ROCKVILLE, MD (April 14, 2016) – The City of Frederick’s proposed $70 million Downtown Hotel & Conference Center (DH&CC) may not meet its rosy economic projections and will likely be a long-term burden on local and state taxpayers, according to a new report from The Maryland Public Policy Institute.  The full report from adjunct fellow and Frederick resident Peter Samuel can be found at mdpolicy.org.

“Frederick leaders understandably want broad economic growth for their city, but have missed the mark with the DH&CC,” said Christopher B. Summers, president of the Institute. “Precedent strongly suggests that the DHC&C will fail to meet the upbeat economic projections advocates claim and that it will actually saddle taxpayers with costly and long-term subsidies.” 

Frederick leaders who support the DH&CC want taxpayers from the City of Frederick, Frederick County and Maryland to subsidize a combined $26 million for planning and construction of 24,000 square foot facility. 

The Institute’s report includes the following critiques of the DH&CC proposal:

• Industry metrics indicate the $70 million DH&CC project would have a value of just $36 million at opening, meaning nearly half of the proposed expenditure would be wasted.
• A comparable facility would be the Lancaster (Pa.) Hotel and Conference Center, which earns less than $2 million in annual revenue, yet has around $5.5 million in operating costs and debt service of $2.7 million. The facility needs about $6.3 million in yearly taxpayer subsidies to stay open.
• The DH&CC would increase Frederick hotel capacity by 10 percent, which could be disruptive to existing hotels that do not enjoy direct taxpayer subsidies.
• Proponents of the project obscure the fact that a good portion of the hotel guests and conferees for the Frederick DH&CC would simply be business transferred from existing establishments in the Frederick area, adding no net economic benefit.

The State’s Fiscal Year 2017 capital budget includes $1 million for the facility’s planning costs and requests $15 million more in future years.

About the Maryland Public Policy Institute: Founded in 2001, the Maryland Public Policy Institute is a nonpartisan public policy research and education organization that focuses on state policy issues. The Institute’s mission is to formulate and promote public policies at all levels of government based on principles of free enterprise, limited government, and civil society.  Learn more at mdpolicy.org.

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