Columbus Center debt scrutinized by lawmakers Two state officials are told to account for funds spent on project

Commerce

August 06, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Members of the Maryland General Assembly demanded answers from officials of two state departments yesterday about the debt owed by the partly closed Columbus Center in Baltimore.

The center's $7.5 million debt includes $2.5 million to NationsBank, $2.3 million to the city, $1 million to the University of Maryland and $1.2 million to vendors.

"The Columbus Center is named appropriately," said state Sen. Robert R. Neall, an Anne Arundel Republican. "Christopher Columbus didn't know where he was going when he left, or where he was when he got there, and he did it all on Queen Isabella's money."

Frederick W. Puddester, secretary of the state Department of Budget and Management, and James D. Fielder Jr., acting secretary of the state Department of Business and Economic Development, were told to account for money spent on the $160 million center.

Of particular concern was $2.5 million in state-backed money that was used to pay about half of a defaulted loan to NationsBank instead of for its intended use, financing more construction at the Hall of Exploration.

The hall was supposed to turn the center, which is east of the National Aquarium, into a major Inner Harbor tourist attraction. But the interactive marine science center, which opened in May 1997, closed seven months later after drawing far fewer visitors than had been projected.

"We've already sunk money in, and now we're sinking in even more," said state Sen. Barbara A. Hoffman, a Baltimore Democrat who chairs the Budget and Taxation Committee.

The center was built on city-owned land with state, federal and city funds. "This whole project was more wishful thinking than planning," she said.

The hearing was scheduled by the House Subcommittee on Education and Economic Development. Members of the Senate Budget and Taxation Committee were invited to attend.

The $2.5 million was guaranteed by the Maryland Industrial Financing Authority for construction.

When the Columbus Center defaulted on a loan of nearly $6 million from NationsBank, the building's primary lender, in December, the Department of Business and Economic Development allowed the $2.5 million to be used to pay down the loan, Puddester and Fielder said.

DBED made monthly payments of $95,000 from December to May, and a balance of $1.9 million was authorized in June, Fielder said. DBED is among the center's creditors, waiting repayment of the $2.5 million, he said.

Last month, the center entered into receivership, which is similar to bankruptcy. A court-appointed receiver, Howard A. Rubenstein, an attorney with Adelberg Rudow Dorf Hendler & Sameth LLC, is responsible for finding a buyer for the Columbus Center or a tenant for the Hall of Exploration.

He must also make arrangements for repayment to the center's creditors.

The legislators said the receiver might have little choice but to turn the center over to the University System of Maryland, which has a 49-year lease on two-thirds of the building, where it houses its Center of Marine Biotechnology.

Joseph Vivona, the University System's vice chancellor for finance, said that "the options for sale are limited," considering the long-term lease.

Rubenstein has said that he is seeking biotech organizations to fill space once occupied by the Hall of Exploration. The University System is among the contenders, he said.

Pub Date: 8/06/98

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