DOWNTOWN FREDERICK HOTEL AND CONFERENCE CENTER PROJECT Frequently Asked Questions (FAQ s) Version

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1 DOWNTOWN FREDERICK HOTEL AND CONFERENCE CENTER PROJECT Version The following are provided to assist with factual responses to questions, concerns, or interest in the project. This is a fluid document and will be revised to add questions/responses as needed and to update responses as new information is received. 1. Why is a Downtown Full-Service Hotel and Conference Center needed? Currently, there are limited conference facilities within Frederick City/County and demand for overnight accommodations within Downtown Frederick is limited to a handful of bed & breakfast options. This has been identified by citizens, businesses, and visitors as a major impediment to serving the needs of the community. There are many lost opportunities for attracting business and community functions in Frederick in the absence of a Downtown full-service hotel and conference center facility. Downtown Frederick has highly appealing transit options and critical amenities like restaurants, retail, arts, and entertainment all within walking distance. Downtown Frederick is a national award winning destination which is the number-one visitor destination in Frederick County attracting over 1.5 million visitors annually. The Project will enhance the visitor experience in Frederick and will extend the length of stay and total spend of visitors, while benefitting the 850 small businesses located in Downtown Frederick and others throughout the community. 2. How was the Plamondon Hospitality Partners/Marriott Team selected? The City of Frederick and Downtown Frederick Hotel Advisory Committee issued a Request for Proposals (RFP) in 2014 to select a private developer for a full-service Downtown hotel with approximately 200-rooms and 15-20,000 square feet of meeting space. After evaluating two qualified proposals against rigorous criteria, the Committee recommended selecting the Plamondon/Marriott team and their proposed development site at 200 E. Patrick Street the former Frederick-News Post building. The Plamondon Team has deep experience in the Frederick hotel market and has agreed to take on all the operational responsibilities and risk associated with the Project. 3. Why is a Public Private Partnership needed? Large urban revitalization projects such as the proposed Downtown Frederick Hotel and Conference Center by their catalytic nature have potential for enormous return-on-investment to the community including jobs, economic impact, area-wide investment, increased patronage to other retail stores and restaurants in the area, and induced conference and event activity. Such projects attract private development dollars but also require public investment in public infrastructure, thus the need for a Public Private Partnership (P3). P3 s are gaining wide acceptance nationally as a preferred development strategy which marries the public sector goals for a robust business environment, job creation and revitalization with the private sector capital, investment desires, and operational efficiencies. According to the Advisory Committee s hotel consultant, similar projects around the country, with the exception of New York City, require a Public Private Partnership.

2 4. Will the city, county, or State have any responsibility for the ownership or operations of either the Hotel or Conference Center? No. Both the Hotel and Conference Center will be privately owned and operated by Plamondon Hospitality Partners. There will be no ongoing subsidies to the project and no additional financial responsibilities by the City, County, or State. The City will own the land and will receive ground rent payments from the hotel owner operator. The City will own and operate all public parking facilities. 5. Are public tax dollars supporting the Project and if so why? No local general fund tax dollars collected on real or personal property from City and County citizens or businesses other than those generated by this project will be used to support the Project. The City and County elected officials have publically committed not to burden the taxpayer with any financial responsibility for this Project. The Developer, Plamondon Hospitality Partners is solely responsible for the cost of the private hotel, restaurants, retail, amenities, and land rent for the hotel. The City and County will support public infrastructure related to the Project through the use of Tax Increment Financing (TIF). Please see question #6 below for additional details. The Project anticipates using public dollars from state programs specifically designed to assist with these types of Projects, such as the Maryland Department of Housing and Community Development - Strategic Demolition and Smart Growth Impact Fund (SDSGIF) Grant Program which has already awarded $350,000 to the project. The City has applied for an additional $1.7 million under this program. These dollars are solely for land acquisition. The Project anticipates using the Maryland Stadium Authority (MSA) to assist with public infrastructure components of the project in the form of taxable debt which will be serviced through the estimated $1.5 million in state taxes and fees collected annually. The MSA has stated that the state can recover an investment of up to $17.8 million in taxable debt to assist the Project. 6. What is Tax Increment Financing (TIF)? The City and County have unanimously agreed in the form of a Resolution of Support to use Tax Increment Financing (TIF) to fund a portion of the public infrastructure costs of the project. Tax Increment Financing (TIF) is a widely accepted financial tool that has been previously used by both Frederick County and City to assist with public infrastructure on large economic development projects. The use of TIF allows the City and County to pledge a portion of future tax revenues generated solely from the TIF District (currently proposed to include only the hotel site) and provide the funding up front in the form of TIF Bonds for qualified public infrastructure needed to support the Project - in this case land, public parking, road and utility infrastructure, and meeting space. These new TIF district generated tax dollars would not exist if not for the development of the Project. In the event that the Project does not generate the funds necessary to service the bonds issued, the Developer is responsible for servicing the debt. City and County taxpayers will not be responsible for servicing the debt. 2 P a g e

