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Gov. Hogan moves to find new State Center developer

(The Daily Record / Maximilian Franz)

(The Daily Record / Maximilian Franz)

Gov. Larry Hogan plans to move forward with redeveloping the State Center complex in Baltimore, and intends to find a new master developer.

The governor announced his direction to the Maryland Department of General Services to issue a Request for Expression of Interest to secure a new master developer for the aging 28-acre site on Thursday morning. The long planned $1.5 billion redevelopment has been held up by a series of legal disputes. The most legal spat ensnaring the project follows the state, roughly 18 months ago, terminating leases at the site with master developer State Center LLC.

“We’ve put multiple settlement offers on the table for two-and-a-half years. This should’ve been resolved a year ago by the courts. Everybody’s frustrated how slow the court system moves,” Hogan said, after a short tour of State Center Thursday afternoon. “But we put a very substantial settlement offer on the table just to be rid of these guys so we can move forward.”

Once the legal issues are settled, Hogan said, the state will work with private developers and the community to overhaul State Center. Potential uses, he said, could include offices, affordable housing, and a grocery store. There’s also potential for open space and a collaboration with nearby Maryland Institute College of Art for arts space.

Michael Edney, lead counsel for State Center LLC, issued a statement critical of the governor, arguing Hogan has no interest in revitalizing that part of Baltimore.

“This announcement is a grand distraction from the State Center plan previously approved by Republican and Democrat Governors that is ready to build today. Governor Hogan canceled that plan; Governor Hogan started litigation with the developer who was ready to build it; and it is Governor Hogan who has no desire whatsoever to revitalize Midtown Baltimore, otherwise he would allow the existing plan to proceed,” Edney said in a statement.

Alan Brody, a spokesman for Comptroller Peter Franchot, who as a member of the state spending board voted with Hogan to terminate state leases with State Center LLC, declined to comment on the governor’s proposal to find a new developer.  But in an email he wrote, the comptroller supports redevelopment of the State Center complex.

“The Comptroller is ready and eager to support a redevelopment proposal that is economically sustainable and fiscally responsible,” Brody wrote.

State Center LLC, lead by Caroline Moore, has sought to redevelop the state office complex for more than a decade.  The firm, after an extensive community engagement process, proposed overhauling the site as a transit-oriented mixed-use project with state offices, residential units, and retail involving converting the historic armory building for use as a grocery store. The complex, located on the northwest corner of the merge between Martin Luther King Jr. Boulevard and North Howard Street adjacent to Mount Vernon, is served by Light Rail and Metro stops.

Plans to redevelop the site, which consists of buildings from the 1950s and 1960s, date back to 2005 during former Gov. Robert L. Ehrlich’s administration. Development on the site was delayed for years by a legal challenge, backed by attorney Peter Angelos, from downtown property owners who feared losing tenants to the redevelopment.  In 2014, the Court of Appeals sided with the developer, finding the property owners, who contested the state’s procurement process, waited too long to challenge the decision.

Following Hogan’s election in 2014 the project again ran into problems after the state objected to the price for a planned underground garage. In 2016, the developer and the state entered a lengthy mediation process that failed. The developer blamed the state for rejecting an agreement offered by retired U.S. District Judge Frederic Smalkin.

In late 2016, the Board of Public Works, which includes Hogan, Franchot, and Treasurer Nancy K. Kopp, voted to terminate leases at the site, essentially killing the project. The governor argued they were capital leases that required the approval of the General Assembly and that they pushed the state over its debt limit.

The Hogan administration then sued the developer, looking to nullify various agreements between the state and developer. State Center LLC responded and sued the state seeking damages, estimating it already invested $26 million trying to build the project.

Since the case has been in Baltimore City Circuit Court both sides have been involved in a back-and-forth trading accusations and barbs over the project.

The developer ran a radio ad campaign accusing the governor of waging “a war on Baltimore,” organized rallies to show community support for their project, and pushed for a meeting with the governor. State Center LLC also issued an analysis on state leases for the development from Urban Information Associates that portrayed the $25.85-per-square-foot the state would pay, which include escalator rate of 15 percent in years five, 10 and 15 in a 20-year lease, was a good deal compared to the $28-per-square-foot charged in office buildings built downtown after 1999.

The Hogan administration has portrayed State Center LLC as a money-hungry developer wasting taxpayer dollars on a legal fight that only benefits its Washington-based lawyers. The Hogan administration also released the Baltimore State Center Site Alternative Land Use Study that found the best uses for the site include a strip retail center between 5,000 and 9,000 square feet, fast-food establishments, low-rise office space and park land.

In an interview Thursday morning on WBAL radio’s “The C4 Show,” Hogan blamed former Gov. Martin O’Malley for the stalled development at State Center.

“So, people act as if it was ready to happen and some how I stopped it. I’ve been anxious to move forward with State Center redevelopment but we’re tied up in this legal morass, with  this crazy deal that the O’Malley administration signed,” he said.
Government affairs writer Bryan P. Sears contributed to this story. 

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