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Construction Estimates for $290 million Publicly Financed
 Hilton Hotel in Baltimore Soaring Beyond Projections;
City Seeking New Competitive Bids

By Lorraine Mirabella, The Baltimore Sun
Knight Ridder/Tribune Business News

Mar. 5, 2005--City development officials plan to seek competitive bids to build the proposed $290 million publicly financed convention headquarters hotel after construction estimates soared beyond projections.

The Baltimore Development Corp. said yesterday it hopes to issue a request for bids from builders as soon as next week.

The city had been working with Baltimore-based Whiting-Turner Contracting Co. to build a city-owned, 750-room Hilton as part of a team led by Robert L. Johnson, the founder of Black Entertainment Television.

But BDC President M.J. "Jay" Brodie said yesterday that four separate construction estimates from Whiting-Turner came in over budget. The city is allowing an estimated $195 million for construction, including hotel furnishings and fees paid to development team members. Brodie would not say how much over projections Whiting-Turner's estimates were.

"Whiting-Turner has been professional and thorough, but they have not given us a figure that falls in the ballpark," Brodie said. "We don't have a figure that works."

Brodie said the BDC was still on track in its plan to seek approval for a $290 million bond issue to finance the construction and other costs. The hotel, to be built on an empty parcel just north of Oriole Park at Camden Yards, should still be able to meet the goal of opening by 2008, with the switch to a new builder likely to cause a four- to six-week delay, Brodie said.

Brodie said BDC officials decided to seek new bids from builders after talking with Mayor Martin O'Malley, the city solicitor and the director of finance.

"The mayor's aware of BDC's decision to issue an RFP for the design-build portion of the project, and he supports the decision at this point," said Raquel Guillory, a spokeswoman for the mayor.

Brodie said he had told Whiting-Turner chief executive Willard J. Hackerman that "this is a public policy situation, and we had to go out and look at other design builders."

"We need to test the marketplace to see what other good qualified design builders will give us, and Whiting Turner is invited to participate in this process," Brodie said. "Faced with the situation in front of us, it's prudent and appropriate to test the marketplace

The decision to seek new bids from builders will have no effect on the hotel's design. And with the exception of Whiting-Turner, the other members of the development team -- Johnson's RJL Development LLC and Quadrangle Development Corp. as developers, architecture firm RTKL Associates and hotel operator Hilton Hotels Corp. -- remain in place and will be paid fees for services rather than having an equity stake in the hotel.

Hackerman did not respond to a request for comment.

Two construction companies said yesterday they are interested in building Baltimore's headquarters hotel.

New York-based Turner Construction Co., the nation's largest building contractor, plans to submit a bid.

"This is a great project, right next to the ballpark and across from the convention center; it will be the bellwether project for the city," said Chris Jahrling, a vice president and Turner's general manager for DC, Maryland and Virginia. "We have done more of this type of product in the U.S. than anyone."

The construction company, which typically works with developers on projects, has built either publicly financed or public/private hotels in Houston, Kansas City and Detroit.

FaulknerUSA, an Austin-based national developer and builder specializing in convention headquarters hotels, will also submit a proposal, said Terri Dusek, a company spokeswoman.

"The fact that we are planning to submit a proposal would indicate that we can make the budget," Dusek said. She said the company has built Hilton hotels in Austin, Vancouver and Omaha.

The plan to publicly finance the hotel has raised red flags among some city officials, including the chairman of a key City Council committee. Keiffer J. Mitchell Jr., head of the taxation and finance committee, said he wants an independent commission to review all three hotel proposals that had been submitted to the BDC, including plans that would not have required full public financing.

Yesterday, Mitchell reiterated his desire to explore other financing options.


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