City moves to settle suit for at least $900,000

September 08, 1994|By Howard Libit | Howard Libit,Sun Staff Writer

A 9-year-old conflict between the city and a West Baltimore bottling company ended yesterday when the city agreed to pay the firm at least $900,000 and as much as $1.4 million to help it move to a new location.

Under a deal approved yesterday by the Board of Estimates, the city also will provide Custom Laboratories Inc. with as much as $1.2 million in low-interest loans to move its plant from the 900 block of W. Baltimore St.

The settlement was sparked by a $14 million lawsuit the firm filed against the city in October.

City officials have built financial incentives into the settlement to entice the firm to stay in the city. At one point, Custom Laboratories -- which has 20 workers but has the potential to employ up to twice that number -- planned to move to a new location in Harford County.

The settlement apparently resolves a dispute that began in 1985, when the city purchased the Custom Laboratories' property to use in the redevelopment of the Poppleton Urban Renewal Area west of Martin Luther King Boulevard. Since then, the company, which bottles and manufactures pharmaceutical products, has been leasing the site from the city.

Custom Laboratories filed the lawsuit last October after the city, which had already paid the company $1.4 million toward relocation costs, refused to pay any additional money.

Federal law requires the city to pay for the company's moving costs, but city officials balked at Custom Laboratories' estimate that it would cost $8 million to replace its outdated bottling equipment -- particularly when it was revealed that the company had already purchased land in Harford County for a new plant.

Daniel P. Henson III, the city housing commissioner, called the firm's $8 million estimate "unconscionable." He said the decision to purchase the property originated with the administration of former Mayor Clarence H. Du Burns.

"I'm happy to get it over with," Mr. Henson, said, adding: "This is leftover garbage" from a previous administration.

The money to pay for Custom Laboratories' relocation costs comes from federal Community Development Block Grants, which are intended to be used to aid poor neighborhoods. In 1992, community leaders as well as auditors from the U.S. Department of Housing and Urban Development criticized the city's decision to spend so much grant money to help a company move jobs out of the city to the suburbs.

But under the settlement, except for an initial $900,000 payment due within a week, all of the money and low-interest loans depend upon whether Custom Laboratories remains in the city, said Edward Hitchcock, an attorney with Tydings and Rosenberg, who represents the city.

The city has given Custom Laboratories exclusive negotiating rights for the next 90 days to a four-acre parcel in the Fort Holabird Industrial Park in Southeast Baltimore, offering the land at a price $200,000 below its value, Mr. Hitchcock said.

For the 90 days after that, the company will have the right to match the offer of any other potential buyer.

If the company chooses the Fort Holabird site, the city will provide $1 million in low-interest loans to help it purchase and develop the property. And if the company decides to relocate at any other city site, it will be eligible for up to $1.2 million in low-interest loans, Mr. Hitchcock said.

No matter where the firm relocates to in the city, it will receive an additional $500,000 cash payment, Mr. Hitchcock added.

The financing deal is available to the company for two years, and Custom Laboratories will continue to lease its current site until dTC its new plant is in operation, Mr. Hitchcock said.

Officials at Customs Laboratories, which also goes by the name New Gold Bottling Co., did not return repeated phone calls yesterday.

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