Economic Growth

So Why Exactly Does Baltimore Own a Money-Losing Hilton?

Current and former politicians prefer cutting real estate deals to doing the less sexy work of basic civic governance

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We're all very proud. ||| Hilton
Hilton

In the comments of my previous post on Baltimore's corporate welfare-tastic Camden Yards, Plàya Manhattan wrote: "No mention of the City of Baltimore owned Hilton?… It only lost $5.6 million last year. That's practically making money!"

And OMG it's true. Here's The Baltimore Sun from three weeks back:

The city-owned Hilton Baltimore convention center hotel lost $5.6 million last year — a worse performance than 2013 despite its close location to Camden Yards and the Orioles' playoff run.

It was the seventh consecutive year that the hotel has underperformed financially, according to an audit of financial statements presented Wednesday to the city's Board of Estimates. Under the deal's initial projections, the hotel was supposed to be making $7 million in profit by now — pumping that mone into the city's budget.

Well, I hope we can at least blame a current presidential candidate. Oh look, we can!

The 757-room convention center hotel opened in August 2008, two years after then-Mayor Martin O'Malley and the City Council authorized more than $300 million in tax-exempt bonds to finance its construction. The interest rates on the bonds range from 4.6 percent to nearly 5.9 percent. The hotel paid $15.6 million in interest last year.

The hotel has lost more than $70 million since it opened.

Look, the economics on this stuff is not obscure. Reason was writing about the well-documented "municipal money pits" of publicly financed  convention centers in 2002. A search through our archives on "convention center" and "subsidies" begins spitting out stuff in early 1980s. Wasting money on government capitalism is a deliberate, conscious choice, one that does material damage to polities. Every dollar, every ounce of managerial effort wasted on these boondoggles is an energy unit not expended covering the basics—public safety, protecting citizens' rights, a clear and hopefully low-hassle regulatory and tax climate that allows individuals and businesses to create their own success, and so on.

But don't you people realize how HARD the mayor worked? |||

Baltimore Mayor Stephanie Rawlings-Blake, in the wake of rioters destroying a local drug store, lamented "how hard we fought to get a CVS to invest into this neighborhood." While the mayor's grief and frustration in a very difficult situation is more than understandable, the underlying policy is not. City halls shouldn't be fighting to get individual stores built; they should be creating the conditions in which many stores get built, and many people want to live, rather than flee. And among those conditions in Baltimore most urgently in need of attention is police reform

I had some similar thoughts in a 2008 column titled "City of Rats: 'Thinking big' at the municipal level means abandoning the basics."

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  1. “government capitalism” = crapitalism

  2. Check the editing on this article, it is a bit disjointed.

    1. OK much better.

  3. cut and paste editing fail

  4. Pl?ya Manhattan wrote: “No mention of the City of Baltimore owned Hilton?… It only lost $5.6 million last year. That’s practically making money!”

    Fuck that attention whore!

    1. And his stupid large cell phone.

    2. I’m star stuck.

      Now that I have a little taste of the good life, I’ve changed for the worse.

      1. Don’t let it go to your head. You’ll never be the worst.

        1. Nikki has a lifetime hold on that title, right?

          1. I’m awful, but I’ll never be the worst.

      2. Be sure and lord it over our loveable FoE.

        Raise the bar.

      3. As an old-timer here, I can tell you you ain’t shit until you get five (5) hat tips.

        1. *hopes that whatever number I make up is higher than Playa has*

          1. My last hat tip turned into a request for a booze brunch. That counts as 5 hat tips.

  5. Look, the economics on this stuff is not obscure. Reason was writing about the well-documented “municipal money pits” of publicly financed conve

    Waiting for other shoe to drop…

    1. Convents? Conversions? Convection stoves? Don’t leave us in suspense!

      1. More like %$@^%$@ NO CARRIER

        I think the NSA got to him before he could finish.

      2. Publicly financed convents have turned out to be real money makers for a number of communities. Provided, that is, the nuns in them make lesbian porn videos and prostitute themselves out to lapsed catholics.

  6. 1%!!!! Deregulation!!!!! Fatcat Rethuglicans!!!!!

  7. More than just cronyism, I honestly think the people who gravitate towards government do not understand how inaction on their part can create jobs. It goes against their nature as politicians to not want to take credit for growth and development, which to them involves taking action towards those ends.

    1. Their concern for job creation could be stuffed up a mosquitoes ass with no discomfort at all for the mosquito.

      They buy their position with contracts, grants, loans, to cronies. They bought the hotel so they could hand out positions to the idiot cousins of their cronies. What do you want to bet they have five people per room for cleaning and maintenance, less than half of whom never set foot in the building? Their entire mentality is corruption and graft. They can’t see anything else.

