Developers set to purchase Superblock property for less than $3M

Developers of the Superblock project downtown are set to purchase the property from the city Wednesday for $12.2 million — less a credit of nearly $9.3 million.

That makes the sale price that the Board of Estimates will be asked to approve just $2.85 million.

In its final meeting of 2012, the board — consisting of the mayor, comptroller and president of the City Council — is expected to vote on the proposed sale to Lexington Square Partners LLC of the Superblock, which occupies nearly four acres of the downtown West Side.

The proposed sale price includes two credits from the city for the developers, one for $2.45 million in settlement costs and another for $6.9 million in demolition costs.

In addition, the board will vote on a request by the developers to extend the development agreement another six months, until June 30, 2013, so they can obtain financing. It would be the fourth extension of the agreement granted by the Board of Estimates.

“This project has been stymied with numerous lawsuits and the perils of the economic recession of the past few years,” the board agenda states. “The developer believes that this extension will be the last one that is necessary in order to secure financing for the project. It will continue to be a condition of settlement and conveyance of the site that the developer provides the city with satisfactory evidence of the existence of financing for the project.”

City Councilman Carl Stokes, whose Taxation, Finance and Economic Development Committee has studied the proposed Superblock development, said Tuesday he was unaware of the newly calculated purchase price for the property that included the credits.

“I have not seen the agreement yet,” Stokes said. “We’re waiting to see the agreement from the Law Department.”

Joann T. Logan, a spokeswoman for the Baltimore Development Corp., said in an email Tuesday that the BDC, the city’s quasi-public development arm, would not comment on the proposed sales price before the Board of Estimates meeting.

When completed, the Superblock is expected to have 296 apartments, a 650-space parking garage, a boutique hotel and 217,444 square feet of retail space. The development is estimated to attract 652 jobs.

Last month, a City Council committee approved $22.1 million in tax breaks for the developers in the form of a payment in lieu of taxes, or PILOT, for the $152 million project.

The 20-year PILOT was later approved by the entire City Council and includes a profit-sharing agreement between the developers and the city, housing for low-income residents and an agreement that city residents be hired to work on construction.

An official of Lexington Square Partners told the council committee that financing for the Superblock could not be obtained without the PILOT.

Under the terms of the PILOT, the developers would receive a 95 percent reduction in city property taxes for the first 15 years and incremental reduced rates for the next five years.

The development has been in the planning stages for more than a decade. It is bounded by Howard, Fayette and Lexington streets and Park Avenue in what was once a bustling downtown shopping district.

But that area has fallen into disrepair over the past 10 years as the properties, bought by the city in anticipation of the redevelopment, became rotten and blighted because of neglect. In response, the assessed property value dropped to $12.2 million from the original assessment of $21.6 million. The appraisal drop was first reported on the Baltimore Brew news website.

The developers have told city officials that construction could begin in mid-2013.