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Maryland sues developer over State Center project

11a-state-center04mfThe state of Maryland has gone to court to reject a $1.5 billion redevelopment plan for a large state office complex in Baltimore.

Douglass Mayer, a spokesman for Gov. Larry Hogan, said Thursday the lawsuit filed against State Center LLC in Baltimore City Circuit Court signals how serious the administration is about moving forward with a viable plan, calling it a “proactive measure.”

The state filed the lawsuit Wednesday after the Board of Public Works voted to end the lease agreements on the languishing plan, citing high debt associated with it. The effect of the vote is that the first phase of the project cannot proceed as proposed by State Center.

The complaint seeks a finding that the more than a half-dozen leases on the property are invalid and unenforceable and that State Center’s only remedy for any alleged breach of the agreements is not monetary damages but to declare the Master Development Agreement “null, void and of no further effect.”

The conclusion is disputed by a lawyer for State Center.

“That’s obviously wrong and the clearest example of that is the fact that the developer has already invested $26 million in executing this contract on behalf of the people of Baltimore,” said Michael J. Edney, adding his client plans to fight back and will file its own legal claims.

“This lawsuit is directly aimed at gutting long-term middle class jobs at State Center,” Edney, of D.C.-based Norton Rose Fulbright, said in a prepared statement. “We will not be bullied by the state, and we will continue to fight for the jobs we know the State Center project can create today.”

In the complaint, the state counters that nothing in the agreement or Maryland law compels the state to move forward.

State Center has alleged the state is in default on the agreement and asserted it is entitled to millions of dollars in damages. Months of confidential mediation reached a stalemate when the state rejected the mediator’s recommendations, according to Edney.

Future uses

The development agreement dates from 2010 and established a process for “orderly development,” which was to be led by State Center but with approvals required by the Department of General Services and the state, according to the complaint.

Since that time, however, “vast changes have occurred” in the economy, development in Baltimore, the real estate and office space markets and the state’s priorities and needs, which made the project “prohibitively more expensive,” according to the complaint.

Hogan said Wednesday the previous State Center proposal was flawed and failed but he remains “totally committed to developing something truly great at State Center.”

He said he will direct the Maryland Stadium Authority to fast-track a study that would include a potential new arena, a proposal supported by Comptroller Peter Franchot who compared the project to the Verizon Center in Washington, D.C., and said such a facility would lead to economic development.

Franchot said the site, with its access to the subway and set at the edge of economically challenged west Baltimore, could bring stable, good-paying jobs to the area and be a cornerstone for revitalizing that area of the city.

Countered Edney, State’ Center’s lawyer: “All I heard the governor say is that he’s ordering an immediate feasibility study for State Center redevelopment including a stadium but we all know that’s just government speak for condemning State Center to the lowest circle of bureaucratic hell. The reason why they ordered a feasibility study is they already know a stadium there is infeasible.”

Mayer, Hogan’s spokesman, took issue with Edney’s characterization.

“No one, and I mean no one, is going to stop governor Hogan and the Baltimore city leadership from redeveloping and doing something tremendous with this site,” he said, “especially not a bunch of greedy developers and their slimeball D.C. attorneys whose only goal in life is to line their already-fat pockets with the hard-earned tax dollars of Maryland citizens.”

The case is Department of General Services et al. v. State Center LLC et al.

Daily Record Government Affairs Writer Bryan P. Sears and the Associated Press contributed to this story.