By Jill Rosen
Sun Staff

Originally published August 1, 2005, 11:15 PM EDT
After weeks of intense negotiating, months of tedious and testy work sessions, and lobbying by Mayor Martin O'Malley, a publicly financed convention center hotel plan barely withstood its first political test Monday.

The hotel, which at $305 million would be Baltimore's costliest public project, squeaked past the City Council in an 8-7 vote. The creation of a $59 million affordable housing fund, a move hotel advocates crafted to win the project more support from the council, apparently failed to influence the vote.

The five-year plan to prime blighted areas for redevelopment did delight community and clergy groups that have pressured city leaders to invest in struggling neighborhoods before supporting the downtown hotel.

But not one of the 15 council members changed votes because of it. Before the vote, some of the elected officials said spending more money on affordable housing initiatives is something Baltimore should have been doing -- with or without a hotel hanging in the balance.

"Funds for neighborhoods in need should not be held hostage in exchange for support," Councilman Keiffer J. Mitchell Jr. said before casting a "no" vote.

With Monday's approval of the bills by the committee of the whole, the hotel bills now move to the council floor, where a vote is expected Aug. 15. If the project is approved then, it would take one more round of voting for the hotel to ultimately succeed.


'A major risk'

The council is bitterly divided over the hotel proposal. As of Monday, despite a weekend deal-making blitz, the plan still appeared to have more enemies on the council than friends. Councilwoman, Helen L. Holton, who voted for the plan Monday, said her "yes" vote was only a procedural move to free the package from committee, and that she remains skeptical.

City Council President Sheila Dixon Monday pledged her support for the hotel for the first time.

"This is a major risk for the city," she said. "But I feel confident that public financing is the way to go."

Dixon was less confident about whether a majority of her colleagues would join her in that support by Aug. 15.

"Who knows?" she said with frustration. "The problem is there is no consistency with them. ... They have five other reasons [to say no] once their other 20 questions are cleared up."

The O'Malley administration, backed by city economic development and tourism officials, has pushed the hotel as the salvation for the underperforming convention center. Without the 752-room Hilton and its ability to offer room-block agreements, they say, Baltimore will never be able to compete in the meetings industry.

Under the plan, Baltimore would issue revenue bonds to finance the hotel. If the hotel fails, the city would use tax income from the hotel -- and possibly the occupancy tax from all Baltimore hotels -- to pay off its debt. Though Baltimore Development Corp. officials insist the hotel would pay for itself, skeptics call the risk too high and question whether the hotel would actually bring more conventions to town.

"I hope I'm wrong, but it's gonna end up in a fire-sale type of thing," Councilman Nicholas C. D'Adamo Jr. said about the hotel as he cast a "no" vote.

But Councilman Robert W. Curran predicted its success.

"The return on the city's money will be historic," Curran said. "I do believe that."

Many council members have asked for alternatives to public financing, even as the BDC has repeatedly told them that a viable private deal was all but fantasy.

Last week, an Atlanta firm that previously bid to develop the hotel sent Dixon an unsolicited proposal outlining how it could build the hotel for $214 million with about $50 million in tax breaks.

Some council members took Dixon to task for not sharing Portman Holdings' proposal until minutes before the vote.

"We should have had an opportunity to review all of the details of their proposal just like we did with the public financing," said Councilwoman Belinda Conaway.

But like all the other deals that involve substantial subsidies, city budget officials said, Portman's offer isn't worthwhile. Stanley Milesky, chief of the Bureau of Treasury Management, said the tax breaks the company wants would cost the city much more in the long run.

"We cannot determine in any way this is a private investment deal," Milesky told the council.


'Fulfillment of a dream'

Before the vote, Dixon gathered with community, religious and union leaders to celebrate the creation of the $59 million affordable-housing trust fund.

In June, irate clergy and members of BUILD -- Baltimoreans United in Leadership Development -- descended on City Hall to demand an end to the "two Baltimores": the Inner Harbor area where investment abounds and the crime-ridden, crumbling neighborhoods.

Bishop Douglas I. Miles berated Dixon in particular for neglecting a campaign promise to find $50 million for redevelopment efforts.

Monday, Miles commended Dixon for her "citywide vision."

"This is the fulfillment of a dream of BUILD," he said.

The money, to be used to assemble large tracts for affordable housing, comes from Community Development Block Grant cash, income from the Inner Harbor Hyatt and general obligation bonds.

The block grant funds make up most of the pot -- $29 million. Though the federal govern ment intends sharp cutbacks of the block grant program, housing officials said they weren't worried about the fund's security.

"We are pretty confident we'll have that money," said Housing Commissioner Paul T. Graziano.

Despite claims from critics that much of the money in the housing fund was already going toward neighborhoods, Graziano said that was untrue.

"Every single penny is new," he said. "I'm elated -- it's a huge investment of money for us."

With the unions strongly backing the hotel as a way to secure hundreds more city jobs, the president of the Baltimore Metropolitan AFL-CIO applauded the housing fund.

"We hope this will help get another project we're very much interested in," said Ernie Grecco -- "the convention center hotel."

But council members, while supportive of the investment fund, seemed cynical about the timing of it.

Councilwoman Mary Pat Clarke alluded to BUILD's allegations of unkept campaign promises to help neighborhoods. "It appears a hotel has given birth to the honoring of that commitment," she said before voting "no."

Even hotel supporters such as Curran said: "We shouldn't have had to wait to invest in communities."

Council Vice President Stephanie C. Rawlings Blake said only sore losers could grouse about the good news of the fund.

"It's very sour grapes," she said, "because they were unsuccessful in their bid to topple [the hotel] proposal."