Since the pandemic struck and hotel stays in downtown Baltimore took a dive, city taxpayers have been paying to prop up the Hilton Baltimore Inner Harbor hotel to the tune of millions of dollars annually.

This week, Baltimore leaders will consider spending nearly $1 million more.

The city’s Board of Estimates is set to vote Wednesday on a grant of $989,000 of American Rescue Plan Act funds to the Baltimore Hotel Corp. for use at the struggling city-owned hotel adjacent to the convention center and ballpark. The money was needed in the wake of the coronavirus pandemic, which “greatly impacted” the hotel, according to the agenda.

The funding, which will come from the city’s $640 million federal allocation from the American Rescue Plan Act, was awarded in October, but still requires Board of Estimates approval.

Shamiah Kerney, head of the city’s Office of Recovery Programs that awards and distributes Baltimore’s ARPA funds, said the Baltimore Development Corp. applied for the funding on behalf of the hotel. The BDC, the city’s quasi-public economic development arm, oversees the city-controlled corporation that owns the hotel and was founded when it was built. BDC issues payments and performs other duties for the hotel, she said.

During the pandemic, the hotel temporarily closed and received no revenue for nearly a year beginning in April 2020, Kerney said. During that time, the hotel temporarily operated as a field hospital. While the hotel reopened in April 2021, it has continued to operate at a “significant deficit” and face financial pressures since tourism has not returned to pre-pandemic levels, she said

Kerney said the money will be used for asset management, consulting, audits, legal fees and other costs outlined in the Board of Estimates agenda.

“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 told The Baltimore Sun.

The Baltimore Development Corp. did not respond to multiple requests for interviews with The Sun.

The latest spending comes in addition to annual payments Baltimore has been making to support the hotel and its debt payments in particular. Baltimore has now paid at least $23 million to cover hotel debt service during the pandemic, including a $7 million payment built into the city’s fiscal year 2024 budget.

Those payments are required under an agreement struck when the city built the 757-room hotel in the mid-2000s.

About $300 million was borrowed in bonds at the time to fund the construction of the West Pratt Street hotel overlooking Oriole Park at Camden Yards. That debt was refinanced in 2017 and is now due to be repaid by 2047.

Based on the terms of that borrowing, the city is required to pitch in money if the Baltimore Hilton cannot cover its bond payments. Since fiscal year 2022, Baltimore has contributed the maximum $7 million payment toward the debt service annually.

“Hotel occupancy rates are growing, but are still not anticipated to exceed pre-pandemic levels in fiscal 2024,” the city’s budget book states.

City finance officials did not respond to questions about the debt service payments.

Built with the intent to lure more business to the convention center next door, the hotel struggled under the weight of its debt even before the pandemic, losing millions of dollars. After the 2017 refinancing, the hotel continued to perform below projections, but it was eking out a profit. Then the pandemic came.

The hotel received about $3.5 million in COVID relief money over the course of the pandemic, most of which originated from the federal government, Colin Tarbert, executive director of the Baltimore Development Corp. told The Sun previously. The Baltimore Hilton received $225,000 from a state fund that was geared toward small and boutique hotels.

The hotel has struggled in spite of the benefits it receives as a result of being publicly owned.

Privately owned hotels pay property and hotel occupancy taxes to the city, but the Baltimore Hilton diverts millions of dollars of those taxes to pay down its debt through an arrangement called tax increment financing — or TIF bonds.