Ousted Superblock developer sues

The once- and would-be developer of the Baltimore-owned Superblock property sued the city Tuesday for at least $50 million in an effort to block Mayor Stephanie Rawlings-Blake from entertaining new bids for the project.

Lexington Square Partners claims the city and its development arm, Baltimore Development Corp., breached a 2007 contract in June by calling off the proposed $150 million redevelopment project at the southwest corner of Park Avenue and West Lexington Street.

“We had no choice but to take this action,” said the developer’s lead attorney, Charles O. Monk II, of Saul Ewing LLP in Baltimore. “We believe we complied with the terms of the contract.”

Rawlings-Blake, in ending the Land Disposition Agreement, said in June that the city was unwilling to grant the Atlanta- and New York-based partnership a sixth extension of time to obtain the financing needed to start the first phase.

“Ultimately, they fell short in meeting the conditions that were necessary to close on the project,” Rawlings-Blake said in June.

But Monk said Tuesday that the city “jumped to conclusions” and canceled the contract prematurely.

The developer met its contractual obligation to provide “satisfactory evidence of [its] ability to secure financing,” Monk said.

Baltimore’s termination of the contract violated the contract’s provision calling for the city first to declare the Lexington Square Partners in default and then give the developer up to 180 days to cure the default, Monk said. Only then could the contract be terminated, he added.

The lawsuit, filed in Baltimore City Circuit Court, asks the court to order the city to call off the reopened bidding and permit Lexington Square Partners to proceed under the Land Disposition Agreement.

Alternatively, the developer seeks a court determination that the city breached the contract and must pay at least $57 million in damages, as provided under the agreement and in compensation for lost revenue.

Lexington Square Partners also has a $50 million claim against BDC, the city’s co-defendant, for tortious interference with the developer’s contract with the city.

BDC had declined to recommend that the city give Lexington Square Partners more time, saying that, based on its calculations, the developers would need more than another six-month extension, according to the complaint, which also seeks an unspecified amount in punitive damages.

Baltimore City Solicitor George A. Nilson, BDC President and CEO Brenda McKenzie and BDC spokeswoman Joann Logan did not respond to telephone and email messages seeking comment after the lawsuit was filed late Tuesday afternoon.

Lexington Square Partners for years has pushed forward on plans to transform the vacant four-acre parcel at Lexington, Fayette and Howard streets and Park Avenue into a mega mixed-use development with apartments, retail, hotel and office space.

But plans for the center-city development hit constant snags, including the recession and a series of lawsuits that were resolved in April 2012.

Last winter, the Baltimore City Council approved a $22.1 million payment in lieu of taxes development incentive to Lexington Square Partners in order to help it obtain a $100 million construction loan and other financing.

At the same time, the developers were granted their fifth extension, for six months, which expired June 30. The developers have said they needed the additional time to line up financing.

Even so, the developers have not been able to obtain about $68 million in financing for the first phase of the project, to include retail, residential and parking, according to the BDC.

The mayor announced on June 26 that the city would issue a new request for proposals this fall.