A new hotel in downtown Frederick should support itself, but if city officials also want a conference center and parking, a consultant says the city will need to float some of the cost.

Developers say that when the proposed hotel comes to fruition, room rates will not be high enough to support the added features, said John Gibb, managing director of Jones Lang LaSalle, a real estate consultant firm.

Gibb presented an update Wednesday to Mayor Randy McClement and the city's Board of Aldermen on the downtown hotel and conference center project.

The city hired Jones Lang LaSalle to study the best place and funding model for the hotel.

Gibb's report affirmed what the city already estimated — there will be a funding gap of about $10 million to $12 million with the conference center and parking lot, said Richard Griffin, the city's economic development director.

As the hotel generates tax revenue, the taxes could be used to help make debt payments on the parking lot and conference center, Griffin said.

Given past concern that the city would be funding the private hotel, aldermen tried to make one thing clear — this won't be like Baltimore.

The Baltimore city-owned Hilton Hotel has had to reach into reserve funds to make debt payments and might need to reach into the pockets of taxpayers — out of the city's general fund — to make the payments in the future, according to numerous reports.

Frederick will not own or pay for any part of the downtown hotel, or its debt payments, Griffin said.

“We don't want to get in a situation like Baltimore,” Alderwoman Carol Krimm said.

Krimm asked Gibb to explain why a downtown Frederick hotel would not be able to charge high enough room rates to support a conference center.

“These are not Washington, D.C., hotel rates,” Gibb said. “It is not as robust as the (D.C.) market.”

Alderwoman Karen Young asked if the city could request a more competitive per diem rate, the top rate set by the government that a work traveler can be reimbursed for his hotel stay, depending on location.

Frederick's per diem rate is $95, while Washington and its surrounding cities and counties have a per diem rate between $169 and $226, depending on the month.

Gibb assured Young that the committee is looking at all financing options.

“We will leave no stone unturned,” he said.

The city is investing some public funds into the project, to cover costs for the land and initial planning. With $500,000 already in hand, the aldermen voted last week to request a $250,000 grant from the state. Of the $500,000, $157,140 will go to Jones Lang LaSalle, Griffin said.

The city's hotel committee plans to present to elected officials in a few week preferred sites for the hotel, although the public may not be included in that discussion.

Follow Jen Bondeson on Twitter: @Jen_Bondeson.

(57) comments

KellyAlzan

There are so many things wrong with this idea.

1) As I have written in the past, Frederick County is becoming an influx of ten to twelve dollar an hour jobs. Retail Retail Retail. Just like Prince Georges County. The retail industry has no strong demand for holding conferences.

As I have written in the past, Frederick County needs higher end industry. The county needs corporations where the average salary is no less than $85k. But before this will ever happen Interstate 270 needs widened. And until then, no large corporations will come to Frederick.

2) Putting a hotel/conference center in downtown Frederick with NO parking is a very foolish idea. The streets already are not able to handle the current traffic volume. What are the city aldermen thinking, what is wrong with them???

3) As I stated many months ago the Fredericktown Mall site is perfect for a hotel/ convention center. There is plenty of space for parking, the road can handle the traffic, and its easy on and easy off of the major highways.

You elected officials in the city of Frederick are about to RUIN the city.

business

[thumbup][thumbup][thumbup]

cyntiast

This town has prime properties for bed and breakfast ..... why hasn't this happen?

watson4sherlock

The nos have it.

No 59.1%

golden-rule

I think this is more an attempt to make Frederick more appealing to businesses/jobs "from 270" than it is a play by "the developers". That said I'm not sold yet on the it's viability. It is certainly a gamble. I confess a bias toward action to enliven downtown and was excited by the prospect of a conference but public funding not so much.

I often walk past the post office and wonder if a parking lot for mail trucks is the best and highest use of downtown realestate; not that I'd like to see a tall building there that would obscure the churches, but something.

louie

This taxpayer says NO to public funding for a hotel/business complex.

higgledy

I am sure Blaine and gang are open to helping out a fellow "businessman" with public funds.

darththevader

What does that have to do with a City issue? Do you know the difference between City and County? Did you see the County mentioned anywhere? Do you even read?

watson4sherlock

Well there is kind of blur between city and county since Winchester Hall appears to be a county property within the city limits. Perhaps there are other county properties within the city limits; like some fire stations.

watson4sherlock

So is that A) false outrage or B) stupidity on your part? I think A.

darththevader posted at 5:01 pm on Thu, Aug 1, 2013.

