February 26, 2009 - Plans for a 30-story hotel and apartment tower near the Inner Harbor at Calvert and Lombard streets are being scaled back because of the weak economy, but developers are still moving forward to build two Hyatt-branded hotels there.

The city Board of Estimates approved yesterday a $4.5 million sale of eight city-owned properties at the critical downtown corner to City Center LLC, a team headed by developers Mark Sapperstein, Benjamin Greenwald and Joseph Haskins.

The $80 million, 450,000-square-foot Hyatt at City Center project will include 300 rooms in the two hotels -- Hyatt Place and Hyatt Summerfield Suites. It will also house a 300-vehicle parking garage and commercial space. But the building is most likely to be about half the size of a 30-story tower proposed a year ago that would have included 150 apartments.

The developers shifted plans in reaction to the worsening economy, Sapperstein said yesterday.

"It was a combination of the market and financing together," he said, noting that the project had "become so big that it just didn't make sense."

It became difficult and costly, he said, to design for both hotel and residential use on a site with a small footprint.

The Baltimore Development Corp. had acquired land and buildings in the block bounded by Calvert, Mercer, Lombard and Grant streets for redevelopment and selected City Center LLC in competitive bidding in January 2005.

At that time, Sapperstein had proposed the project as a luxury apartment tower. The project faced delays as the market shifted, and the team worked out design and pricing to make the project work economically. A year ago, Sapperstein revised the design to include the two hotels as well as residences.

Yesterday, city officials welcomed the news that the corner of mostly vacant buildings would be revitalized with hotels despite the recession.

Kirby Fowler, president of the Downtown Partnership of Baltimore, said the site is among the top downtown locations in need of revitalization.

"The Hyatt project has to happen for Calvert Street to reach its full potential," Fowler said. "It's one block away from the Inner Harbor, where we have millions of visitors every year. We can't have empty buildings at the intersection of Calvert and Lombard and convey a very good image."

Though hotel business is generally suffering in the recession, the city is still expected to find itself in need of more rooms once the economy improves, Fowler said.

"Assuming we'll come out of the economic doldrums, we could still support the inventory that is coming on line this year and perhaps even more," he said. "We still don't have the number of rooms to land some of the larger conventions."

There are about 7,500 hotel rooms in an area including the Inner Harbor, the central business district, Harbor East, the city's west side and Mount Vernon.

New hotels opening downtown this year are likely to include a 96-room Quality Inn at Lexington and St. Paul streets and the 200-room Hotel Monaco in the former B&O Building on Charles Street. Also, a 154-room Fairfield Inn & Suites by Marriott at President and Lombard streets near Little Italy is scheduled.

Other hotels are in varying stages of construction downtown, including Hotel Indigo, at Calvert and Redwood streets, Staybridge Suites at Charles and Fayette streets, and Four Points by Sheraton at Calvert and Water streets.

BDC President M.J. "Jay" Brodie said the new hotel will help anchor an area that has become a lodging hub. Hotels there include the Brookshire Suites -- on the same corner as the proposed Hyatts -- and Hampton Inn and Suites in a former USF&G building north of the proposed hotel site at Calvert and Redwood streets.

The addition of two new Hyatt brands can only help the city's hospitality industry, he said.

"For Baltimore to have a broad diversity of [hotel] brands is very healthy for us," Brodie said.

Of Sapperstein's current plans for the site, Brodie said: "He believes he can do it, and we have confidence he can do it."

Sapperstein said the developers will essentially start again on design work, collaborating with the city and Hyatt officials, in hopes of completing that phase this year. They then would seek construction financing and start to build in spring or summer 2010.

With an estimated 18-month construction schedule, the hotels probably would not open before late 2011.

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