Council President Young proposes sale of city-owned Hilton hotel
Proposal would use funds for recreation centers
David Collins
I-Team Reporter
WBAL-TV\SkyTeam 11
city-owned Hilton Hotel
SOURCE: WBAL-TV\SkyTeam 11
Baltimore City Council President Bernard C. "Jack" Young is introducing a resolution to explore selling the city-owned Hilton Baltimore Convention Center Hotel and use the money to fund recreation centers.The goal is to get input from all stakeholders and make an informed decision on whether selling the Hilton is a good idea.Young's resolution appears to be a response to Mayor Stephanie Rawlings-Blake's $60 million proposal to sell off four city-owned parking garages for a similar purpose. The council president repeated Monday that he will not let the mayor's bill come up for a vote. He opposes the plan, as he favors keeping the city's revenue flow from those assets intact.Young said the Hilton has failed to live up to expectations, despite its location in Baltimore's Inner Harbor.According to The Baltimore Sun, the hotel reported $5.6 million in losses last year. The hotel has lost more than $70 million since opening in 2008, Young said."City government should not be in the hotel business, and I think, in private hands, better decisions will be made and we can probably make some revenue," Young said.Former Mayor Martin O'Malley pushed the Hilton project through the City Council, which approved issuing more than $300 million in tax-exempt bonds to finance construction.Young, who voted against construction of the hotel, said in a statement that a private owner could result "in better management, a boost in revenue, and provide the city with cash to fund new recreation centers and expand academic and socially-enriching programs for young people.""We have an opportunity to turn around what has for years been a money-losing deal for the taxpaying citizens of Baltimore," Young said in a statement. "Instead of booking hotel rooms, the city should focus its energy and resources on providing our young people with opportunities to thrive and grow academically and socially."We don't have any business running a hotel, but every obligation to make sure that our young people have access to world-class recreational opportunities that will keep them positively engaged and help prevent juvenile delinquency."In a news release, Young cited multiple experts who he believe that the city should sell the hotel.This includes Dennis C. Coates, a professor of economics at the University of Maryland, Baltimore County. He said that selling the city-owned hotel "is philosophically and economically the right thing to do.""It's a valuable piece of property and it's a valuable facility. I would think that tens of millions of dollars is in the right ballpark," Coates said in a statement.Young also issued a quote from Loyola University economics Professor Stephen Walters, saying, "Get it off the city's books and onto the books of the private sector and use the cash to fund needed programs. I think it's a great idea."Darius Irani, director of Towson University's Regional Economic Studies Institute disagrees, saying, "I don't think it's a good idea if the reason for selling it is based on poor performance. It's just the way the deal was structured that leads it to be where it doesn't look like it is doing as well as its private sector counterparts, but then again, its debt will be paid off sooner."Baltimore Development Corp. officials said the hotel has a positive cash flow, but it's offset by bond debt and by depreciation for tax purposes. The BDC believes the April riots slowed potential financial gains this year because the unrest caused some convention cancellations.The BDC said selling the Hilton before 2016, when the bonds mature, would result in a penalty. They said the true value of the property still needs to be determined.City Councilman Carl Stokes said he's looking forward to starting the conversation about the sale."It's a little more complicated than 'Let's just put this money over to the recreation centers.' We got to talk about what the Hilton hotel's economics are. What's the benefit of selling it or not selling it? That's the full discussion we will have in September," Stokes said.A 2013 consultant's study determined the city would lose $60 million to $90 million if it sold the Hilton. The study also recommended against restructuring the debt.City officials believe the hotel will turn a profit by 2023.
Baltimore City Council President Bernard C. "Jack" Young is introducing a resolution to explore selling the city-owned Hilton Baltimore Convention Center Hotel and use the money to fund recreation centers.
The goal is to get input from all stakeholders and make an informed decision on whether selling the Hilton is a good idea.
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Mayor announces new plans for city rec centers
Baltimore mayor wants to sell garages for revenue
Young's resolution appears to be a response to Mayor Stephanie Rawlings-Blake's $60 million proposal to sell off four city-owned parking garages for a similar purpose. The council president repeated Monday that he will not let the mayor's bill come up for a vote. He opposes the plan, as he favors keeping the city's revenue flow from those assets intact.
Young said the Hilton has failed to live up to expectations, despite its location in Baltimore's Inner Harbor.
According to The Baltimore Sun, the hotel reported $5.6 million in losses last year. The hotel has lost more than $70 million since opening in 2008, Young said.
"City government should not be in the hotel business, and I think, in private hands, better decisions will be made and we can probably make some revenue," Young said.
Former Mayor Martin O'Malley pushed the Hilton project through the City Council, which approved issuing more than $300 million in tax-exempt bonds to finance construction.
Young, who voted against construction of the hotel, said in a statement that a private owner could result "in better management, a boost in revenue, and provide the city with cash to fund new recreation centers and expand academic and socially-enriching programs for young people."
"We have an opportunity to turn around what has for years been a money-losing deal for the taxpaying citizens of Baltimore," Young said in a statement. "Instead of booking hotel rooms, the city should focus its energy and resources on providing our young people with opportunities to thrive and grow academically and socially.
"We don't have any business running a hotel, but every obligation to make sure that our young people have access to world-class recreational opportunities that will keep them positively engaged and help prevent juvenile delinquency."
In a news release, Young cited multiple experts who he believe that the city should sell the hotel.
This includes Dennis C. Coates, a professor of economics at the University of Maryland, Baltimore County. He said that selling the city-owned hotel "is philosophically and economically the right thing to do."
"It's a valuable piece of property and it's a valuable facility. I would think that tens of millions of dollars is in the right ballpark," Coates said in a statement.
Young also issued a quote from Loyola University economics Professor Stephen Walters, saying, "Get it off the city's books and onto the books of the private sector and use the cash to fund needed programs. I think it's a great idea."
Darius Irani, director of Towson University's Regional Economic Studies Institute disagrees, saying, "I don't think it's a good idea if the reason for selling it is based on poor performance. It's just the way the deal was structured that leads it to be where it doesn't look like it is doing as well as its private sector counterparts, but then again, its debt will be paid off sooner."
Baltimore Development Corp. officials said the hotel has a positive cash flow, but it's offset by bond debt and by depreciation for tax purposes. The BDC believes the April riots slowed potential financial gains this year because the unrest caused some convention cancellations.
The BDC said selling the Hilton before 2016, when the bonds mature, would result in a penalty. They said the true value of the property still needs to be determined.
City Councilman Carl Stokes said he's looking forward to starting the conversation about the sale.
"It's a little more complicated than 'Let's just put this money over to the recreation centers.' We got to talk about what the Hilton hotel's economics are. What's the benefit of selling it or not selling it? That's the full discussion we will have in September," Stokes said.
A 2013 consultant's study determined the city would lose $60 million to $90 million if it sold the Hilton. The study also recommended against restructuring the debt.
City officials believe the hotel will turn a profit by 2023.