What does that have to do with a City issue? Do you know the difference between City and County? Did you see the County mentioned anywhere? Do you even read?

higgledy

These corporations never get tired of begging for money.

bjonesskins69

Another giant waste of money. Look at all the empty office spaces on 85 down past the mall. This isn't build it and they will come. Those offices have sat vacant for years. And the congestion would be a problem. And Frederick isn't all that. i.e. Balt/Wash. People come there for a reason, not Bumpkin' Land. We have enough to draw tourists to the area. This again would be a bait and switch regarding who is really going to pay. Like with the incinerator when it fails, it will be our tax dollars that pick up the slack while Bafoon Blaine and his co-horts are out fishing and drinking cheap beer. May be a good time to check some land out over the Potomac. O'Malley has already run a boat load of people out of the state so there is more tax revenue. But I forgot they raised the gas tax to replace money that was misused for some one else's wasteful spending. [wink]

BobWtmr

Oops. The old curmudgeons of the Historic District want things to remain the same as they were in their youth 50 years ago. It's not going to happen. The dynamics of the 21st Century are too overpowering for the horse and buggy folks of the 20th. Just take pictures of, "Old Frederick" for your scrapbook and bring in the bulldozers.

BobWtmr

Building anything to 21st Century specifications in the 19th Century Historical District would be difficult if not impossible.

elymus43

We need a new Mayor and an a new BOA. I do not see anyone running for Mayor that could put the City on the right track. If the candidates were as concerned about the taxpayers as they are about helping the builder, developers, and realtors, the City could move forward. Frederick City does not need the convention center or the new hotel.

sholman85

AGREED! We need more businesses here bringing real jobs first. Retail isn't the future of this city and isn't what ensured its survival up to this point. This isn't a matter of "if we build it, they will come" this is a matter of ensuring the long-term economic health of the city. Bring the jobs from 270 out here, give them a reason to come to Frederick. Make that happen first and a hotel and convention center will pay for itself. Unfortunately, nobody seems to have the common sense and foresight to go about things the right way.

louie

Well said.

wmpratt2010

If there was a demand for it, it would be built. So no to public (Tax payer) money.

richardlyons

Well stated. Hotels build where there exists a demand. Profit rules.

watson4sherlock

Good observation. Perhaps the county could makes some money by broadcasting the next public hearing with a three second delay. Citizen greets commissioner with a "Hail Victory" and commissioner eats peanuts and drinks water while telling citizen you're wasting your three minutes.

watson4sherlock

This comment should have been below:

richardlyons posted at 2:11 pm on Thu, Aug 1, 2013.

No market here for Ringling, BOCC fill tha niche quite nicely.

dbjanda1

Everyone complaining about too many WalMarts, well, this just adds to the count of government buildings downtown...Lets see, there's the courthouse, Frederick city hall, Winchester hall, Frederick library, Frederick social services, Donald Shaffer building, the old and empty Education building, not to mention all the parking decks...Are these suppose to entertain convention goers ???...If they build this thing they should shape it like an elephant and paint it white to go along with the current environment...Me

steven09

Would this be a chain? [wink]

Seriously, this would greatly benefit downtown and many of the merchants and restaurants. Almost all current Frederick hotels are outside the City limits, meaning that the City and most of the downtown vendors see little benefit.

Rates will be free market based. They can't be preset by the government. In economic terms, hotel rates are very elastic. If a rate is too high at one hotel guests will simply go to another.

Per Diem rates are set by the GSA each year and are roughly calculated at slightly over the average rate of all area hotels, so it will not go up unless the area hotels raise their rates.

The optimal location for a downtown hotel is close to a highway exit, but walkable to downtown and Carroll Creek. This is basically the new East Street corridor between the roundabout and Patrick Street.

Ron Young originally planned a convention center where Hovnanian condos are now along the Creek. The post office would be a great location but they would move only if the City builds them a new facility. That's not going to happen anytime soon. The old FNP building is a possibility, as well as several other parcels of land in that area. However, they are all slightly small for a hotel and convention center.