    2. Additionally, they are incentivized (?) to action. There is a real “Don’t just stand there, DO SOMETHING!” mentality throughout much of the electorate and ALL of the press. A politician who “tries” something, even something incredibly stupid, will be subjevt to far less criticism than one who does nothing.

  8. Oh, and no one has said it yet? I’m ashamed, Reasonoids:

    NOTHING LEFT TO CUT!

    1. You mean like this?

      Reason was writing about the well-documented “municipal money pits” of publicly financed conve

  9. Meh. Shooting fish in a barrel.

    Can anyone find an example of this kind of operation that actually makes money? I seem to recall mention of a state owned casino….a casino for fuck’s sake….that never made money. If you can’t make money with a casino, you can’t make money.

    No matter how bad, how inefficient, corrupt and incompetent you think government is, it is worse.

    1. Just as I said, it is worse. I looked to see if I could find that casino and there are tons of them.

      On one article I found this comment:

      “Charles Cohen, CEO & co-founder of Probability plc, the world’s leading designer and operator of gambling games for mobile devices.

      “It takes a special kind of business genius to go bust running a Casino.”

    2. If any government operation made money, the politicians would either reform it to halt the embarassment, or privatize it to their cronies.

    3. This may not be true, but I heard a story about the IRS seizing a brothel in Nevada and trying to run it. They shut down within six months. Moral of the story: The government couldn’t turn a profit selling pussy and booze to truck drivers.

      1. It’s not true:

        Contrary to a popular urban legend circulated by email, the Mustang Ranch was never operated by the US government.

        The government auctioned it off to raise money.

    4. The Federal government of Canada owns a large parcel of land in Vancouver. On the water abutting a cool and hip new residential community. Right across from the edge of downtown. The property was about 100 old delapidated industrial buildings. They formed a Trust and leased the buildings to private developers to run a collection of markets, funky restaurants, artist communes, and so on. Absolutely packed from day one. High rents. No vacancies. All the developers put money into refurbishing the buildings. No capital expenditures to speak of for the Federal Government. Actually, a great idea, which in and of itself is amazing.

      Virtually impossible to lose money on. But, they do. I don’t think it has ever turned a profit. I think it has a staff of about 100 in Ottawa living off it, and another 100 in Vancouver. I could run it with a staff of about 5 people.

  10. Of course it loses money! That’s why it helps the city. If it made money, that means they’re taking advantage of their customers. /prog

  11. Wow the hat-tippiest hat tip EVAR!

    1. How will they ever follow it up?

      1. Top-hat tip. It’s the way of a gentleman.

      2. Professional Portraits?

        I need to update mine.

  12. But Martin O’Malley looks good with his shirt off! Pay attention to the facts.

    1. Putin of the West?

    2. Interesting that he returned to see the results of his handiwork.

  13. This would be a good time to trot out the “Reason Saves Cleveland” video where Drew and The Jacket met with Cleveland City Council members. Their only argument was “well, if you want to open a business here, all you have to do is contact my office!!” As if that’s, like, a good thing.

    1. The link on reason.com gave me a 404, so here’s a transcript.

      1. Does someone have a little hat tip envy?

        1. I’ve had two hat tips, so…..

          1. (raises monocle)

            HARUMPH I SAY.

    2. Their only argument was “well, if you want to open a business here, all you have to do is contact my office!!”

      How did I miss that completely naked corruption?

  14. Sort of OT: Dailykos says Hillary is absolutely about criminal justice reform while Rand is just posturing

    While Hillary Clinton has not just given a sound bite on Freddie Gray and Baltimore but has spoken in depth on policing reform and mass incarceration, the Republican presidential candidates have struggled to strike the right note.
    Sen. Rand Paul took a break from posturing as the Republican who cares about equal justice to joke that he was glad his train hadn’t stopped while passing through Baltimore Monday night.

    Wow, just wow

    1. Rand Paul, a republican, is just lying to get your vote. That is what republicans do. They are racist liars.

      Hillary Clinton, on the other hand, is a bastion of honesty and really cares about the common man.

    2. I am waiting for a repeat on the reporting of the Canklebeast joking that this kind of reform would never take place because there is too much money in it. It being the drug war.

      Naturally that is the person the Dems want to lead the charge for reform.

      1. Excuse me, we are not allowed to comment on Secretary Clinton’s appearance. Thank you.

        1. You mean Failed Primary Candidate Clinton.

    3. The comments are even better

      What today’s authoritarians believe can be summed up with two notions:

      Lying and getting away with it makes you stronger.
      It also makes your victims weaker.

