A group of downtown property owners is seeking to halt the massive $1.5 billion redevelopment of State Center by claiming the state failed to follow its own procurement rules in hiring a developer for the project.
A lawsuit filed Friday in Baltimore City Circuit Court claims that the state Department of General Services did not seek competitive bidding in 2005 when master developers for the 15-year project were named.
The lawsuit also charges that if the State Center project moves forward creating 1.5 million square feet of commercial and office space near Preston Street and Martin Luther King Boulevard, the impact will render the central business district nearly void.
Office space in that district — which includes nearly 700,000 square-feet of state-leased space — is presently struggling under a vacancy rate of 2 million square feet, or nearly 25 percent, due mostly to the recession’s tight grip on commercial real estate.
Should the state-leased office space move to new offices in State Center, it would cause massive vacancies throughout the central business district, and the area “cannot remain viable” the lawsuit charges.
Those state offices include the Attorney General’s office and the Maryland Transit Administration.
“This project is not in the best interest of the state and the city,” said Alan M. Rifkin, attorney for the property owners and a prominent state lobbyist. “The boondoggle of all this is extraordinary from any perspective.”
Property owners suing the state include St. Paul Plaza Office Tower LLC; Lexington Charles Limited Partnership; 301 Charles Street LLC; Park Charles Apartments Associates LLC; Park Charles Office Associates LLC; 501 St. Paul Street LLC; St. Paul & Franklin LLC; RoboPark LLC; Charles Plaza LLC; 39 W. Lexington LLC; Baltimore Condo 2-8 LLC; Fayette Garage LLC; Charles Towers LLC; The Marlboro Classic LP and Redwood Square Apartments LP.
Caroline Moore, CEO of Ekistics, LLC, the Baltimore-based master developer of the State Center project, declined to comment on the lawsuit this morning.
“We just received notice of it,” Moore said. “I haven’t reviewed it yet. I have no comment.”
Maryland Department of General Services Assistant Secretary Michael Gaines said through an assistant this morning that he had no comment on the lawsuit because he had not seen the court filing.
Rifkin said attorney Peter G. Angelos, owner of the Baltimore Orioles and a property owner in the central business district whose staff has scrutinized the State Center project this past year, was not a plaintiff.
The State Center development will be a public and private partnership, state officials have said.
The state planners of the project have set it up to draw on $314 million in tax increment financing — or taxpayer-backed bonds sold by the city to help finance the project. Those bonds, called TIFs, are structured for repayment over a specific time period based on projected increased property values that the development will bring.
Under the TIF plan, the bonds are repaid through diverted property taxes, and the city tax base receives nothing for the term of the repayment.
Other State Center financing includes state funds, city funds and private sources, development documents show.
The project is expected to begin early next year with construction of a parking garage. Its history has been wobbly.
The original developers of State Center, Struever Bros, Eccles and Rouse and Doracon Contracting, have both scaled back their work in Maryland based on the recession and a corruption scandal involving former Mayor Sheila Dixon, respectively.
Struever Bros., Eccles & Rouse withdrew as the master developer in 2008, and Doracon owner Ronald Lipscomb, Dixon’s former boyfriend, has moved his business away from Maryland as a result of the scandal, which was a factor that led to Dixon’s resignation from office on Feb. 4.
The state has replaced both developers with Ekistics LLC, a new local development firm headed by Caroline Moore, a former Struever executive.
The lawsuit seeks to have the State Center project halted through an injunction, Rifkin said, because of the plaintiff’s claims that procurement procedures were not followed.