Attorney general to stay in building

March 02, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

The state attorney general's office will stay at the St. Paul Plaza building in Baltimore, ending a five-month drama over a 280,000-square-foot building owned by a partnership that was forced into bankruptcy during the recession and whose owners' recovery was threatened by the potential loss of their biggest tenant.

The state Board of Public Works next week is expected to approve a lease at St. Paul Plaza for nearly 97,000 square feet of space, the biggest office lease anywhere in metropolitan Baltimore since 1992.

Officials first approved a new lease with developer David Kornblatt last fall, then backed out to stage a flirtation with the new owners of nearby One Charles Center, then revived the deal when talks to buy One Charles Center bogged down.

The expected Board of Public Works vote would come nearly five months after Gov. William Donald Schaefer withdrew the first lease from the board's agenda and ordered officials to explore buying One Charles Center. Metropolitan Life Insurance Co. foreclosed on that building last summer.

"Gov. Schaefer asked us to investigate One Charles Center, and we've done that," said Dave Humphrey, spokesman for the Department of General Services, which manages the state's real estate affairs. "We're still interested. It's a fine building, but we came to crunch time on the attorney general's lease."

The state came away with the same deal that it had in October for St. Paul Plaza, located at the intersection of St. Paul and Lexington streets. St. Paul Plaza lead partner David Kornblatt said the state did not try to use the threat of moving the attorney general to One Charles Center to get more rent concessions.

The 1988 lease, negotiated at the peak of the real estate boom, contained an option to renew this year at $24.70 a square foot, Mr. Humphrey said. Instead, the rent will average $17.83 a square foot over the six-year term of the new lease, he explained.

The deal phases in the rent cut because St. Paul Plaza filed for bankruptcy protection in 1990 and its owners are working under a court-approved plan to pay the building's mortgage. The rent begins at $23.70 a square foot, then falls to $19.70 next year, and then to $14.90 in 1999. The state gets six months free in 2000.

"We wanted to help Mr. Kornblatt and his partnership make debt payments," Mr. Humphrey said. "He's been very patient with us."

"All I'm trying to do is pay my bills," Mr. Kornblatt said. "I'm staying alive till '95." The phrase "Stay Alive Till '95" has become a joking battle cry of recession-pressed developers.

Officials in the attorney general's office had said they wanted to stay put. Mr. Humphrey said the decision saved $2 million in relocation costs.

In the mean time, talks with the owners of One Charles Center have not yielded a deal to buy the 22-story building. Mr. Humphrey said the state has not been able to get information about a pending lease of about one-third of One Charles Center to CSX Corp. and is concerned that the state would be stuck with a tenant paying below-market rent.

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