Downtown hotel 1

An artist’s rendering of the downtown hotel and conference center project, as viewed from the northwest corner of Patrick and Carroll streets.

ANNAPOLIS — A bill that would cap the county’s hotel tax at 3 percent has passed the Frederick County delegation and will be introduced in the General Assembly.

The vote on the proposed bill was 5-3, with all five Republican members of the delegation — Sen. Michael Hough, and delegates Kathy Afzali, Barrie S. Ciliberti, William Folden and David E. Vogt III — voting to cap the tax at 3 percent.

All three Democratic members of the delegation — Sen. Ron Young, and delegates Carol L. Krimm and Karen Lewis Young — voted to keep the state law as currently written, which allows the tax to be set between 3 and 5 percent by the Frederick County Council. The three lawmakers also represent an area that covers the city of Frederick.

County and city leaders were looking to increase the tax to the current 5 percent cap, which would allow about $4.3 million from hotel tax revenue to help fund a hotel and conference center in downtown Frederick.

About $44 million of the cost to construct the $82.47 million development will be paid by the hotel’s developer, Plamondon Hospitality Partners. The remaining funds would come from a combination of city, county and state funding, as well as tax revenue generated by the project, according to a memorandum of understanding signed by the city of Frederick.

Debating the tax

Hough, District 4, who drafted the bill cap to hotel tax at 3 percent, said it was “patently unfair” to increase the tax rate for all hotels in the county to benefit one.

Supporters of the current hotel tax law countered that the tax is not paid by businesses, rather by people visiting Frederick who stay in the hotels. Krimm said Hough’s proposal would remove local control over the issue, which is inappropriate.

“That is a decision that the County Council should be making,” she said.

In 2004, lawmakers approved a bill that said simply that the county’s local government was authorized to charge a hotel tax which cannot exceed a 5 percent rate. The 3 percent rate was set by, and can be changed by, the county government.

Hough said he worried that an increase in the tax would harm business owners because higher overall room rates could make Frederick County rooms less enticing and drive visitors to nearby counties.

Krimm said she doesn’t think the difference between a 3 percent or 5 percent hotel tax rate would have any effect on consumer behavior.

Currently, Frederick and Cecil counties have 3 percent hotel tax rates, the lowest rates in the state; Harford County had no hotel tax until a six-percent tax was implemented in 2015.

Each of the counties surrounding Frederick, including those in Pennsylvania, have a hotel tax rate of at least 5 percent.

Local lawmakers expressed dismay after the delegation’s 5-3 vote.

“It’s really, to my mind, a vote against tourism,” County Executive Jan Gardner said. “It’s not really a vote against the hotel and conference center. Because the hotel-conference center has a lot of momentum, and it is going to move forward with or without the decision you just made.”

Mayor Randy McClement said the hotel tax increase would have helped the Tourism Council of Frederick County expand its operation by creating a capital budget.

Most of the money from the hotel tax — about 97 percent in 2015 — is allocated to the tourism council to promote the county and give grants to local nonprofit organizations.

“This tax has a great benefit to the entire Frederick County community,” McClement said.

Another battle ahead

The tax cap bill sets the stage for continued debate on the downtown hotel and convention center. A Maryland Stadium Authority bond bill, which is being drafted by Krimm, will seek approval for the largest chunk of public financing for the hotel and convention center, about $14.8 million in bond funding.

That bill will be on the agenda for next week’s delegation meeting.

While Friday’s vote on the hotel tax included much discussion about the downtown hotel proposal, the final tally does not necessarily reflect lawmakers’ positions on the stadium authority bill.

Some delegation members have not declared an official stance on the hotel project, and Hough said last week that he wanted to consider the hotel tax cap and stadium authority bills separately partly because the hotel tax increase was the greatest source of disagreement in the downtown hotel proposal.

Nevertheless, the stadium authority bill could be filed before some members of the delegation are ready.

Krimm said she may go ahead and introduce the bill herself before the delegation’s next meeting, because lawmakers are under pressure to file bills early in a year when more than 3,000 measures — more than were considered in all of 2015 — are still being drafted.

If the delegation wants to hold a vote on whether to sponsor the bill as a united front, co-sponsors could be added through an amendment, she said.

Follow Danielle E. Gaines on Twitter: @danielleegaines.

Danielle E. Gaines covers politics and government in Frederick County, splitting her time between Winchester Hall and The State House. Having grown up in Illinois, she lived in New York and California before settling in Maryland.