Should the City build a hotel? I don't think anyone wants the City getting into the hotel business. But should they build a convention center designed to host state and regional conventions downtown? My thinking is that it, as Richard Griffin mentions, would more than pay for itself over time.

One point I'd like to make is that often, once built, conventions find themselves too small to host some groups that would like to utilize it. My thought would be to design it so that it could be expanded at a later time, if needed. But I realize that also brings up the site concern.

watson4sherlock

With Baltimore and DC within 40 miles you think Disney would bring it's ice show and Ringling Brothers it's circus?

richardlyons

No market here for Ringling, BOCC fill tha niche quite nicely.

watson4sherlock

There's a hotel lot out by the Walmart on Guilford Drive near the Harry Grove Stadium right off of 70. Here's another spot for a convention center. Not downtown.

xroads1213

NO. Next question...

hallemd

I don't want my tax dollars going for any hotel OR convention center. If the city wants this than they need to find a private investor who wants to put up the funds. I am tired of the public subsidizing private businesses who make money hand over first.

fredneckian

Want to be a millionaire in this country? Beg the govt for capital to start up some losing operation. They will eventually give it to you if you come up with a way to make it worth their while. Then run away when the project goes belly up with the millions in your pocket from the taxpayers while they pay the bills for decades to come. The politicians only care about the good of their wealthy constituents, not about the vast majority.

People complain about poor people on welfare, well, there are lots of rich people taking your money just as well yet they get free passes.

sholman85

How about a Walmart downtown? Make it an even four in the area! Remember, it'll help other businesses and make the area more attractive! They'd be a willing private business who will foot the bill for the job!

watson4sherlock

Putting the Walmart downtown instead of at Frederick Town Mall would be a great idea! That Carmack site is perfect; right across the street from Volts.

watson4sherlock

There's not room downtown for a convention center. They should build something small and quiet with cozy get away suites. Put the convention center at Frederick Town Mall site.

joelp77440

Lot's of room. If you were at a convention, would you want to stay on Rt. 40 and get mugged or downtown and walk the shops, dine at the restaurants, etc.

The convention center will only work downtown. Look at the Holiday Inn near FSK. Empty half the time.

watson4sherlock

That is a wonderful example of why Frederick shouldn't have a convention center. Why would people what to come here any way? Recently Five Guys and Green Turtle moved out of downtown.

See http://www.downtownfrederick.org/

watson4sherlock

The crime on Route 40 is misrepresented. There are 135 calls for city police service in July 2013, 12 of them are in the vacinity of Frederick Town Mall.

See https://www.crimereports.com/map/index/?search=+Frederick+MD

watson4sherlock

They have to have officers manually direct traffic in downtown Baltimore during rush hour. It takes over an hour to get in on 395. The downtown district should be laid back not risking your neck to cross Market Street.

sholman85

The City wouldn't have to foot the bill for this if they encouraged actual private industry to come to frederick rather than relying on massively unstable retailers.

But hey, this board of Aldermen likes to put the cart before the horse and approve anything that lines their pockets.

For example, the walmart on route 40 won because they paid off city sponsored organizations like the Golden Mile Alliance with "Donations." Karen Young herself said "I've talked to their representatives and they promise to be good corporate citizens." Ok Karen, you keep telling yourself that so you can sleep at night.

What needs to happen is a luring of businesses along 270 out to here. We need more jobs and not just crappy retail. If you want to fill a hotel and conference center then bring the businesses here that will actually use it. Don't just build it, have us foot the bill and HOPE they'll come.

But again, common sense seems to be glarringly absent for our current city leaders. You can't put something into the city if there isn't a demand for it. Create the demand and the construction of this project will pay for itself. Its pretty cut and dry, but again common sense falls on deaf ears in this town.

hallemd

sholman - as usual you are blowing hot air out of your butt again -- the Golden Mile Alliance received donations from many businesses along the mile to help us get off the ground and we also receive money from the city but we are an INDEPENDENT organization with no obligations to anyone. You need to get your facts straight before you open your big mouth.

sholman85

Diana, the Alliance is a City -Sponsored organization (meaning the city gives money to the group) and on top of that it was created in conjunction with the City of Frederick (as in they worked hand in hand with the creation and organization of the group). I know the facts. You're just angry someone has made your financial misgivings publicly known, especially since you're a board member.

