Feb. 26, 2008 - A stalled project to redevelop a critical downtown corner appears back on track after market changes forced a shift from an apartment tower to a mix of hotels and residences.

Two new hotels with 300 rooms are now planned for the $100 million Citycenter project at Calvert and Lombard streets, first proposed three years ago as a luxury apartment tower, developer Mark Sapperstein says.

The 30-story building, which Sapperstein said he hopes to start building this year, will include two Hyatt-branded hotels, a Hyatt Place, geared to business travelers, and an extended-stay Hyatt Summerfield Suites, with apartments on top, Sapperstein said. It would be L-shaped, wrapping around the Brookshire Suites on the northwest corner.

Baltimore Development Corp., which had selected a team headed by Sapperstein to redevelop the downtown corner in January 2005, is recommending the revised plan, which includes selling the city-acquired property to the developer for $4.5 million and tax breaks in the form of a payment in lieu of taxes, or PILOT.

The BDC's board of directors is to vote on the plan Thursday. The city's Board of Estimates would have to approve the purchase, and the PILOT requires approval by the City Council.

The development team has spent much of the past three years working out design and pricing issues to make the project work economically, Sapperstein said. While demand for rental apartments downtown remains strong, the cost of constructing high-rise buildings and parking has risen to the point that it makes more sense economically to include both hotels and apartments than to rely on one use, he said.

"What I decided to do was to add more meat into this same square, more revenue enhancing [uses] rather than relying on apartments," Sapperstein said. "We couldn't build the apartment units and go vertical and make the numbers work. Rather than start something that might not work, we decided to switch gears."

Kirby Fowler, president of the Downtown Partnership of Baltimore, said the site is a critical link in revitalizing downtown as a place to live, work and find entertainment.

"It's very difficult to redevelop downtown if you have gaps in the streetscape," he said.

Fowler said the city expects the redeveloped site to draw visitors north from the Inner Harbor and connect what has developed into downtown's hotel row. A SpringHill Suites by Marriott opened in November at 16 S. Calvert St.; a Hotel Indigo boutique hotel is under construction at the southeast corner of Calvert and Redwood streets, and a Four Points by Sheraton hotel is planned at 25 S. Calvert St.

Sapperstein had planned to build 300 apartments, a garage and a small amount of retail on the site, bounded by Calvert, Lombard, Mercer and Grant streets. The new configuration of a 30-story building will include 150 apartments, up to 280 parking spaces, and some retail, likely a spa and diner-style restaurant.

But much of the space will be devoted to the two hotels, the first new Hyatt brands downtown since the Hyatt regency Baltimore on Light Street became the pioneering Inner Harbor hotel in 1981.

Hyatt Place, which is geared to business travelers with features such as 42-inch, flat-panel HDTVs and high-speed Wi-Fi Internet access, is to have 175 rooms, and the Hyatt Summerfield Suites, an upscale, extended-stay brand, 125 suites.

Hyatt announced last month that it had doubled the number of Summerfield Suites hotels in its pipeline to 20, boosting the total number now open or under development to more than 50.

The hotels will be among nearly 20 properties planned or under way downtown, according to the Downtown Partnership. As of last fall, four hotels, with a total of 1,192 rooms, were under construction. Between this year and 2012, another 15 -- including the two Hyatts -- will add 1,891 rooms. The downtown area has 28 hotels with 6,847 rooms.

Sapperstein said he's confident about the demand.

"Hyatt has their hands around this market, and they convinced me as well as market studies," he said. "When you bring on 1,000 rooms, it will have some impact -- it may lower room rates for a bit, but once it stabilizes it will be fine going forward."

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