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The $1.5 billion State Center project has been seen as an engine of economic growth, but critics say it is too costly and the state can’t afford it. (File photo)

Federal funds for State Center?

Beleaguered project pulled from state board agenda

An outgoing state legislator said local leaders are trying to leverage federal funds to make the proposed $1.5 billion redevelopment of State Center possible, even as doubts about the financial viability of the project continue to mount.

Del. Shawn Tarrant, a Democrat who currently represents the State Center area but lost his re-election bid, said there have been conversations about rearranging the project, which as proposed involves building a new garage, office space and eventually residential units to leverage federal dollars.

“There’s been some meetings on the federal level to see if State Center, if part of the project can be re-worked, where we’re using federal dollars to do some of the proposed ideas and flesh them out that way,” Tarrant said.

He said the conversations have involved a federal elected official, whom he declined to identify, as well as local ministers and representatives from the Department of Housing and Urban Development.

“They have talked about doing a special project, and then you could show from there the viability, and show the state, this is something great to bet on,” he said.

Despite speculation that outgoing Democratic Gov. Martin J. O’Malley, a supporter of the project, would want the development voted on while he still held his seat on the Board of Public Works, the project is not on the board’s Wednesday agenda and it’s unknown if it will appear before the board next month.

“The governor is evaluating the results of the Senate budget committee hearing and consulting other officials,” said Ron Boehmer, a spokesman for the governor. He would not comment on whether the O’Malley administration wants the project brought before the board next month.

The meeting on Jan. 7, is the last time O’Malley will sit on the three-person state spending board that can approve the development. Republican Gov.-elect Larry Hogan, after being sworn in, will serve on the board. Advisers close to Hogan have raised concerns about the state’s budget situation and whether the project would exceed the its debt limit. State Comptroller Peter V.R. Franchot has come out against the project, while the third member of the board, state Treasurer Nancy Kopp, has not taken a public position.

Doubts about State Center’s financial viability resurfaced after state Sen. Edward J. Kasemeyer, D-Howard and Baltimore counties and chairman of the Senate Budget and Taxation Committee, requested the development not be brought before the spending board. Also, a seven-page analysis of the development by the Department of Legislative Services raised concern about affordability and changes in the proposal by the developer.

State Center is currently proposed as a public-private partnership with developer, State Center LLC, contributing 33 percent of the costs. Also, as part of the agreement, the state would pay guaranteed rent as part of the redevelopment of the 28-acre parcel on the West Side.

Development plans for the site date back nearly a decade, but were delayed in part because of the 2008 economic collapse and a subsequent lawsuit. Initially Struever Bros., Eccles and Rouse was the managing partner of the development group but the firm eventually had to drop out.

When that company withdrew, Ekistics LLC was named managing partner in its place. That’s when business and property owners, funded by attorney Peter G. Angelos, filed a lawsuit arguing the project should have been put back out to bid instead of a new managing partner being appointed.

This spring it appeared the project was back on track when the Court of Appeals set aside a trial judge’s ruling that the procurement process had been violated, concluding that plaintiffs waited too long to challenge the process in court. After that ruling, developers expressed optimism State Center would finally get under way.

But the November election of Hogan, and the increasingly poor outlook for the state budget, has cast doubt on the state’s ability to participate in the project. Maryland faces a structural deficit of nearly $300 million in the current budget year and nearly $600 million in fiscal year 2016. On Monday, the Board of Revenue Estimate wrote down state revenues by $271 million in the current and 2016 budget years.

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About Adam Bednar

Adam Bednar covers real estate and development for The Daily Record.