(24) comments

petersamuel

Delegate Carol Krimm doesn’t see a difference between a 3 percent and a 5 percent tax. Or maybe between a 5 percent and a 7 percent tax, or between 7 percent and 9 percent…? With her kind of thinking tax rates will go steadily up and up, along with assurances each time that those dumb customers won’t notice the difference. If we are serious about attracting more visitors to come to Frederick we should be looking at ways to reduce their costs. Visitors would certainly appreciate zero hotel tax as in Harford County.

public-redux

I look forward to hearing the reaction from the Republican county council members and Republican municipal officials. The disrespect from the Republicans in the county delegation is astounding.

matts853

Why is the city only profit sharing in the conf ctr cash flow and not also that of the hotel operations?

petersamuel

Delegate Carol Krimm wants to go it alone in sponsoring a bill to get the state Stadium Authority in on funding the Downtown Hotel and Conference Center. She claims there is some great urgency about all this. Consider the accompanying Frederick News Post report by Nancy Lavin on the beginnings of historic preservation permitting which makes it clear we don’t have any agreed or permitted plans yet on what exactly we want to finance. As Kara Norman of the estimable Downtown Partnership is quoted we are in for a “long discussion” about the history of the site and how it is to be handled.in the design of the hotel complex. There is an historic preservation review to be undertaken by the City’s Commission (HPC) and another by the state Historic Trust. Lots of historic research has to be done and archeological digs. Pete Plamondon Jr co-chief of the developer Plamondon Hospitality has emphasized that renderings and plans so far submitted are preliminary at best and not a final design by any stretch of the imagination. Like it or not the city an state historic regulators have to sign off on any designs. Until that has occurred - and it certainly won’t happen this year - there is no design on which to do cost estimates. Without cost estimates there is no basis for a financing plan. Another way the project may change, hopefully, is through a pruning back of the $14 million 24,000 square feet conference center portion of the project. Meeting space like this is so plentiful in Frederick and elsewhere it earns trivial revenue, and $14m of public funding is a wasteful extravagance. The City’s own consultants have said only 12,000 square feet is justified. Plus the tentative design shows the conference center right atop the substantial brick buildings of the historic Birely Tannery. No way will that be granted historic permits. What’s the point of getting a state agency involved before we have resolved these issues at the City Level. A majority of the state delegation voted to do the right thing in capping the county hotel tax. It was a horrible idea - call it krimminal ? - to increase by two-thirds the tax on economy and mid-priced hotels to subsidize a bloated convention center and ritzy downtown hotel. Now is the time for fellow delegates in Annapolis to make clear to this crazy lady she’s on her own again. Any effort to get state funding should be tabled until we have worked out what it is we propose to fund. Ideally we would develop a self-financing project without the need for taxpayer support.

Positive

Set aside the tax issue for a moment and consider the vote. By Maryland statute, authority for this taxing issue resides squarely with the County Council, which has the authority to change the hotel/motel tax. Yesterday, 5 members of our delegation decided that the County Council wasn't going to make the decision they wanted. So they are creating new statewide legislation to tie the County Council's hands. Frederick County's tax issue will no longer be made by the people that we elected to represent us, but will be decided by elected officials from the Eastern Shore, Baltimore City, Montgomery and Prince George's Counties, as this decision affecting only Frederick County is pulled away from us and handed to the political machine in Annapolis. Those who care about local home rule should be extremely concerned, as this issue is only the beginning. What other Frederick County issues do they believe would be better decided by statewide officials we didn't elect and who don't represent us? What other decisions will the state delegation decide to pull out of our community? How many more ways will the state delegation remove local decision-making capacity for our county's future? Those who voted in favor of taking this tax decision out of our community never mentioned this priority in their legislative agendas. You can bet they will do everything they can to siphon more governance away from Frederick County and hand it over to Annapolis.

public-redux

Many Fredco Republicans are authoritarian rather than conservative, which is always a disappointment to those of us who are conservative. People like Rick Blatchford and me.

jerseygrl42

excellent move and the taxpayers DO NOT need another hotel downtown.....only the money folks do

johnqFrederick

This quote from Krimm seems to sum up the liberal Democrat philosophy on taxes: "Krimm said she doesn’t think the difference between a 3 percent or 5 percent hotel tax rate would have any effect on consumer behavior . . . "

She doesn't think . . . similar to other Local, State, and Federal tax, fees, or regulatory burdens, it always starts small, a dollar here, a dollar there -- yet there is little to no accountability -- there is bloat, waste, fraud, and abuse.

If Krimm doesn't 'think', then maybe she can run a cost model and persuade us how the increase will be used, show us a forecast, explain oversight and accountability, and even suggest how to 'sunset' the tax increase when 'mission accomplished'.

Frayou

👍. Agree. Always rationalize tax benefit all. Unfortunately increase taxes leads to increase government spending and waist. Always easy to spend someone else's money. The taxpayer. No matter if be a tourist, property Werner or business. This pattern needs to stop.

FrederickFan

As always, I completely disagree with you. I have never in my life made a decision on where to stay in a motel based on an analysis of taxes! No one ever does!

