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Hope of cleaner, busier future for Sparrows Point

The sale of the Sparrows Point peninsula to a local investment group should lead not only to the cleanup of the abandoned Bethlehem Steel mill site, but also to the creation of a vital hub of economic activity, including shipping, manufacturing and other job-creating enterprises, officials predicted Thursday.

Officials said that Sparrows Point Terminal LLC, which includes Redwood Capital Investment, had pledged to invest at least $51 million in cleaning up the remains of the contaminated 3,100-acre property.

Baltimore County Executive Kevin Kamenetz praised the agreement as a landmark step toward the revitalization of the 5-square-mile peninsula, where steel was produced for generations at what was once the world’s largest steel mill.

A spokesman for SPT said he could not disclose further details of the deal or the company’s plans or timetable for the project. But, in a news release, SPT indicated it intends to redevelop the property in line with the vision laid out by Baltimore County Sparrows Point Partnership. That plan includes concentrating certain industries such as energy, distribution and advanced manufacturing on different parcels of the property.

“With its unique combination of access to deep water berths, rails and highways, this location has the potential to be one of the largest ports on the East Coast and a hub of economic activity,” Michael Pedone, chief operating officer of Sparrows Point Terminal, said in the release. “Our team looks forward to moving forward with the remediation requirements for the site and maximizing the potential of Sparrows Point to bring new jobs and new companies to Maryland.”

Under the terms of a separate agreement with the Maryland Department of the Environment, SPT will assume responsibility for the ongoing environmental work and will complete cleanup of the site.

That agreement requires SPT to provide the state with $48 million in financial assurances — a $43 million trust fund and a $5 million letter of credit — to ensure cleanup of the property. Every six months, through an independent engineering firm, SPT will re-evaluate the sufficiency of its financial commitment. If the cleanup is 10 percent or more over budget, SPT will increase funding to address the shortfall.

The consent order includes financial penalties of up to $5,000 a day for failure to meet any deadlines established in an approved work plan, and it requires SPT to pay the state agency’s oversight and response costs up to $100,000 per year.

SPT also agreed to provide the U.S. Environmental Protection Agency with $3 million to perform additional offshore investigation and, if necessary, offshore remediation.

Kamenetz said during a news conference Thursday afternoon that the new owner has expressed support for the partnership’s proposals for development on the site that include expanded opportunities for the Port of Baltimore, logistics and distribution facilities as well as light manufacturing operations. Because of a power plant on the site, a clean energy firm may be able to tap that resource.

Partnership recommendations also include a “greenway” area that could serve as a public park that pays tribute to the history of steel-making at the site.

For generations, the steel plant was one of the major employers in the Baltimore metro area. Steel was produced at the site dating back to the 1880s, until the RG Steel went bankrupt in 2012.

According to University of Maryland, Baltimore County’s “Mill Stories,” the plant had contributed steel to projects such as the Empire Tower, the Golden Gate Bridge and the Chesapeake Bay Bridge. During the 1950s, the plant was the largest in the world and at its peak employed 31,000 people. By the time the steel mill closed for good, it was employing about 2,000 people.

Until the Thursday sales agreement, the site was owned jointly by St. Louis-based Environmental Liability Transfer Inc., the parent company of Sparrows Point LLC, and Hilco SP LLC, part of Northbrook, Illinois-based Hilco Redevelopment Partners.

The two companies purchased the site for $72 million at auction in August 2012. Under the terms of the joint venture, Sparrows Point owned the 3,300-acre site and certain environmental liabilities associated with the land, while Hilco owned above-grade improvements, machinery and equipment.

SPT did not acquire 200 acres of the site.

Earlier this year, Sparrows Point agreed to sell the property to Hilco, which in July agreed to sell a significant percentage of its new acquisition to a then-unidentified local investment group. Neither party in the sales transaction Thursday disclosed the price tag.

“Hilco Global is very pleased to have played an important role in helping to facilitate the revitalization of this historic industrial manufacturing site over the past two years. It is truly a new beginning for a site that provides unique access to deep water shipping, rail and highways that will create a new economic engine for the people of Baltimore County, Maryland, and the eastern seaboard of the United States,” the company said in a statement.

Kamenetz said previous ownership wasn’t interested in developing the property and just wanted to demolish the structures on the property and sell it for a profit.

“The key was to attract a new ownership group other than the ones that originally bought the property out of bankruptcy. Their goal really was to, kind of, cut and run and make what they could make and move on,” Kamenetz said.

News of the steel mill property sale was first discovered in a letter sent in July by lawyers representing Baltimore city and Sparrows Point LLC asking a federal judge to extend through October a temporary restraining order allowing treated wastewater to pass through two of the plant’s pipelines.

The order, scheduled to expire Aug. 1, was extended through Oct. 13 to give all parties the time needed “to close on property transfers and reach agreement on the solution to the existing water problems,” the July letter states.

As part of the temporary restraining order, the city pays Sparrows Point $105,000 a month for use of the two pipelines, which take up to 40 million gallons per day of treated wastewater from the Back River Wastewater Treatment Plant. The wastewater, which was once used in steelmaking, has flowed to Sparrows Point for at least 70 years.

“We are hopeful and guardedly optimistic that the new ownership will lead to a resolution of the matter,” said Michael Schatzow, a partner with Venable LLP in Baltimore and a lawyer for the city, after the deal was announced Thursday.

Gerard P. Martin, a lawyer for Sparrows Point LLC, said the litigation remains pending but said he thought the case would be settled with new ownership now in place. Martin is with Rosenberg Martin Greenberg LLP in Baltimore.

Daily Record reporter Danny Jacobs contributed to this article.