If anyone wants to view the public record, just go right on over to Cityoffrederick.com
Say hi to Dave Severn and Steve Ifshin for me!

rcfoster

Nice idea, but it would have been better about 5 years ago. This economy and local taxes can't afford to build something like this.

I hear Rt. 40 is looking for a tenant at the old mall. Parking, roads, room and probably a great price for the property.

MCEDDE21

The consultant says the City must pay to make the project work. The developers say they need they City’s money and the City’s director of economic development agrees. That’s group think, with a measure of self-interest. That’s what they all say, every time--much like the infamous Oliver Porter and his PPP Associates’ recommendation to privatize County government, with no real study of the County’s needs and circumstances.

These represent ideal and (by definition) impossible solutions to the real world problem of economic development. The truth is that all of these projects may look good, but they end up draining the City’s finances—like Baltimore’s Hilton Hotel—for the benefit of banksters on Wall Street.

So, why do we keep going back for more? Why do we keep paying outsiders to tell us that we need to keep paying them??? Privatization and its twin, the charmingly and more elegantly named “public-private partnership”, are shams.

Use YOUR heads, folks. You’re smart people. You don’t need to rely on somebody else. Alderwoman Krimm has stated the obvious: “We don't want to get in a situation like Baltimore.” OK, then: Don’t make the same mistake.

lynchforfrederick

Neither the city, nor a corporation will change room rates to match a 50% increase in order to support a hotel, and occupancy rates will not reach the heights proposed. The conference market is too small and the market too broad, we're on the outer edges without transit, it won't work.

darththevader

The City can build a parking deck. That's it. If there isn't enough private funding for the hotel it shouldn't be built

watson4sherlock

The city owns and maintains enough parking decks.

darththevader

They also get income from them. With a hotel and convention center you would need another one.

watson4sherlock

A parking deck is a liability not an asset. They take in less money than they cost. They are a service to the people.

watson4sherlock

Parking Garage Square Foot Cost Assuming Face Brick with Concrete Block Back-up / Precast Concrete, 145,000 square feet, 5 stories, 29,000 square feet per story, 170 feet by 170 feet.

Open Shop Labor Total Building Cost $8,721,200

See http://www.reedconstructiondata.com/rsmeans/models/garage/

watson4sherlock

New Hanover County’s parking deck at Second and Chestnut streets averages about $800 in revenue each weekend.

See http://www.myreporter.com/?p=16327

darththevader

Ummm...what does your comment have to do with anything?

watson4sherlock

You appear to be commenting on your own comment.

darththevader posted at 4:55 pm on Thu, Aug 1, 2013.

They also get income from them. With a hotel and convention center you would need another one.

watson4sherlock

You appear to be unaware that parking decks cost money to build and maintain and bring in a very small revenue.

The city should not even build a parking deck for a convention center/hotel it should be part of the private development not a public burden.

watson4sherlock

Still converting public assets to private use. Just build a parking lot and give it away with the nursing facilities. The rich get richer and the poor can crawl off and die.

president8444

NOT MY TAX MONEY EVER.

jthompson

Using the past as a predictor of the future, in the end the City will do whatever the developers want. The subsidy the City (and County) will provide to the project will not be so obvious as simply handing the developers a check for $12 million. Instead, it will be in the form of free permits, free water & sewer service, property tax relief, low-interest, tax free loans that don't have to be repaid, etc.

CynnicalSid

Remember, this is supposed to be an 'Upscale' hotel and convention center! With no parking planned for the 500-700 patrons of the convention center! "The existing downtown parking will absorb that demand"... So what makes that 'Upscale'?

You can't fly, take a train or metro to Frederick and you think a downtown hotel and conference center with no parking for the conference center is going to survive? That's probably why no hotel chain is drooling over the chance to buy into this bass akwards idea!

Our City leaders obsessed with their new pet project might want to consider eliminating the throngs of panhandling vagrants, window smashing drunken vandals and countless dilapidated unsightly condemned buildings before any public money goes anywhere else!

fourofsix2003

And AGAIN,the roads in Frederick cant handle the traffic now,so hey,lets build a new hotel,convention center,add ANOTHER WAl Mart,instead of funding the police so they can do their job!

girlpolitic

Frederick will soon be the new Detroit. How about funding your currently under funded pensions and OPEB first.

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