National Harbor project moves ahead

Gaylord, Prince George’s continue with $133 million expansion after reaching an 11th-hour agreement

Friday, July 21, 2006

Business and government leaders in Prince George’s County are pleased they didn’t kill the goose about to lay them a golden egg — after it was confirmed that Gaylord Entertainment is going forward with its 500-room, $133 million convention center hotel expansion at National Harbor.

The developer and the Prince George’s County Council reached an 11th hour agreement Tuesday on minority contracting requirements.

The agreement not only improves the county’s ability to provide opportunity for minority businesses, but it also secures the county’s place on the national scene as an attractive place for investors to do business, according to County Executive Jack B. Johnson (D).

The expansion is the largest hospitality project ever built in the county and a centerpiece of National Harbor, a $2 billion, 350-acre waterfront property in Oxon Hill.

‘‘We’re on to the business of this expansion,” Bennett Westbrook, Gaylord’s vice president for development, said late Tuesday, after hours of impassioned testimony and negotiation during the Council’s last full day before summer recess.

Kwasi G. Holman, president and CEO of the Prince George’s County Economic Development Corp. in Largo, said the compromise was a ‘‘win-win for the county.”

‘‘We’re looking forward to working with the minority businesses to make sure they have all the necessary resources to be successful,” Holman said.

J. Aaron Warren, president of the Minority Building Industry Association in Upper Marlboro, said he plans to put in a contract for Warren Brothers International to build homes at National Harbor.

‘‘It is the first big project to set the tone for other projects coming into Prince George’s County,” Warren said of the harbor.

Arthur A. Turner, Jr., chairman of the Prince George’s Chamber of Commerce’s economic development committee, said the compromise ushers in a new way of doing business in the county. Historically, minority contractors would be regulated to landscaping and janitorial services. With this deal, minority entrepreneurs could help build the project, he said.

‘‘This process has shown that the grassroots community activism really works,” Turner said. ‘‘Doing business the old way is dead. Historically, minorities didn’t participate, and they did not contract. We have changed the scope of discussion and changed the paradigm.”

Gaylord had threatened to abandon the expansion last week in a letter to Council Chairman Thomas E. Dernoga (D-Dist. 1) of Laurel. The impasse arose after the Council refused to budge on new requirements that at least 15 percent of the contracts at the project go to minority-owned companies or Gaylord would forfeit part of $50 million in county-backed bond money.

But Gaylord, the Council and Johnson were satisfied with the final deal.

‘‘I’m really excited about what happened ... this was a good day,” Johnson said.

Under the compromise, at least 15 percent of the contracts for the expansion would still have to be with minority-owned companies in order for Gaylord to receive the $50 million in bond funding from the county. The key part of the compromise was a revised provision that would penalize Gaylord up to $21 million over 30 years for failing to meet that requirement. The size of the penalty is much steeper than the $9 million fine tied to the original proposal, but it would not be tied to the bond funds.

Gaylord asked that the penalty not be tied to the bond money itself, so as to make the bonds more marketable. Westbrook called the council’s earlier actions ‘‘punitive, unfair and at odds with what we each bargained for.”

The compromise marked a change for the council. Gaylord was previously tied to requirements that 20 percent of the contracts be with local- and minority-owned businesses, with about 11 percent going to just minority businesses. That was for the original hotel and convention center.

But the council last month upped the required minority contracting percentage for the 500-room expansion to 20 percent, later bumping that down to 15 percent. The controversy came when the Council set a new penalty, and tied it to the bond money itself.

Johnson, Dernoga and Westbrook said the disagreement was over the penalty, and not over the percentages.

‘‘On the substance of the matter, everybody was really in agreement,” Dernoga said. He added that he does not even expect the $21 million penalty to have to come into play.

The debate brought about 35 speakers to testify, including Johnson and Westbrook, and on the other side, former County Executive Wayne K. Curry and Johnson’s political opponent Rushern Baker.

Some tried to call Gaylord’s bluff, claiming the developer would never back out. Others feared Tuesday’s decision could spell doom for the project, and the county’s reputation.

Johnson urged the Council to amend its proposal and keep the project alive.

‘‘This project is absolutely critical to the health and the vibrancy of this county,” Johnson said.

The 500-room addition is expected to yield $157 million in taxes over 30 years, as well as construction jobs and 200 permanent hotel jobs. The project would also trigger a $1 million grant to Prince George’s Community College for a hospitality program.

Gaylord and the county announced in February that the 1,500-room hotel and convention would be expanded to 2,000 rooms.

Councilman David C. Harrington (D-Dist. 5) of Cheverly said the agreement over minority contracting will set a precedent for future developments that involve public money.

‘‘The principle was held that public money needs public involvement,” Harrington said.

Staff Writer Marcus Moore contributed to this report.