3 7. Will public dollars be used to build the hotel? No. The cost of the hotel and all associated private amenities including lobby, restaurants, pool, spa, and retail areas are solely the responsibility of the developer. Public financial support will solely be used for eligible public components of the project including land, structured parking (both on and off-site), public meeting space (conference center) and road and utility infrastructure. 8. Will this increase my taxes? No. The City and County Elected Leadership are committed not burdening the local taxpayer with costs associated with this project. Local support for the project will support public infrastructure through the use of Tax increment Financing (TIF). The TIF agreement will be structured specifically to ensure that taxpayers are protected from servicing debt related to the Project. In the event of a shortfall, the Developer would be required to service all debt related to the bonds. 9. Does public financial support for the Project create an unfair advantage over other projects in the area? No. The costs of construction for an urban revitalization project on an infill development site in a Historic Downtown are significantly higher than suburban development costs. Public participation helps level the playing field for urban projects which require costly public structured parking, high quality architectural design, treatments, materials, cultural and historic resources management, environmental remediation, and road and utility infrastructure. It has been clearly articulated by the City s hotel consultant that projects such as this one require public private partnerships to help cover the higher costs. It is also important to note that the returns on public investment for the Project are also much higher than suburban facilities due to its catalytic nature. 10. Who and how is it decided if the State of Maryland agrees to invest in the Project? Ultimately Governor Hogan and the Maryland General Assembly make the decision to approve and support investment in this Project. Participation by the Maryland Stadium Authority (MSA) requires that that it s enabling statute be amended by the General Assembly to include authority for them participate in the oversight and funding of the Project. The Frederick County delegation is anticipated to introduce a Delegation bill in the January legislative session for that statute change. 11. Is the proposed Maryland Stadium Authority (MSA) participation in the Project a gift to the developer? No. The Maryland Stadium Authority (MSA) will issue taxable bond debt to support only public infrastructure related to the project including land, utilities, roads, meetings space and parking. The bonds will be repaid by the $1.5 million in state taxes and fees collected annually by the State directly attributable to the Project. The tax sources include sales tax, income tax, and rental vehicle tax revenues. The MSA has stated that the state can safely invest up to $17.8 million in taxable bond debt based on the anticipated annual state revenue stream from the project. 3 P a g e

