In its pursuit of parking, the city got controversy

Now it wants to unload hastily bought building

July 25, 1999|By Eric Siegel and Kevin McQuaid | Eric Siegel and Kevin McQuaid,SUN STAFF

For months, Baltimore economic development officials had been wrestling with the question of where to put a downtown parking garage.

In January, they finally came up with an answer: In the middle of the 100 block of Water St., a location that would spare from demolition a vacant but historic building at Redwood and Calvert streets.

Once a decision on the site was made, they moved quickly. They committed to buy 117 Water St. and began working to condemn several adjacent properties, envisioning a garage groundbreaking by the first of the year and plaudits from businesses and preservationists alike.

"I thought I would be a hero," said Andrew B. Frank, executive vice president of the Baltimore Development Corp., the city's economic development agency, who was in charge of the project.

But today few are prepared to pin medals on the chest of Frank or his agency.

The City Council quashed the plan in late June because 117 Water St. tenants protested the notion of a forced relocation.

By that time, however, Mayor Kurt L. Schmoke had directed BDC to buy the building anyway for $2 million, because he felt 117 Water St.'s owners had been economically harmed by disclosure of the plan. The purchase was completed May 12.

The city's ethics commission has been asked to investigate the city's purchase because the building's previous owner, Milton H. "Mickey" Miller Jr., is a member of a mayoral Parking Advisory Board and because he and a partner had bought 117 Water St. for $1.1 million 56 days after the city's purchase.

Instead of a parking garage, the city got a controversy.

Recent interviews with city officials and real estate experts and the release of relevant documents promise to do little to quell the debate: Instead, they raise fresh questions about the wisdom of the deal.

The appraisal that the city relied on in negotiating the $2 million purchase price was completed in July 1998 -- 10 months before the city bought the building from Miller. Experts say that appraisals more than six months old generally should not be used.

"Appraisers start looking and thinking about changes to a market in a six-month period -- that's the rule of thumb," said Kendall Thurston of the Chicago-based Appraisal Institute. "A prudent person or investor would want to update as much information as possible."

The theory of "constructive condemnation" that the mayor cited in directing that the city buy the building -- because the owner was hurt by the disclosure of the garage plan -- is almost never successfully argued, because it applies only when a government's actions render a property economically useless, according to several industry authorities.

Although continuing to defend their overall approach as "reasonable," Frank and his boss, BDC President M. J. "Jay" Brodie, acknowledge for the first time that missteps were made by the agency in its effort to address the business community's demand for action.

Those include misstating the city's plans for 117 Water St. in a letter to tenants in early February, failing to ask Miller and his business partner during negotiations what they had paid for the property, and rushing to get the building's purchase approved before the City Council approved the condemnation of several other Water Street properties needed for the proposed garage.

Meanwhile, Iowa-based Principal Mutual Life Insurance Co., in its first public comments on the deal, said it felt it got a fair price when it sold the building for $1.1 million to Miller and his partner Ira Miller in mid-March.

And the future of the entire block is more muddled than ever.

The city has put 117 Water St. up for sale and has gotten some interest in the building -- but it could retain the property and try again to develop a parking garage in the middle of the block.

One developer has approached the city about putting up a huge garage that would take up the entire block.

Another has a contract to buy the historic buildings at the corner of Calvert and Redwood streets, once the headquarters of USF&G Corp.

Meisel & Cohen Properties, which holds the contract, wants to tear down the two structures and put up a parking garage using private money.

And the nonprofit Abell Foundation has expressed interest in buying the old USF&G headquarters building at 131 E. Redwood St. and preserving it for offices or apartments.

"It's not the outcome I wanted," said Frank. "The business community is very anxious to see a garage under construction. It didn't work."

Former financial district

The focus of all this attention is a cobblestone street two blocks from the Inner Harbor, part of a six-square-block area of narrow alleys and oddly shaped buildings that at one time made up the heart of downtown's financial district.

117 Water St. in particular has a rich past. Built shortly after the Great Baltimore Fire of 1904, the building has housed a tannery and various print shops. It was once a chocolate factory.

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