The oprylands hotel deal is in trouble, but the hotel operators and the state are still on the hook for tens of millions of dollars, and they are still counting on taxpayers to help.
The state of Maryland has agreed to pay the entire cost of the opyrland hotel deal, which is expected to reach $1.6 billion by 2021.
The agreement, which was announced Wednesday by Gov.
Larry Hogan, also includes an additional $2.5 billion in bonding authority and a $2 billion credit guarantee for the state to repay.
That means that if the state doesn’t find another source of financing to help finance the deal by 2021, the entire state will be on the line.
“The opry land hotel deal has been negotiated and approved by the Maryland General Assembly, and we expect the state will fully repay its obligation to the federal government for the debt owed to the state,” Hogan’s press secretary, Alex Conant, said in a statement.
The opyrlands deal is among the biggest in recent years for state taxpayers.
It includes more than $1 billion in tax credits for the hotel industry.
The hotels are in the Baltimore metropolitan area, a major center of tourism, and the oproylands is the second-largest hotel chain in the United States, after Hilton Worldwide.
The hotel companies, whose profits are built on their occupancy of the region’s hotels, had already pledged to provide the state with an additional 1 million square feet of space for use by local businesses, as well as $100 million to build more than 1,000 hotel rooms.
The deal, however, will require the state, the Baltimore County government and a county-owned hotel to pay back $1,300 in bonds and other expenses incurred during the negotiation process.
The bonds will be repaid in 2031, when the hotels’ occupancy rates are expected to rise above 70 percent.
But that could change if the hotel companies decide to raise their occupancy rates or cut back on their services to the region.
“I don’t think we’re going to see that happen, and that’s why I think this deal is important,” said Jim Muehlenberg, the managing director of the Baltimore office of consultants firm Dyson & Associates.
“If they want to continue to operate the oprayland hotels, I think that they should be able to do that and continue to generate revenue for Maryland.
But if they can’t, then they should have to come to an arrangement with the state.”
The state will also have to pay $500 million in bonds to the hotel and hotel-related businesses to build out facilities in Baltimore, Maryland and the District of Columbia.
Muehlberg said the debt would be repaid through the end of 2021.
“We have to do this to save our state money,” he said.
“But we also have a responsibility to the people of the state of which we’re a part to make sure they are being paid for the work that they’re doing.”
The Maryland General Land Office is in charge of the agreement and will decide whether to seek the state’s approval.
But some observers believe that if they do, the state could face a major financial crisis.
“A failure to come up with a sustainable debt plan could be catastrophic,” said Steve Korn, a senior fellow at the Center for a New American Security and an expert on debt and sovereign wealth.
“There are real questions about how much the state can afford to pay in interest.”
But Hogan said that the state would work with the county to find an alternative financing mechanism.
“This is a significant, major undertaking, and I look forward to working with the County to help get it done,” Hogan said.