A city-owned Inner Harbor hotel that has bled money and received millions in financial support from Baltimore’s coffers since the start of the pandemic got another injection Wednesday of nearly $1 million in public support.

The Hilton Baltimore Inner Harbor hotel, which the city built in the mid-2000s using hundreds of millions in borrowed funds, has struggled for years to pay down its debt. The hotel’s problems have been exacerbated by the pandemic — so much so that Mayor Brandon Scott indicated that he’s open to selling the hotel, though that road could still leave the city owing hundreds of millions in debt.

The city’s five-member spending board approved the $989,000 grant Wednesday for the Baltimore Hilton — through the Baltimore Hotel Corp., the city-controlled entity that runs the hotel — without discussion as part of its routine agenda. Only City Council President Nick Mosby voted against the payment.

Funding for the grant comes out of the city’s $641 million in American Rescue Plan Act aid, designed to help the city’s economic and public health recovery from the pandemic, and marks at least the second tranche from the federal stimulus package that Baltimore has earmarked for the city’s hospitality industry. Meeting documents noted the property was “greatly impacted” by the COVID-19 pandemic.

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Baltimore’s troubles with its Inner Harbor Hilton, located on West Pratt Street next to the Convention Center and overlooking Camden Yards, date back to the mid-2000s, when the city borrowed more than $300 million by selling bonds to design and build the hotel. Relatively little of the principal had been paid off by 2017, when the city opted to refinance the bonds, prolonging the repayment period by another three decades.

And since the hotel has lost money since the start of the pandemic, the city has been on the hook for annual payments to help cover its debt — a requirement of the property’s borrowing agreement. In this year’s budget the city earmarked $7 million for the hotel. That’s in addition to $16 million the city had already given to the property, according to a tabulation last year by The Baltimore Sun.

Asked after the Board of Estimates meeting Wednesday whether the city would consider selling the struggling hotel, Scott told reporters he’s open to any solution. The mayor noted that because Baltimore owns the property the city is obligated to keep providing financial support. But he added that he’s “quite open” to having a buyer take over the operations.

Whether selling the hotel is even an option for the city, though, isn’t clear.

Even if Baltimore were able to find a buyer, the city would likely still be saddled with a tremendous amount of debt. As of the end of 2021, the city was on the hook for about $471 million — $260 million in principal and $211 million in interest payments — according to disclosures to bondholders. Baltimore is not scheduled to finish paying off the hotel until 2046.

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Shamiah Kerney, who heads the Mayor’s Office of Recovery Programs overseeing Baltimore’s pandemic aid, said the Hilton temporarily suspended operations in April of 2020 — operating as a field hospital alongside the convention center for a stretch at the beginning of the pandemic — and remained closed without revenues for 51 weeks. The hotel reopened a year later, Kerney said, but continued to operate “at a significant deficit,” which she partly attributed to the lagging tourism economy that has yet to return pre-pandemic levels.

The nearly $1 million award approved Wednesday will go towards administrative costs at the Hilton, accord to the Board of Estimates agenda, including for asset management, legal fees, consulting and audit costs.

“Based on the information provided to the Recovery Office, if the Hotel Corporation is unable to pay these expenses, it could lose the services of its asset management company, consultants, and other firms that are involved with its ongoing operations,” Kerney said.

Kerney said the Hilton’s application for American Rescue Plan funding was submitted to the city’s recovery office by the Baltimore Development Corp., a quasi-government entity overseeing economic development, on behalf of Baltimore Hotel Corp. .

Baltimore Development Corp. CEO Colin Tarbert declined to comment Wednesday on the additional city funding for the hotel or on the mayor’s comments about selling the property.

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Public support has been crucial to the Baltimore Hilton from its construction. Under a tool known as tax increment financing, commonly called a TIF, millions from the Inner Harbor Hilton’s property and hotel taxes are diverted to pay down debt. When the hotel is unable to cover those payments, the city is obligated under the terms of the bonding agreement to help.

Wednesday’s award is not the first time the city has granted federal pandemic aid to the local hotel industry, nor to the Baltimore Hilton. The Scott administration also earmarked $2.5 million in federal pandemic aid for Visit Baltimore. The organization then distributed the funds among 37 different hotels around Baltimore. According to a November report to City Council, that included a $242,595 grant to the Baltimore Hilton, which Kerney specified was a separate award from the funds approved Wednesday.

Even as the city has awarded money to hotels and the hospitality sector, the local industry’s recovery from the pandemic is mostly in line with other parts of the country, according to the real estate analytics group CoStar, which compiles data on the hotel industry.

Daryl Cronk, director of hospitality analytics for CoStar, said in a recent interview that while Baltimore’s regional market isn’t “a high flyer,” it’s performing fairly well. Across the Baltimore region, occupancy rates are running at 64% — up 1% from the year before and in line with national trends — while the city’s central business district has seen modest 3% growth in demand, Cronk said.

Scott expressed confidence Wednesday about the health of city’s tourism industry when asked whether he believes there’s a market for selling the troubled hotel. “We’ll see,” the mayor said.

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