Maryland's Boondoggle Inn
By Andrew Nehring
WasteWatcher, April 2017
In July 2016, Frederick County (Maryland) Executive Jan Gardner introduced a bill that would increase the county’s hotel tax from 3 percent to 5 percent. Despite denials from Gardner, State Senator Ron Young (D-District 3), State Delegate Karen Young (D-District 3), and State Delegate Carol Crimm (D-District 3) that the new tax revenue will not be used to fund certain aspects of a planned $84 million Downtown Frederick Hotel and Conference Center, that does not appear to true. Part of the revenue generated from the hotel tax hike will pay down the $3.5 million in debt payments for the conference center over the course of a 25-year contract.
Private funding for the project totals approximately $53 million, while state, county, and city taxpayers are on the hook for nearly $31 million. That amount does not include taxpayer-funded off-site costs associated with the project, such as the new $19 million parking garages. Like sports stadiums and similar boondoggles that never pay for themselves in terms or revenue or jobs, the conference center project begs the question as to why taxpayer dollars are necessary if it could be completely financed solely by private developers. County businessmen such as FSK Holiday Inn owner Randy Cohen understand this concept and are opposed to the use of taxpayer money to subsidize competition at the expense of private businesses.
In a November 3, 2016 interview, Gov. Larry Hogan (R-Md.) said that no state money would be going toward the project. The governor’s promise was initially upheld when the Maryland Stadium Authority (MSA) voted against the $16 million state bond for the project on November 8, 2016.
MSA Board Chairman Thomas Kelso said, “There is no owner for this project, and no financing … Even if there were, the current memo of understanding (MOU) has no clear role for the MSA. In order for the MSA to be involved, there must be a “clearly defined, lead role.”
While the MSA voted down the bonds, the Democratic-controlled General Assembly passed a capital budget with $16 million in grants to help build the hotel and conference center. Republican delegates from Frederick County vocally opposed the capital budget. They had been arguing against the proposed downtown hotel and conference center since the idea was first proposed. State Delegate Kathy Afzali (R-District 4) said, “I am sorry to see this monstrosity put into the capital budget.”
On April 5, 2017, Gov. Hogan announced that he will not veto the capital budget, negating his promise that state money would not be going toward the project. However, due to three amendments passed during consideration of the budget, $7.5 million in grants are pre-authorized for each of the capital budgets for 2018 and 2019, with the remaining $1 million in grant money being tied up until an MOU is signed by the MSA, the county executive, the county council, Frederick City’s mayor and board of aldermen, and the private developer.
Based on precedent both in Maryland and other locations around the country, the proposed downtown hotel and conference center will be a colossal waste of taxpayer dollars. For example, the city of Baltimore owns and operates the Hilton Baltimore, which has lost more than $50 million since it opened in 2008. Delegate Afzali’s assessment that the project is a “monstrosity” is likely to be accurate.