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Construction expected to begin next month for $184M facility at EBDI

State officials have awarded a $170 million contract to Turner Construction Co. to build a new lab for the state Department of Health and Mental Hygiene at the 88-acre East Baltimore Development Inc. site in Middle East.

Construction is expected to begin next month, said Robert C. Brennan, executive director of the Maryland Economic Development Corp., the state’s development agency, which closed on the sale of state bonds last week to finance the project. The total cost of the new lab is expected to be about $184 million.

“We expect them to be on site in January and construction activity to begin in January,” Brennan said. “Our plan is to have this baby open by the end of the second quarter of 2014.”

Turner Construction, headquartered in New York, was one of three bidders for the project, Brennan said. The others were Colorado-based Hensel Phelps Construction Co. and Baltimore-based Barton Malow Co.

Brennan said Turner submitted the low bid, but Michael A. Gaines, assistant secretary for real estate for the state Department of General Services, declined to confirm that.

“Their total proposal was the most competitive,” Gaines said. “After considering all factors in the procurement, they were selected as the most competitive.”

Those factors included cost, minority inclusion in the project and “the fact that they had experience in the critical areas important for the Health Department lab,” Gaines said.

Brennan said DGS and MEDCO officials voted for Turner’s bid, while Forest City-New East Baltimore Partnership, the master developer at the EBDI site, voted against it.

He said there was debate over the scope of Turner’s past minority inclusion patterns at the EBDI site. To remedy that, Brennan said, MEDCO planned to hire an independent monitor to ensure that minority participation was 35 percent of the job.

City Councilman Carl Stokes, whose 12th District encompasses a portion of the EBDI site, said Tuesday he was not in favor of awarding the DHMH lab contract to Turner Contracting because it had bungled efforts at minority hiring at another project at the EBDI site, a 1,400-space, $30 million parking garage now underway.

The minority hiring issue has been a flashpoint in the $1.8 billion project, now a decade old. Last week, more than 300 East Baltimore residents, many of them poor and unemployed, gathered in a church to demand inclusion in construction hiring.

“We are against the award to Turner because Turner’s past performance record is abysmal,” Stokes said. “The state argued that Turner had more experience in building labs — and that’s not true.”

Stokes said Forest City executives vetoed a list of minority- and woman-owned subcontractors submitted by Turner for the parking garage because they were not local. The 10-story project, next to a new $60 million, 20-story graduate student tower for Johns Hopkins University students, broke ground this summer and is expected to be completed in mid-2012.

Chris McFadden, vice president for communications at Turner Construction, said in a statement that his firm “is proud of our long-term commitment to the utilization of minority and woman owned contracting firms on our projects. We have a record of success in exceeding aggressive goals on our projects. On the garage project, Turner and our partners are meeting or exceeding the local, minority and women owned business contracting goals for the project.”

Scott Levitan, senior vice president of Forest City-NEBP, did not return a call seeking comment.

Christopher Shea, CEO of EBDI, declined to comment, saying in an email that EBDI had no role in the selection of the contractor for the DHMH lab.

Brennan said state officials have met with Stokes and other local elected officials about the minority-inclusion goals and plan to be vigilant about minority hiring for the DHMH lab project.

The city’s requirement of 35 percent minority participation is higher than the state’s requirement of 25 percent, he said, and the focus at the EBDI site is to hire from current and former residents of Middle East and other small businesses in certain East Baltimore ZIP codes.

“This is over and above what you’ll see in a normal inclusion plan,” Brennan said. “We have met with all other respondents to reinforce that we have this unique requirement for this project. We’re taking it very seriously, and we believe that our contractor will do a stellar job and exceed expectations when we get to the end.”

Brennan described Turner’s problems with minority hiring at the garage project as a “hiccup.”

“What we were hearing is that they stumbled coming out of the blocks,” he said. “We also heard they recovered. And we’ve discussed this in depth with Turner, and I understand they had a learning curve.

“I feel that they have listened to us, and they understand what our requirements are, and they understand our goals and the importance of inclusion of this project.”

EBDI is a nonprofit created in 2002 to develop the project. So far, it has spent more than $564 million, $212.6 million of it in public funds.

The original plan was to create a world-class biotech park linked to Johns Hopkins Hospital, which is just to the south of the development site. Plans called to relocate 732 households, and so far, 669 homes and other buildings have been demolished with another 700 ready to come down.

Only one life sciences building has opened, the John G. Rangos Sr. building in 2008, and it is not fully leased. In 2009, Gov. Martin O’Malley directed the state DHMH lab to move to the EBDI site on Ashland Avenue near Broadway that was originally cleared for a private biotech building.

The city had sold tax increment financing bonds to spur development of the new biotech park there, but without property tax revenue to repay the bonds, the state Board of Public Works this summer voted to fund a payment in lieu of taxes for the site in the amount of $725,000 annually through 2024 for a total of $18.1 million.

In addition, terms call for the state to lease the five-story lab’s 234,000 square feet from MEDCO at a cost of $65.38 per square foot for the 20-year term of the revenue bond repayment. The annual base rent will be $15.3 million, state records show.

In the meantime, the plans for further life sciences development at the site have stalled amid the recession and changes to the EBDI master plan.

This summer, EBDI and Forest City officials proposed a third version of the master plan that calls for a large urban park, retail, a hotel and new market-rate housing units at the site. A new public school is also planned.