BDC, Gateway South reach $1.2M settlement on Baltimore slots facility

Daily Record Business Writer//June 21, 2011

BDC, Gateway South reach $1.2M settlement on Baltimore slots facility

By Rachel Bernstein

//Daily Record Business Writer

//June 21, 2011

The Baltimore Development Corp., the Baltimore City Law Department and Gateway South LLC announced a $1.2 million settlement Tuesday that helps clear the way for a new slots facility near M&T Bank Stadium.

The agreement confirms that Gateway South will not seek development rights on the proposed slots site, which removes a potential legal hurdle to the city’s efforts in bringing slots to Baltimore.

Gateway South asked city officials in March for $4 million, money the entity said it was owed when the BDC on behalf of the city canceled an agreement to sell it an 11-acre site by Warner and Russell streets.

In 2007, BDC awarded Gateway South and Rockville-based Cormony Development LLC exclusive negotiating rights for the redevelopment of the site on the Middle Branch of the Patapsco River.

That property later became part of a preferred parcel in the slots process.

Because of the ambiguity of the agreement’s wording and “generous cost reimbursement provision,” Gateway South claimed it was due the $4 million, according to city documents.

As part of the settlement agreement, Gateway South will be paid for the designs, site engineering, environmental studies and other work related to the project.

In return, Gateway South will give the city all reports, investigations, engineering and architectural work products, appraisals, marketing studies, environmental assessments, legal work and other associated documents.

BDC President M.J. “Jay” Brodie said that the difference between $4 million and the settlement of $1.2 million was because Gateway South’s partners believed the documents and studies were worth more than they actually were.

“The deliverables have real value to the city,” Brodie said. “There were lots of studies. … It’s not simply writing a check to a developer.”

Brodie said the settlement came after a series of meetings.

“We appreciate the Gateway South Team’s effort first in working to make their development proposal come to fruition, and then as the terrain shifted, to work with us to resolve this matter in a way that helps the city move forward without any perceived legal encumbrances on the [Video Lottery Terminal] development site,” said Baltimore City Solicitor George Nilson in a statement.

The development team was led by Managing Director Samuel Polakoff. The 2007 plans included 1 million square feet of Class A office space, a transportation terminal, 100,000 square feet of retail and restaurant space, and a sports and recreation complex.

One of the project’s partners, Baltimore Ravens linebacker Ray Lewis’ Team 52 Development LLC, planned to create a headquarters for the Ray Lewis Foundation. The athletic facility would have been available for at-risk youth.

The project was to have cost between $200 million and $250 million.

“While we are disappointed that we will not have the opportunity to see the completion of the Gateway South project we had proposed, it was important for us to work with the city to allow the citizens of Baltimore to benefit from the impact that a [Video Lottery Terminal] facility could have on reducing property taxes and education funding,” Polakoff said in a statement.

The settlement is scheduled to be voted on Wednesday by the Baltimore City Board of Estimates.

Baltimore’s slots parlor would be the second-largest in the state with 3,750 slot machines. Proposals for the Baltimore project are due July 28.


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