February 22, 2010

Chesapeake Bay Conference Center not meeting debt costs

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By Andy Rosen
Andy@MarylandReporter.com

The state has added the Chesapeake Bay Conference Center in Cambridge, with its Hyatt Regency hotel, to its list of “problem” projects that it has helped finance, as a rough 2009 hurt business and the facility’s ability to pay back its debts.

The Maryland Economic Development Corp. (MEDCo), a quasi-public, non-budgeted state agency that helps secure bonds to develop property, now has three problem projects on its books. The others are student housing projects at the University of Maryland, Baltimore and Bowie State University that have not been filled to capacity.

A fourth project is perhaps the most troublesome. The Rocky Gap Resort and Lodge in Allegany County continues to underperform expectations. Though a recent loan change has given the state more wiggle room to cover its operating expenses, it still isn’t meeting its debt payments and officials say they need slot machines there to make it work. No one bid on the slots license available at Rocky Gap.

The conference center was completed in 2002, with the 400-room luxury Hyatt Regency Chesapeake Bay as it main feature. The facility also includes a marina and golf course with broad views of the Choptank River. It was constructed as a way to boost the economy in the Dorchester County area.

The facility is supposed to pay for itself; the income from conferences and visitors is supposed to cover the cost of paying off bonds that were used to construct it. But for fiscal 2009, the conference center failed to cover its costs.

Groups such as the Maryland Association of Counties, the Maryland Economic Development Association and the Maryland Chamber of Commerce hold regular events there.

According to MEDCo documents, the conference center lost $390,000 in fiscal 2009, which ended in June. The center had earned $6.1 million during the prior year. MEDCo Executive Director Bob Brennan said at a budget hearing last week that slower tourism and conference business during the recession was likely to blame.

He said he expected recovery to take two or three years, but the facility has enough money in reserve — about $13 million — to cover the losses. He said the losses are part of an industry-wide slide.

“Our facility is doing very well in comparison,” he said. “So out of everything that’s bad, we’re doing fairly well.”

Brennan said the Rocky Gap facility is unlikely to sustain itself if slot machines aren’t installed there. Voters approved the installation of up to 1,500 machines there in a 2008 referendum, but no bidder was willing to put down the required deposit to apply.

“It is imperative that we get slots out there in the near term,” he said.

Western Maryland lawmakers have suggested including ownership of the facility as part of a measure to construct slots at Rocky Gap.