You always spew cheap, misleading stereotypes in your comments. Your guy, Republican Blaine Young, gave away $160,000,000 in corporate welfare waste to residential Developers with absolutely no accountability. Voting against the hotel tax just hurts Frederick County, and puts more of the burden on us, instead of on people who don't live here. Big mistake.

public-redux

If you read johnqfrederick's comment closely, you'll see that he never claims people incorporate hotel taxes into their travel decisions. In fact, he seems to agree with Krimm that they don't. His second and third paragraphs are premised on the idea that the taxes are actually collected.

I agree with you, johnq, and Krimm that people don't base their lodging decisions on hospitality taxes. No one visiting Frederick is going to stay in Washington County just to save 2% on their hotel tax. Hough is a moron if he thinks otherwise.

johnqFrederick

As always, you tow the line of failed liberal policies, laws, regulations,

You spew cheap, misleading stereotypes in your replies

Maryland liberal Democrat laws, policies, and regulations have a 40+ year failure rate -- your Baltimore Gem and liberal Montgomery County should not be allowed to infect Western Maryland and Frederick County with the failures that plague their respective areas.

You have no proof that the hotel tax hurts or helps -- yet you are more than willing to assume that 'others' should pay for your failed policies.

BTW -- my rental investments in Maryland require me to pay 10% tax (6% plus 4%) for my short term rentals in two of Maryland's tourist areas. You have never run a business, paid your 'fair' share, yet -- you and others that think like you -- demand that the 'makers' continue to pay for the 'takers'.

Again -- if the City Hotel is such a great idea -- 'go fund me' -- put your $$$ where mouth is!

public-redux

John, you should pass on that 10% tax to the folks who rent your properties instead of paying it yourself. Just tack it on to their bill. I'd guess that is what of your competitors do.

jerseygrl42

did you ever meet a Dem. who didn't fall in love with every tax/fee increase available...omalley was a perfect example of that

BlueDawn666

Yeah you must of forgot about Jill King a tea party Republican, who is very in love with this tax/fee increase and you need to meet me a Dem who isn't in love with this, because you said you have never met a Dem that didn't love every tax/fee increase, well HELLO here I am..wanna meet, I would like to have you meet a Dem that doesn't love every tax/fee increase,,,cause we are out here. I guess you don't get out much?

kimberlymellon

Here's Richard Griffin, Frederick City's director of Economic Development attending the BIO International Conference 2014 in San Diego, CA. He's at the San Diego Convention Center. This means he is likely lodging at a nearby San Diego Hotel in the charming Gaslight District. For the room he rented, he paid an occupancy tax of 10.5%. He paid another 2% San Diego Tourism Marketing District Assessment fee (established by the city) and he paid a .3% California Tourism Assessment. None of which deterred him in any way from attending this conference. The three types of taxes/fees allow for CA and San Diego to tailor its fees to the specific locality and hotels benefiting the most financially from their location. Why then, isn't Mr. Griffin looking to establish a fee that will allow the City's need to pay for itself versus tapping hotels county wide to fund the city's investment into Mr. Plamondon's hotel conference center?

SNNLive - The City of Frederick - Department of Economic Developmenthttps://youtu.be/4l1GY7jy6rY

kimberlymellon

Here's a rational solution: If City/County/tourism officials/Plamondon and supporting contractors and businesses are so certain of the economic boon in business use and tourism for the historic district and creek walk area, then establish a hotel 'tax district' or fee (it already has it's own TIF district) to support itself, instead of depending upon every other hotel and tourist in the county. Because while government/business travelers generally don't worry about the reimbursable tax on their rooms, tourists DO look at the total cost of lodging - including tax - when they choose hotels. Why is there such a bull -headed insistence upon hurting privately funded hotels that already pay their fair tax share to support the entire economy and their guests?

public-redux

I'd amend your suggestion to allow local governments to set the hotel tax at whatever rate they want.

kimberlymellon

I might agree with that. Let Walkersville, Thurmont, Emmitsburg, Urbana, Middletown etc opt out of Frederick City's Hotel Tax speculative obligations. But in all seriousness, where it the impact study on raising that tax? Carol Krimm "thinks" is not a rational basis for increasing the hotel tax county wide.

public-redux

A rational basis for tax policy is always nice. The county delegation to Annapolis capping the hotel tax rate at 3% is irrational in 2 ways. First, it isn't their business. It is the business of county and municipal governments. Second, even if it were their business, there was no impact study for choosing that number.

It was a political end run. That is obvious. And it reeks of hypocrisy from the party of small government. My party.

BlueDawn666

Oh SNAP.....

DickD

Strange, but I agree with the Republicans on this one. I saw the hotel as corporate welfare and was totally against it. Strange because you would expect the Republicans to be the ones proposing corporate welfare, but that is not the case. You would expect the Democrats to resist corporate welfare, but that is not the case. I hope this is the end to this sordid story.

MCEDDE21

Nailed it!

Dwasserba

Nooooo, because the bill is still being introduced in the General Assembly, where it *may* be revealed it did not have unanimous support.

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