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State Center issues to linger despite Hogan’s redevelopment orders

James Brady, chairman of the University System of Maryland Board of Regents, speaks at a news conference to announce the board's recommendation that football head coach DJ Durkin retain his job, Tuesday, Oct. 30, 2018, in Baltimore. University of Maryland, College Park President the next day fired Durkin. (AP Photo/Patrick Semansky)

James T. Brady, who co-chaired Gov. Larry Hogan’s transition team, urged the administration to make a redevelopment of the State Center a top priority after the 2015 riots in Baltimore. (AP Photo/Patrick Semansky)

Fixing the crumbling State Center complex in Baltimore was the itch Gov. Larry Hogan couldn’t scratch, an irritant that lingered from the time he took office in 2015 and which seemed poised to peeve him through his remaining time in office.

Hogan, who is preparing to start the second year of his final term, said on Tuesday the project’s been on his gubernatorial to-do list since he started residence in Government House. And he made it clear he was ready to scratch that itch.

“We’re here today to announce some exciting news on a long-awaited, transformative project for Baltimore City that we have been committed to and pushing hard for since day one of my administration,” Hogan said.

Emails between Hogan’s staff, obtained by The Daily Record through a Public Information Act request, show associates of the governor pushing the administration to deal with the aging state office complex within months of taking office.

James T. Brady, who co-chaired Hogan’s transition team, sent an email on May 16, 2015, to then-Chief of Staff Craig Williams. The message urged the administration to include State Center redevelopment as part of plans to buoy Baltimore following the riots that rocked the city in April.

“I have attached a white paper prepared by EJ McNulty that outlines some approaches that might be part of a comprehensive strategy to address the critical aftermath of the Baltimore City riots. I would recommend that it be shared with (Lieutenant Gov. Boyd Rutherford) and (former Baltimore Del. Keiffer Mitchell), and that they be encouraged to contact EJ directly to enlist her assistance in areas where it makes sense,” Brady wrote. “EJ has been an energetic Republican activist for some time.”

Now, approaching five years later, Hogan is pushing ahead with a plan to redevelop the site in Baltimore’s Madison Park neighborhood. It’s a project he inherited from former Gov. Martin O’Malley, who in-turn inherited it from Gov. Robert L. Ehrlich.

During his time in office Hogan, who founded real estate development firm Hogan Cos. before his election as governor, expressed frustration over the project’s delay with increasing regularity and vehemence.

Based on a legal opinion from the Maryland Office of Attorney General, he said Tuesday, his administration is moving ahead with redeveloping the property. The Department of General Services, he said, will start by issuing a request for proposals for 1 million square feet of office space in downtown Baltimore for the roughly 3,300 state employees working at State Center.

Despite the governor’s actions, however, the redevelopment of State Center remains at worst on hold, and at best on a timetable extending into the next governor’s term, which begins in 2022.

While vocal about his irritation over the delay Hogan’s actions played a role in creating the major obstacle to overhauling State Center, the ongoing legal battle with State Center LLC.

The court fight stems from a decision by the Board of Public Works to cancel leases with State Center LLC in December of 2016, a decision championed by the governor. When the state, the project’s anchor tenant, terminated its leases the decision essentially killed a $1.5 billion redevelopment proposal for State Center.

The board, which includes Hogan, Comptroller Peter Franchot, and Treasurer Nancy K. Kopp voted unanimously to terminate leases for office space based on Hogan’s assertion the deals are so-called “capital leases” requiring General Assembly approval.

At the time the State Center project had already been delayed by a previous legal fight with downtown property owners, and then a protracted mediation process between Hogan’s administration and State Center LLC.

Following the board’s lease terminating vote the Hogan’s administration sued State Center LLC looking to shield the state from consequences resulting from the cancelling the roughly dozen state leases claiming they were invalid and unenforceable.

State Center LLC counter-sued asking the court to compel Hogan to abide by previous agreements, and sought damages, estimating it invested $26 million in trying to build the project.

The case remains in court, and Hogan’s announcement came on the heels of a loss in the courtroom. Days before retired Baltimore City Circuit Court Judge Dennis Sweeney ordered the state to turn over documents it withheld during discovery.

State Center LLC’s attorney Michael J. Edney, of Steptoe & Johnson LLP, said his clients still want to build the State Center project they’d proposed.

“The (lawsuit’s) purpose is to force the state to abide by the contracts and to get out of the way (so State Center can be redeveloped)” Edney said in a telephone interview.

While the attorney general’s office provided Hogan an opinion that his administration can seek proposals for new office space, the ability to do more — such as select a new developer for State Center — remains in doubt.

In announcing his State Center plan Hogan said the courts previously ruled to prevent State Center LLC seeking any kind of injunction against decisions, such as selecting a new developer. Edney, on the other hand, said the courts never made such a decision,

“That’s not true. The courts said nothing like this,” he said.

Beyond the legal hurdles the process for any new development beyond State Center LLC’s proposal will require a significant investment and time to secure the required community support.

In 2018 the General Assembly approved, and Hogan let pass into law without signing, a bill requiring any project have “an enforceable community benefits agreement” in place with the State Center Neighborhood Alliance before building can commence.

But emails between community members and Hogan’s staff reveal little effort was made to develop a relationship with community leaders, who are increasingly skeptical of the governor’s plans for the property.

At the start of Hogan’s tenure community members like John Kyle, president of the State Center Neighborhood Alliance regularly emailed Hogan’s staff, especially Mitchell, who represented the area on the City Council and in the General Assembly.

Messages exchanged with the state ranged from invitations to community events to asking for a meeting with the governor. The messages remained friendly and upbeat even after the governor ended leases with State Center LLC.

“We look forward to a reply and to meeting with the Governor about how best to involve our communities in any current or future planning for State Center,” Kyle wrote in a message to Rutherford in February 2017.

Eventually the frequency of the correspondence trailed off, and communication regarding State Center and the communities mostly came from the developer’s lobbyist.

Hogan pledged on Tuesday to heavily involve area neighborhoods in the planning of a new State Center development and to bring development supported by the community.

Kyle, who did not attend the event, said there’s significant work ahead for the governor’s team regarding community engagement, if the governor wants support for another State Center development.

“I have to say the relationship between the neighbors and the Hogan administration has essentially been nonexistent,” he said.

 


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