The parties connected to a hotel and conference center planned for downtown Frederick have a new strategy for state funding in the next Maryland General Assembly session.
The group has decided that tying a $14.8 million funding request to the Maryland Stadium Authority may make the request appealing enough for Gov. Larry Hogan to include in the state’s fiscal 2017 budget. That’s the thinking of city of Frederick officials, developer Plamondon Hospitality Partners and other stakeholders, outlined in a draft memorandum of understanding released Friday.
The Stadium Authority has “a very, very strong track record of working on these types of projects,” said Richard Griffin, the city’s economic development director. “They have a lot of credibility with the state Legislature.”
Among the many projects the public corporation has supported through its tax-exempt bonds is an $80 million hotel and conference center in North Bethesda funded through a public-private partnership.
The drafted agreement between the city and Plamondon also calls for a combination of public and private dollars to pay for the $82 million project — a hotel and conference center plus on-site parking and a sixth city parking deck.
The property is currently owned by a company formed by the Randall family. The family also owns the parent company of The Frederick News-Post.
Under the agreement as drafted, Plamondon would put up $44 million for the hotel. The conference center and public infrastructure — including parking — would come from a combination of city, county and state funding, as well as tax revenue generated by the project.
The mayor and Board of Aldermen must approve and sign the draft document to make it final. Even then, it’s a largely nonbinding document intended to establish the terms of the partnership between the two groups.
City elected officials will review and discuss, but not vote, on the agreement at a workshop meeting on Wednesday at 3 p.m.
Stepping up its game
The partners were hoping to secure half of the roughly $15 million state funding during this year’s General Assembly session, and the remaining $7.5 million in 2016. However, Hogan, a Republican who took office in January, didn’t acknowledge the $15 million request during this year’s session.
The original timeline called for construction beginning in 2016, with the hotel opening in early 2017. That schedule can continue only if the state Legislature approves the full $15 million in the 2016 session.
Using the Stadium Authority as the vehicle for the state funding request is one of several new developments that project partners say will make the request carry more weight this time.
The Stadium Authority also recently updated information from its 2010 feasibility study of the project. The July update shows the state could leverage up to $17.8 million in bonds that would be paid off, including interest, through $1.5 million generated in state tax revenue over a 20-year period, The News-Post previously reported.
That information is what Delegate David Vogt said was missing from the request in the last session.
“I wanted something that showed the state’s going to get that investment back,” he said. “The last proposal didn’t have that.”
Vogt, along with the rest of the the Frederick County delegation, unanimously backed the funding request last session. At least four Republican members indicated in October they may not show similar support in the upcoming session, The News-Post previously reported.
In an interview Friday, Vogt said the new studies and the memorandum of understanding will influence his decision.
“I think it’s definitely a more fiscally responsible approach,” he said of the latest plan for the state funding request. “As long as it’s executed and managed property, I think we have a path to success with this.”
State Sen. Ron Young was already on board with the request, but he agreed that tying the funding to the Stadium Authority might make it easier for other government officials to support it.
Jan Hardesty, public information officer for the Stadium Authority, credited the entity’s “on-budget, on-time reputation” with the General Assembly to its leadership role in other significant infrastructure projects.
Putting the pieces together
Even with a stronger starting plan, the state funding component still is undecided until the next session. Hardesty said it would be too preliminary for Stadium Authority leaders to comment on their willingness to participate with the public funding of the project.
Other pieces of the funding puzzle are also pending.
The memorandum includes $1.25 million from the Maryland Department of Housing and Community Development’s Smart Impact Growth grant. The city received $350,000 through the grant in 2014. The economic development department applied for $1.7 million more in grant funding in September, but hasn’t heard back yet, Griffin said.
The funding breakdown also includes $4.3 million from revenue through the Frederick County hotel tax based on the assumption that the Frederick County Council will approve the long-discussed increase from 3 to 5 percent. Griffin said he discussed the tax increase for overnight visitors in the county with all council members, who would review the tax increase at a future workshop and public hearing.
Council President Bud Otis said Friday that nothing had been scheduled yet. He said he would support the hike of 2 percentage points only if the rest of the council did.
“If we’re going to do this, we have to do it all the way,” he said. “I would support it if everybody can get on board and behind it.”
Despite the various funding sources still unsecured, Griffin said he was optimistic everything would come together.
“The costs of doing an urban infrastructure hotel and conference center are high ... but the return on investment to the community is also high,” he said.
The feasibility study projected the project would create 280 direct and indirect jobs with an annual economic impact of $25 million. As part of the memorandum, the city of Frederick will also receive 10 percent of the annual net profits from the conference center, although Plamondon will maintain and operate it.
The project is also expected to generate $745,000 annually in city and county property taxes, part of which will go to the $5 million in tax-increment financing that county and city officials have agreed to contribute to the project.