'Clean' polluted site too risky Two builders retreat from townhouse project on city industrial land

A 'brownfields' community

Cost of homes, risk of suits were too much for Ryland, Warren

March 29, 1998|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

For years, Barre Station was looked upon by nearby residents as the foundation of Southwest Baltimore's revitalization.

It was going to be a $11.3 million, 113-unit townhouse development that would draw residents from the University of Maryland medical complex and bring middle-class residents to this depressed area. The homes would be selling for a little over $100,000, giving a boost to property values in adjoining communities.

The 8-acre site, where the old burned-out Koppers metalworks plant once stood, would be clean and environmentally healthy, the first heavy industrial site to receive the benefits of "brownfields" legislation enacted last year by the state. It was on track to become one of the city's largest private housing ventures in years.

The cleaned-up site in effect was to be given to the developers. But last Monday Ryland Group Inc. and Otis Warren Development of Maryland announced that they would not go forward with the project.

After four years and hundreds of thousands of dollars, the two developers decided the project wouldn't be profitable and that it was impossible to be certain that the property was environmentally clean.

Zack Germroth, a housing department spokesman, said the city has incurred $1.9 million in environmental cleanup costs and was living up to its agreement to deliver a clean site.

But Warren and Jim Joyce, president of Ryland's Baltimore division, thought differently.

"People have tried for four years now to try and figure out how to get it to a clean bill of health and get it to a point where it can make sense economically," Joyce said. "And we finally said, 'Enough is enough.' "

"I think it's less an environmental issue and more of a financial issue," said Catherine Caskey, the city's development director.

"They either overestimated how much they could sell the houses for [or] underestimated their development costs. The bottom line is that the city can do this with a minimum of further subsidies, and I think they just felt that they could not make it work. We have done everything we can to alleviate them of any concerns about the environmental."

As Warren and Ryland bow out, the city says 12 other developers have shown an interest in the site. At least four plan to submit proposals by the city's April 24 deadline, Caskey said. And if everything goes smoothly, a panel will select the most promising proposal and construction could begin by next spring.

"We are not looking backward," said Housing Commissioner Daniel P. Henson III. "We are looking forward, and we think that it is an exciting site, and we think we will get another developer on it fairly quickly who will be able to move with dispatch."

But, according to a skeptical Warren: "The real proof of who's looking at it is to see if anyone else will go in and do it. It still remains [to be seen] whether anyone is going to proceed. I would love to see the site done."

Warren was incredulous that someone could succeed where he had failed. "Why would we spend a couple hundred thousand dollars and four years of our lives and this is what we do just walk away? It doesn't make sense. Maybe someone else can afford to take that risk. People jump out of airplanes, but I don't."

The site still contains concrete footers from the Koppers plant that Joyce likened to Stonehenge.

Germroth agreed. "It's got those god-awful huge footers in the ground they are humongous. We knew they were down there, but to take them out, makes no sense. So build around them, or just build right on top of them with no basements."

But Joyce disagreed, saying, "You can't bury them." And removing them, he said, would add between "$500,000 to $800,000" to development costs. And that would alter the base price for the homes, making them more expensive -- $125,000 to $130,000 -- way above going rates in that area.

"I can't imagine that anyone can go after that site and sell $100,000 units," Joyce said. "It just can't be done. That site had development costs of over $25,000 a lot, that's more than twice of what it should cost, and that's on the development side. So it gets to the point where to sell a house down here for $100,000, somebody has to virtually give you a finished lot."

But of equal concern were the environmental problems -- issues that the city said it was slowly but surely resolving, but issues that continued to nag Warren and Joyce.

"If Koppers caused the [environmental] problem, obviously you are not liable. If the city caused a problem in their demolition, you're not liable. But, what if there is a condition that by moving that dirt around on that site, once it had been adequately buried, and now bring it to the surface while I had title, now maybe I'm liable," Joyce said.

"And you know the reality is, if a suit got filed who would you sue first? The public company, the biggest name and the deepest pockets in this case it would be Ryland."

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