It calls for TIF bonds to pay for public improvements.
Frederick, Md (KM) The memorandum of understanding for the proposed downtown Frederick hotel and conference center was discussed during Wednesday’s Board of Aldermen Workshop.
The agreement between the city, the county, the Maryland Stadium Authority, the Maryland Economic Development Corporation (Medco) and Plamondon Hospitality Partners outlines the obligations of each of the parties, and discusses how this project will be financed.
Richard Griffith, the City’s Economic Development Director, says part of the financing will come from Tax Increment Financing bonds issued by the city, the county and the state, but they will not be used to pay for the hotel. “The city, the county and state are only supporting the cost of public improvements,” he said. Some of those public improvements include on-site parking, the conference center itself and utilities.
The plan calls for the 207-room hotel and its amenities be constructed at the former Frederick News-Post building at East Patrick Street. The property will be owned by the city, and Plamondon Hospitality Partners will operate it. It will also operate the 23,500-square-foot conference center which will be owned by the Maryland Economic Development Corporation.
Griffith called this something new in the MOU. But opponent Peter Samuel said this was the wrong way to go. “MEDCO is a disastrous state agency,” he said. “It’s got a horrible record of scandal and fiscal fiascoes.” Samuel pointed to Rocky Gap in western Maryland, and the Chesapeake Bay Convention Center in Cambridge. He said the only facility owned by MEDCO which is working is in North Bethesda.
The project is expected to cost $84-million, which Plamondon expected to pay for most of it, and take all of the risks if the project fails.
Even though the TIF bonds will be used to pay for public improvements, Alderman Michael O’Connor said investors who purchase those bonds will be taking a gamble, not the city’s taxpayers. “But if for whatever reason if the tax increment does not appear, general taxpayer dollars will never be put into the project to make those investors whole,” he said.
Other funding for the project will come from a $1-million grant from the state’s Capital Improvements Program for fiscal year 2017. The Department of Housing and Community Development will provide $850,000 from the Smart Growth Impact Fund. $15-million dollars will come from Maryland Capital Grants, with $7.5-million of that amount appropriated in fiscal year 2018, and $7.5-million in fiscal year 2019.
The Maryland Stadium Authority will provide no funds for this project, but MSA and MEDCO will provide services. MEDCO will sell Sustainable Community TIF Bonds. Those bonds along with those from Parking Revenue Bonds will fund public infrastructure connected with the project.
Opponent Jane Weir told the Aldermen that a project like this is not needed because there is already a glut of hotels with conference centers in the region, pointing to the Holiday Inn at FSK Mall. “The only way to get people to this proposed downtown hotel and conference center is for the customers to come out of the surrounding hotels and event venues,” she said.
Weir said she’s not against a downtown hotel, just this project.
But Allie Korotky, one of the founders of Cycle-Fit in Frederick, said it is needed in the downtown. “We need more than great restaurants and microbreweries. We need more stuff to do,” she said. “This hotel project will not only provide that more, it will draw other businesses to be part of that excitement as well.”
The Aldermen are expected to vote on the MOU on Thursday, October 20th.
Griffith says construction of the hotel and conference center project could begin next year.
The city says the facility could generate 280 jobs, direct and indirect. It’s expected to have an economic impact to the tune of $25.8-million dollars.
By Kevin McManus