Waiting for ruling, State Center developer is optimistic 

Posted: 6:00 pm Sun, April 17, 2011
By Melody Simmons
Daily Record Business Writer

While both sides await a ruling by a Baltimore City Circuit Court judge in a bitter court feud over the $1.5 billion redevelopment of State Center, the chief developer of the project said she remains committed to moving forward.

Caroline G. Moore, 47, CEO of Ekistics LLC, says her group was optimistic and continuing to expand its development plans four months after the project stalled because of a lawsuit filed in mid-December 2010 that charges the state Department of General Services failed to follow state procurement rules when it awarded the master developer contract.

“We are proceeding with some core elements of the projects,” Moore said in an interview last week. “For all intents and purposes, we’re ready to go.”

Moore and state officials filed a motion to dismiss the lawsuit early this year, and Judge Althea M. Handy heard three hours of sharp arguments April 6 at the Clarence M. Mitchell Jr. Courthouse.

The chief concern of the lawsuit centers on the alleged failure of the state to have conducted procurement for the developers, the construction or the leases for State Center — all of the various elements the law requires to be bid, according to Alan M. Rifkin, attorney for a group of downtown property owners who are suing DGS.

Christopher Patusky, director of the for the Maryland Department of Transportation’s Office of Real Estate, said a request for qualifications was sent out on Sept. 21, 2005, which he said was the project’s bidding.

Rifkin, however, disputed that.

“However ill-advised it may be for the state to spend over $1 billion to construct over a million of square feet of new and luxurious office space for state workers during a recession when there is over 2 million square feet of vacant office space in the city, the fact remains that the state was required to competitively bid the construction, the selection of the developers and the office leases and they didn’t,” Rifkin said. “It is undisputed that the state never conducted a procurement, much less competitive bidding.”

While the legal feud unfolds, the 1.5 million-square-foot development remains wedged in the cross hairs. Should the case move to trial, it could further delay the 15-year State Center redevelopment indefinitely as the downtown property owners attempt to regain footing in office and commercial leasing, now stunted by the recession and a 19 percent vacancy rate.

In the meantime, Moore said plans for Phase I of the redevelopment, which includes a $28.3 million underground parking garage with 928 spaces and an office building that will rise 12 stories above it, are being made.

C. William Struever, the original master developer who sold his “ownership rights” to Ekistics in 2009, has been rehired as a consultant on the project, Moore said. Moore, who worked for Struever for 23 years at Struever Bros., Eccles & Rouse, declined to say how much Struever had been paid for his ownership rights to the master development agreement or how much he is being paid as a consultant.

“That is private information,” she said, adding that Struever will continue to be a part of the State Center development, which Patusky did not dispute during an hour-long interview. “We will hire him as a consultant in any way he can provide consulting services to the team.”

Informed of Struever’s continuing participation in the massive redevelopment, Rifkin charged it smacked of “insider dealing.”

“If that’s true that Ekistics bought Struever’s interest out in this project, which they never competed for anyway and had no right to sell, then that will be another count in our lawsuit,” Rifkin said Friday. “This is the taxpayers’ money we are talking about. A taxpayer project. The procurement laws have to be followed. People can’t just sell their interest as a commodity.

“The procurement law was meant to prohibit just that kind of insider dealing.”

Moore said Ekistics official are continuing to plan the development from their offices in Brooklyn. Their focus is Phase I and the office building called simply “Building G.”

“Resilience is a great word,” Patusky said, of Moore’s public-private partnership, which has hired consultant Steve Kearney, a former top aide to Gov. Martin O’Malley who is now a specialist in a private “lobbying and public affairs practice,” Kearney O’Doherty Public Affairs LLC.

“The state will lease 390,000 square feet of the 405,000 square feet of that building,” Patusky said, “leaving 15,000 square feet available to private tenants.”

Ekistics LLC was formed in 2009, state records show. Moore declined to reveal names of the group’s board of directors, citing privacy concerns.

Moore, a Baltimore native and graduate of the Bryn Mawr School, is a third generation developer. Her father, C. Gordon Gilbert, and grandfather, Harry Gilbert, were real estate appraisers and developers in the metropolitan area.

Depending on how the lawsuit is resolved, Moore said Ekistics is poised to raise $20 million from the private market to begin construction of Phase I. A public bond sale, now on hold because of the legal fight, will also be held by the Maryland Economic Development Corp. to raise money for construction. Moore said she did not know what the total bond sale would be because it will include other costs for legal work.

Despite it all, she remains confident.

“I would love to be able to talk about something other than the allegations of this lawsuit,” she said.

Correction: An earlier version of this story incorrectly stated that Steve Kearney was part of the public-private partnership seeking to develop State Center. Kearney is a hired consultant on the project. The Daily Record regrets the error.