November 13, 2016

State funding for Frederick conference center hotel voted down

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Artists's conception  of Frederick Hotel and Conference Center.

Artists's conception of Frederick Hotel and Conference Center.

By Peter Samuel

For MarylandReporter.com

The Maryland Stadium Authority (MSA) bowed out of the $84 million downtown Hotel and Conference Center project in Frederick last week, withdrawing $18 million in state support.

Gov. Larry Hogan said in an interview Nov. 3 that no state money would be going toward the project.

A meeting of the authority board discussed a five-party agreement with the City of Frederick; Plamondon, the city-selected developer; Frederick County; and the Maryland Economic Development Corp. for the financing of the hotel complex on Carroll Creek.

MSA CEO Michael Frenz presented the Frederick-drafted memo of understanding (MOU) to the stadium authority board. After a lengthy discussion they voted unanimously not to proceed.

Next day the MSA put out a statement by Thomas Kelso, chairman of the board, explaining the reasons. The board and staff were concerned that its role in the project had “changed significantly” since the MSA first became involved in 2011 — changing from advisory services to financing.

Problems with site 

MSA was not involved in either site selection or other crucial decisions in which it usually participates in project development, Kelso said. The stadium authority often handles construction and other services for public-private partnerships.

The original lot has turned out to be too small for the hotel complex. The city has sought to buy adjacent land because of difficulties getting permits for demolition of a historic tannery building.

Other crucial decisions included a questionable procurement under which the winning developer submission was made weeks before the RFP (request for proposal) even went out.

Kelso also observed: “There is no owner for this project, and no financing,” adding “Even if there were, the current MOU has no clear role for the MSA.”

MSA was already heavily involved in active projects, the chairman said, and its professional staff was stretched. The board believed MSA should only get into projects “where we have a clearly defined, lead role.”

Other state agencies involved

The MOU’s surprise in September had been that it also brought in a sister state agency, the Maryland Economic Development Corporation ( MEDCO).

No announcement had been made by MEDCO, but chief executive Robert Brennan told journalists that his board had “tabled” Frederick’s hotel MOU Oct. 17.

He said they’d decided to make any further consideration of the Frederick City project conditional on an update of a 2012 feasibility study and more clarity in the financial statements.

Brennan said MEDCO’s board also wanted to consult with other state agencies (probably MSA, the Department of Housing and Community Development, and Maryland Historical Trust) involved in the project giving the impression it could follow MSA’s example and walk on Frederick too.

In an interview at a Maryland Public Policy Institute reception in Annapolis Nov. 3, I asked Gov Hogan about state support for the Frederick City hotel. He told me flatly the project was not going to get state funds.

In the 2016 legislative session the appropriations committees declined a city request for funding, with five of the eight Frederick County legislators opposing state funding.

But the three Democrats supporting hotel funding — Sen. Ron Young, Dels. Karen Young, and Carol Krimm — managed to get funding as part of the capital budget. That law however makes release of the funds dependent on a MOU with the Maryland Stadium Authority, which its board has now ruled out.

Frederick Mayor Randy McClement acknowledged the setback but said the city intended to push on with the project by “adjusting” to the loss of state funds. The city’s financing plans had the developer putting in $53 million, the state $18 million, the county $6 million and the city $7 million.

Peter Samuel is a Frederick-based journalist. The Maryland Public Policy Institute published his research paper on the hotel in April. Other writings appear on his blog www.frederickhotelboondoggle.us