4 12. When will the 2012 Market Feasibility study be updated? The 2010 and 2012 studies were undertaken by and financed by the Downtown Hotel and Conference Center Team with support from the Maryland Department of Housing and Community Development (DHCD) and Maryland Stadium Authority (MSA). In addition, the developer Plamondon Hospitality Partners has conducted independent market studies for the project including one in The Developer will update the study again prior to final development agreements and financial closing. 13. Why is the City buying the land for the project? Following recommendation from the Advisory Committee s consultant JLL (formerly Jones Lang LaSalle) and experts from the City, County, and State, it is advisable for the City to own the Project Site. Public ownership of the land provides some control over public investment being made in the Project and generates revenue in the form of a ground-lease from the Developer for that portion of the land utilized by the hotel. 14. Is enough parking being constructed to ensure that surrounding neighborhoods are not impacted? Yes. The Project is subject to the same Adequate Public Facilities Ordinance (APFO) and Land Management Code (LMC) review as any other project in the City. The Developer will be responsible for conducting a traffic study and will be required to mitigate traffic and parking demand related to the Project. Presently the Project includes construction of 100 on-site below grade parking spaces and an additional 70 at-grade spaces. Also, the City anticipates building 650 parking spaces behind the Frederick County Public Schools (FCPS) building (Parking Garage #6) see question #15 below. 15. Why is Parking Deck 6 needed and will it support only the Downtown Hotel and Conference Center? Walker Parking Consultants (under contract to the City) completed a comprehensive study of proposed demand from the Downtown Hotel and Conference Center Project on the City s Parking System. The study concluded that based on the demand from this Project and from other planned development in this area, there will be a shortfall of 250 parking spaces in the current system requiring that the City build those spaces in the near term. The City intends to fill that need by constructing the $15.5 million Parking Garage #6 with ~650 spaces. The facility will provide 400 more spaces than required for this Project. The parking will be constructed using the Downtown Frederick Parking Enterprise Fund revenue with possible assistance from the Maryland Stadium Authority and Frederick County. 16. Who will own and operate the parking facilities? Parking Deck 6 will be owned and operated by the City of Frederick Parking Department. All parking fees and revenues generated through use of Parking Deck 6 will be reinvested into the City parking system. The City s parking system operates as an enterprise fund and does not receive funding through general tax dollars. The ownership and operation of the on-site public parking is still under negotiation but will be open to the public. 4 P a g e

5 17. How will the proposed Project differ from other existing or proposed hotel amd conference centers in the market? The full-service Downtown Frederick Marriott Flagship Hotel and Conference Center at 207 rooms and 24,000 square feet of meeting, event, and conference space will fill an underserved market niche and will complement other existing and proposed facilities within the Frederick. The attraction of new induced conferences, trade shows, and other large events to Frederick market by this Project will generate spin-off room-nights to other hotel properties in the area. Additionally, both market feasibility studies have indicated that the Frederick market is large enough to support the Project and the existing hotel properties in the area. 18. What is a Full Service Hotel? In the hospitality industry, there are three general hotel categories: limited-service, select-service, and full-service. While select-service hotels may include meeting space and offer an on-site restaurant, only a full-service hotel provides the amenities and features required for conferences, large-meetings, and events. Full-service hotel amenities often include multiple food and beverage services, lounge space, breakout rooms, larger conference and banquet facilities, and more. 19. When will the Hotel and Conference center design be reviewed and approved by the City Historic Preservation Commission (HPC)? At this time, the concept renderings provided by the Developer as part of the RFP response have been solely used to offer insight into the developers design intent. The Project will be required to formally submit building and site plan designs for approval by the City Historic Preservation Commission (HPC) and Planning Commission (PC). The review will include height, mass, design sensitivity to historic district, materials, site function, traffic impact and parking. Both processes are fully public and will consider input from the community. Both Commissions operate as quasi-judicial bodies, independent from elected officials or city staff. In addition, the project will also require approval from the Maryland Historic Trust (MHT). 20. What process will the design go through to be approved and ensure compatibility with the historic district and viewshed? See the response to Question #19 above. 21. Does the federal per diem issue affect the proposed Project? The federal per diem in Frederick is significantly lower than that in Montgomery County and other counties surrounding the District of Columbia. The hotel developer Plamondon Hospitality Partners is fully aware of this issue and currently successfully operates a number of Marriott hotels in the community. There is an effort among the economic development partners and our federal delegation to adjust the per-diem rate to be more consistent throughout the Washington DC market but there is no timeframe for that to occur. 5 P a g e

6 22. Will there be a negative impact on the Project returns if the hotel owner chooses to offer low cost or free meeting space at the Conference Center? No. Often hotel and conference center operators provide low cost meeting space to induce large groups to use the facility. The revenue dollars are made up with the sale of food and beverage service and rooms. The Hotel Advisory Team has negotiated for a 10% participation in the net cash flow from the Conference Center. Most of the revenues anticipated are from food and beverage sales in the conference center. The hotel developer will own and operate both the hotel and conference center and carries all the risk for operations, maintenance and capital repairs/upgrades. 6 P a g e