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Saturday, May 7, 2016

Do Over Needed for Frederick Hotel/Conference Center

George Wenschhof

Sadly, the attempt by Mayor Randy McClement (R) of The City of Frederick to push forward the development of a downtown hotel/conference center has become a boondoggle of epic proportion.

In spite of the effort by proponents of this development to project a positive outcome resulting from the recently concluded Maryland general assembly session, no financing from the Maryland Stadium Authority (MSA) has been approved.  When reading reports of their hastily held press conference one would believe $16 million in state funds had been approved and it was full speed ahead for this development project.

Instead, what transpired in a convoluted manner, typical of action during the yearly legislative session, was the insertion of $1 million toward the project this year. However, the allocation of these funds is contingent on a new memorandum of understanding (MOU) being reached by all of the parties involved and the approval by Maryland Board of Public Works (BPW) for the use of MSA funds. 

In addition, the legislative wording included language requesting $7.5 million for each of the following fiscal years to be included by Maryland Governor Larry Hogan (R) in his budget.  Not only does the Governor have to include these funds in his next two budgets, but the availability of these funds is once again contingent on a new MOU and approval for the use of MSA funds for this hotel/conference center.

It has been reported the developer has said they will not move forward until they have received the full $16 million, which puts us at 2018 and counting, if funding requests are approved.

Since being elected mayor nearly seven years ago, McClement has repeatedly had the cart before the horse in what he has framed as his signature project for the city.

Over four years ago, when the city was requesting $1million from MSA, I published a column where I pointed out “there was no site or developer identified, an update on the feasibility study had not been done and the city contribution to the project had not been decided or shared with taxpayers”.

In a recent column I wrote with the city MSA request now around $17 million “Opponents have alluded the “fix” was in for this site owner and developer, pointed out contaminants were discovered during earlier environmental studies, are concerned over the outcome of a historic building on the site that once housed a tannery and have added the Tax Incremental Financing (TIF) proposed for this project has now been banned by California, the state that first used this creative financing 50 years ago”.

Now, with a new MOU required prior to review for approval of stadium authority funds by Maryland BPW, it is an opportunity for The City of Frederick to review, amend or possibly terminate the questionable deal they negotiated with the developer.

Prior to submitting any request to the Maryland Stadium Authority for funds and The City of Frederick agreeing to buy the land and partner with the developer in the conference center, the city should take several actions.

At a minimum, the city should require the developer to obtain financing, site plan and building permit approvals at their expense prior to agreeing to any other conditions.  If the developer does not agree to these terms, it may present the opportunity for a do over of the entire process.

If so, this would allow the city to start over with a new request for proposals (RFPs) process with parameters more acceptable and fair to taxpayers.

An update of the feasibility study of the need for a 207 room hotel and 24,000+/- square foot conference center should be done taking into account the privately funded Holiday Inn/Conference Center expansion is anticipated to be completed in early 2018.  The Holiday Inn/Conference Center expansion will have a total of 205 rooms with 30,000+/- square feet of conference space.  It also has easy access to interstates and an abundance of onsite parking making the demand for two large venues within miles of each other suspect.

After an updated feasibility study is completed, it is likely data would support a more appropriately sized 100 - 110 room hotel and 5,000+/- square foot conference center in downtown Frederick.

Interestingly, as the name implies, the stadium authority fund was started in 1986 to lure a football team back after the shock of losing the Colts in the middle of the night and the desire to keep the Orioles.  Professional baseball and football stadiums were subsequently built resulting in the Ravens coming to Baltimore and the Orioles staying in town.

Over the years, politicians began to use MSA funds on public/private development projects across Maryland with mixed results.

The use of stadium authority funds requires public involvement and some of these projects have been costly failures in Maryland. Across the country, there are countless failures of similar projects.  So in a do over, it would not be advisable for the city to request any funds from the Maryland Stadium Authority.

Ideally prior to issuing a new RFP, as I suggested 4 years ago, the city should hold a series of public workshops to determine what level of government participation is acceptable to taxpayers.  This should be spelled out in the new RFP process, a serious omission in what was done previously. Examples of what a city financial contribution could be is a one time several million dollar contribution or a waiver of taxes for the first 5-10 years.  However, the city contribution should be finite with a definite end and not include any ownership of the property or partnership in the project.

The acceptable geographic area to request RFPs should also be expanded in the downtown historic district.

All of the above steps would increase responses, likely produce a more suitable site and result in the desired positive impact to the historic district.

The fact the city only received 2 responses to their previous solicitation effort should have been an immediate signal, something was amiss.

Continuing forward with the present proposal will only result in a monumental quagmire for taxpayers for countless years to come.

The Maryland board of public works would be wise to not approve the current $1 million request and any subsequent funding requests without the developer providing financing approval, site plan approval and building permit approval.

Hopefully, the opportunity presents itself for The City of Frederick to start over and move forward with a hotel/conference center that makes sense for taxpayers and is more suitable for historic downtown Frederick.

If so, let’s hope they take advantage of the opportunity.

Stay tuned.