Please ensure Javascript is enabled for purposes of website accessibility

Judge voids State Center development contract

A Baltimore City Circuit Court judge has prevented the proposed $1.5 billion redevelopment of State Center in Baltimore from going forward.

Judge Althea M. Handy ruled Thursday that the State Center project should have been competitively bid and that the state failed to do so, in violation of the procurement laws of Maryland.

As a result, the Master Development Contract and the ground leases for the proposed project are void, she ruled.

Alan Rifkin, of Rifkin, Livingston, Levitan & Silver LLC, who represents the businesses challenging the project, said in a telephone interview Thursday that the ruling clearly prevents the redevelopment from going forward.

“It was the largest state project in recent memory and to have awarded it without competitive bidding was a serious matter,” he said.

Rifkin said the court’s ruling “reconfirms the significance of following the competitive bidding laws that have served the people of this state for well for so many years.”

“On behalf of the many downtown businesses, both small and large, that raised questions about this project and how it was awarded, we are pleased,” Rifkin later said in an emailed statement.

David Paulson, a spokesman for Maryland Attorney General Douglas F. Gansler, said Thursday that the office “is reviewing all of its options.”

The ruling came just two days after Handy presided over a three-hour hearing on the state’s motion for summary judgment.

Conceived in 2005 as a transit-oriented mixed-use development, State Center was an attempt to revamp 1.5 million square feet of old state office space on the city’s West Side. But the master developer, Struever Bros. Eccles & Rouse, withdrew in 2008.

Rather than rebid the project, the state replaced the original development team with Ekistics LLC in 2009. Ekistics CEO Caroline Moore had been chief operating officer for public-private partnerships under Struever.

Rifkin’s clients, a group of downtown business and property owners led by St. Paul Plaza Office Tower LLC, filed suit challenging the switch in 2010.

Documents unsealed at Tuesday’s hearing revealed that several state officials expressed concern over the change at the time.

However, Assistant Attorney General John J. Kuchno argued Tuesday that, by entering into ground leases for the redevelopment, the state had made competitive bidding unnecessary.

“The [state] leased the property, and in exchange the developer agreed to do certain things,” he said, noting that these types of ground leases were not bound by state procurement laws.

“The law says the Board of Public Works can lease property to anybody it wants for any consideration it deems,” Kuchno said.

Rifkin countered that the state’s “conduct” was at the heart of the controversy.

“The state is rebuilding office buildings for use by state employees,” Rifkin said. “It’s a laudable project. It doesn’t mean it was done right.”

Ekistics’ Moore said Thursday evening that she was disappointed in the court’s ruling.

“We have been through such a long period of time through this public-private partnership in Maryland,” she said. “We have been to hundreds of state and city community meetings. To have this ruling come out is really discouraging.”

Moore said she was glad Handy ruled quickly on the case, so her team can figure out how to proceed.

“I don’t know exactly what that will be right now,” Moore said. “We have a few options open to us. Court cases can go on for a long, long time. This is one step that could be multiple steps.”