      Today’s Republicans believe that they are a predator class. You are the prey.
      One part Social Darwinism, one part the psychopathic tart, Ayn Rand. And yes, they hate anyone with religious convictions such as oppose lying, cheating, stealing, and killing.

      What is this, I don’t even…

      1. “And yes, they hate anyone with religious convictions such as oppose lying, cheating, stealing, and killing.”

        Yes, if there’s one thing Republicans hate it’s religion. He’s got those fuckers pegged.

      2. Lying and getting away with it makes you stronger.
        It also makes your victims weaker.

        But enough about Hillary.

    4. Rand Paul’s been talking about this since before his first senatorial run. Hillary Clinton started pretending to care about it as a means of undercutting her leftist opponents by eating into their base of support.

      Anyone who can pretend Paul is the one pandering in this situation is delusional.

      1. Daily Kos delusional? Pish posh! Next you’ll be telling me that water is wet and the sun rises in the east!

  15. Statists make Frankenstein look like a documentary. They stifle, suffocate, and dismember markets, panic when the economy stumbles, throw random pieces together, apply external stimuli, and proclaim success at the first twitch. They impress themselves and the rubes but have no more idea of what they are doing than astrologers trying to ape science with jargon, formulas, charts, and computers. They bark whatever orders pop into their heads with as much comprehension and accountability as actors following scripts; they are cargo cultists, Easter Islanders, faux-economists who believe incentives work for sin taxes but not other taxes or market interference. They have no grasp on reality, acting as if they can solve problems entirely by passing laws, regardless of consequences, and when the inevitable unexpected consequences do arise, they see no connection with previous laws, only opportunities for new laws.

  16. Sorry about the weird lopping-off bits & so on. Should be all fixed now.

    1. Matt, Matt, Matt …. you are undercutting the faithful. Not only do you suddenly make a lot of comments look out of place, you take away the one fun thing today that isn’t the usual political nutpunch.

      I despair for the younger generation, with all their aspirations taken away with a few UNDOs and PASTEs.

  17. What do you figure the payroll is? You can pay a lot of housekeepers and laundy personnel for $5.6M. Even with bennies, you gotta figure that’s about 120 full-time jobs for cleanliness facilitators.

    1. I looked at the article that was linked and they said there are 400 ‘jobs created.’ Of course, it’s impossible to know the percentage of those that are full time.

      Even if they’re all full time, that means the city is losing $17,500 annually for every job created. Brilliant.

      1. Whatever, N00B, you have to spend money to lose money.

  18. If anyone wants to see the empty stadium, MLB.com is showing the game online for free

    http://mlb.mlb.com/shared/flas…..type=video

  19. Semi ON topic, speaking of public boondoggles:

    Streetcar ridership, revenue still off track

    The S.L.U.T. is turning out to be one draining relationship.

    That’s the name, bequeathed by the people, for what officials blandly call the South Lake Union Streetcar. For seven years now, electric trolleys have been ambling on a 1.3-mile track from downtown through the bustling Amazon jungle.

    Yet despite its boomtown surroundings, the streetcar needs another bailout to keep going.

    It will be the third rescue in seven years.

    “Ridership levels and sponsorship revenues on the South Lake Union Streetcar have been less than the forecast amounts, resulting in operating cash flow challenges,” reads the budget pleading from Mayor Ed Murray.

    Not less than MY forecast amounts!

    Once again, the 19th century idea turns out to be ineffective because the conditions aren’t the same as they were in the fucking 19th century.

    Who could have predicted this… I mean, besides anyone who paid attention?

    http://www.seattletimes.com/se…..off-track/

    1. Yet every “smart growth” policy across the country — and these are embraced by all the soi-disant experts as the way all metropolitian areas must progress — is based on concentrating high-density housing near train stations.

      Somehow in the future, all housing will be above one station, and all jobs will be above another station. And in the surrounding areas, everyone will be smiling, riding bicycles and enjoying outdoor cafes where the roads used to be. If you don’t believe me, google image ‘transit village’ and see all the pretty drawings. (Note, however, it’s always pretty drawings of the future, they never show actual pictures of these transit villages once complete because they are almost always disasters).

      1. But to accommodate bicycles & outdoor cafes in winter, is a climate-controlled dome part of it?

    2. I don’t know Seattle – does it connect anything that people want to visit? Because I recall from living in SF the historical streetcar running down Market Street being a wild success. Not to mention the cable cars. There they go with their 19th century technology again.

      1. Heh…like the Bronx Trolley, which is a bus made to look like a trolley car, making a circuit of tourist destinations.

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