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Sparrows Point
(The Daily Record/Maximillian Franz)

City agrees to Sparrows Point sewer discharges

Deal comes as two sides still in legal dispute

Baltimore’s spending board approved a new agreement on Christmas Eve to continue discharging treated sewage at Sparrows Point from its Back River Wastewater Treatment Plant.

The new agreement is effective through Dec. 31, 2018, although it can be extended or terminated early, and pays the property’s new owners, Sparrows Point Terminal LLC, $120,000 a month based on estimates for electrical and operating costs. Monthly charges will be reviewed annually and updated via the previous year’s actual electrical costs and the consumer price index for the Washington, D.C., and Baltimore region.

The city is involved in litigation with the property’s previous owner, Sparrows Point LLC, regarding a previous agreement allowing for the discharge of wastewater at the site. In January 2013, the city agreed to pay Sparrows Point LLC $80,000 a month to discharge treated sewage at the property. But after the city spending board approved a renewal of that agreement in September 2013 Sparrows Point LLC claimed that it was terminated because the monthly payments were not meeting costs.

Baltimore disputed the claim that the agreement was terminated and insisted the agreement renewed automatically. The dispute resulted in litigation that is working its way through federal court. A hearing for that case has been scheduled for Jan.15. In the meantime, the judge has issued a stay barring Sparrows Point LLC from preventing the city from discharging at the site and for the city to pay the corporation $105,000 a month, according to electronic court records.

A letter in the case, sent by lawyers from the corporation and the city to the judge requesting an extension of the restraining order allowing sewage to continue to be discharged, made public in July that a sale of the property was in the works. Although the letter did not disclose who the interested purchaser was, it was later revealed that Sparrows Point Terminal LLC was an investment group led by Redwood Capital Investments LLC.

In September, it was announced that Sparrows Point Terminal LLC had purchased the property. Currently the new owners are in the process of demolishing much of the site in hopes of one day transforming the 3,100 acres into a modern manufacturing hub.

Sparrows Point Terminal LLC has also agreed to contribute $51 million to the cleanup of the contaminated site that was home to Bethlehem Steel, at one time the largest steel plant in the world. At its peak in the late 1950s the plant employed 31,000 people. In November, the new owners announced they planned to demolish the $275 million L Blast Furnace to make way for redevelopment on the site.

About Adam Bednar

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