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The Tentacle


October 31, 2016

Facts Should Kill Hotel/Conference Center

Guest Columnist

Kirby Delauter

 

This month let’s discuss the disaster known as the Downtown Hotel Conference Center (DTHCC). When we follow the trail of deceit for it, you’ll see that our county executive, along with the likely four Democrats on the council will vote for this even though I laid out every reason under the sun as to why this is a really bad deal, and the people who will get stuck paying the tab will be you, the taxpayer.

 

The City of Frederick, its Economic Development Office, the Chamber of Commerce, the county executive, the county’s Department of Economic Development, and The Frederick News-Post, are all in on hatching this scheme to build the DTHCC under any and all circumstances.

 

Opinions don’t matter, economics doesn’t matter, and the simple math required to come to the basic conclusion that -2+-2 = -4, doesn’t matter.

 

You might ask, how does The Frederick News-Post (FNP) play into this agreement? It’s simple, they own the land that is in question for this new building. The FNP stands to gain multi-millions by dumping this alleged brownfield property off on to the taxpayers, so that: (A) they can get their payday; and (B), they can avoid the multi-millions it would take to mitigate the environmental impacts of cleaning up the site at their expense.

 

It’s nice how it runs positive puff piece after puff piece on the front page of the paper letting the people know what a great asset the new DTHCC would be for downtown Frederick. As they run these fairytale, front page stories, the editors have placed disclaimers that they own the property, but they just fail to mention what a great deal they would get vs. the shafting the taxpayer would get once dumped into their laps.

 

The issues I have with this are many, but in the interest of time and clarity, here are a few. The original plans called for a parking garage to house the hundreds of vehicles that will come to the DTHCC. The parking deck has been eliminated due to its additional $18 million in cost. My first question to the City and its ECDC team: Where will you now park the hundreds of vehicles that were going to be in the garage that’s no longer being built?

 

Their answer is: Somewhere on site. No plan, no details, just somewhere on site.

 

My second question to them is: Have you been approved by the Historic Preservation Commission in the city since parts of the property are historic?

 

Their answer is: Not yet.

 

My third question is: Have you been approved by the city planning commission?

 

Their answer is: Not yet.

 

My fourth question is: Who will fund the $53 Million shortfall in financing since the private partner in the deal is putting up $40 million of the anticipated $93 Million cost?

 

Their answer is: They want the county to enter a TIF (Tax Increment Financing) agreement for $5 million.

 

They have four Democrat members of the County Council raise the hotel tax to increase revenue. They were counting on the Maryland Stadium Authority to fund the remainder.

 

It’s been said that the Stadium Authority wisely declined to get involved. The council was then informed that an entity known as Maryland Economic Development Company (MEDCO) is now looking to get in on this sweetheart arrangement.

 

I went ahead and pulled MEDCO’s financial information which is readily available since they are a quasi-state agency. What I saw was shocking to say the least. MEDCO has a negative net worth of -$228,000,000. Their debt service will increase starting in 2018 by 500%. They have a project they built/financed at the University of Maryland, in which they currently cannot make the debt payments. They built and financed Rocky Gap Resort for $54 Million. It went bankrupt in three years and was sold for $5.7 Million. They built/financed the Chesapeake Bay Conference Center that is currently $163 million in the red. The best part of the MEDCO deal (if you’re not already impressed) is that if for some reason it fails, MEDCO can walk away leaving who else but the taxpayer to pick up the tab.

 

If this isn’t enough to deter you from supporting such a horrific deal known as the DTHCC, let’s add just a few more items that will make you ask yourself why in the hell is County Executive Jan Gardner and the County Council majority even contemplating such a disaster.

 

There is another privately owned Hotel Conference Center in Frederick known as the Holiday Inn Conference Center, owned by Cohen Enterprises, which is preparing for an $89 Million renovation of its facility and the novel thing about this is, their doing it with their own money, no taxpayer subsidies. So, while Cohen Enterprises takes the risk of doing it on its own, we have politicians willing to subsidize the DTHCC so it can compete with the Cohen firm on a very uneven playing field. This is just plain wrong.

 

We also have the mayors and town councils around the county falling for the bait and switch by the Tourism Council which is dangling the increase in the hotel tax revenues in order to bribe them to support this DTHCC. They promised to give the town’s Main Street monies from the increased taxation so they can create ways to throw those tax dollars down a black hole, too.

 

It is very short sighted of our local leaders to not look at the long term conditions of this disaster.

 

Tell your state and county representatives NO to the Downtown Hotel & Conference Center.

 



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