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This Sept. 3, 2013 file photo shows the Superblock corridor along West Lexington Street in Baltimore. (The Daily Record/Maximilian Franz)

Judge weighs fate of Superblock litigation

A Baltimore judge is considering whether to throw out a lawsuit filed by the ousted developer of the Superblock seeking to block new bids on the project.

After a hearing in Baltimore City Circuit Court, Judge Pamela J. White said Friday she would issue her opinion as soon as possible, noting “too much time has passed” since the city and Lexington Square Partners entered a land sale and development agreement in 2007 for a $150 million redevelopment.

At issue is a provision in that agreement stating it would terminate June 30, 2013, if a settlement was not reached or conditions of the settlement were not met, with neither side held liable. The agreement had been extended five times since 2007 but city officials last June denied Lexington Square’s request for a sixth extension in order to line up financing.

To Assistant City Solicitor Michael Redmond, arguing the city’s motion for summary judgment, the provision is unambiguous — a settlement did not occur by June 30, so the agreement ended.

“These are the terms the party agreed to,” Redmond said. “These are the terms that will allow the city to proceed with desperately needed development on the West Side.”

Jason M. St. John, a lawyer for Lexington Square, countered the provision would allow the city to run out the clock on the agreement even if the conditions of the settlement were met. The developer would have no rights under the city’s view of the agreement, added St. John, a partner with Saul Ewing LLP in Baltimore.

“It’s an illusory interpretation because the settlement couldn’t occur by June 30 because the city wasn’t ready to hand over the title,” he said.

Lexington Square’s lawsuit, filed in September, seeks to establish 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 Baltimore Development Corp., the city’s co-defendant, for tortious interference with the developer’s contract with the city.

An earlier motion to dismiss the case, also filed by the city, was denied in January. The current motion for summary judgment asks the judge to decide that, based on undisputed facts, the city is entitled to judgment as a matter of law.

Lexington Square has proposed a mixed-use project with apartments, retail, hotel and office space for the parcel, bounded by Lexington, Fayette and Howard streets and Park Avenue.

The project has been stymied from the beginning by the real estate market, lack of financing, and lawsuits and protests over its history and design.

As properties in the Superblock sat vacant or were demolished, the value fell.

In December 2012, city officials agreed to sell the vacant, blighted, nearly four-acre parcel to Lexington Square Partners for $2.8 million and a unique, 20 percent share in future profits if financing was obtained.

Around that same time, the Baltimore City Council voted to give a $22.1 million tax break to Lexington Square in the form of a payment in lieu of taxes, or PILOT. Lexington Square said then it needed the PILOT in order to obtain a $100 million construction loan and other financing.

The BDC has said the developers were unable to obtain about $68 million in financing for the first phase of the project, to include retail, residential and parking.

The case is Lexington Square Partners LLC v. Mayor and City Council of Baltimore, 24C13005455.