Developer presses for tax breaks

Clarke wants to raze hotel before securing financing for tower

Threat of vacant lot

More city help sought for One Light Street project downtown

August 01, 1999|By Tom Pelton | Tom Pelton,SUN STAFF

He has demolition crews ready to pull down a landmark hotel. He has a dream of raising a 35-story tower in its place. He just doesn't have the money to build anything yet.

Developer J. Joseph Clarke said he hopes to begin demolition of the 81-year-old Southern Hotel this week before he has the financing to build its replacement, the $120 million One Light Street hotel and office complex.

Clarke said he's moving ahead immediately because he wants the City Council to understand the urgency of approving more tax breaks for his project.

Without additional tax abatements, he warned, the city could end up with a vacant lot or a half-demolished building in a highly visible location downtown at Light and Redwood streets.

"We are taking a risk that the City Council will go along with us, but we think it will," said Clarke, principal of J. J. Clarke Enterprises. "If the city doesn't help me, I'm not going to help the city."

The threat of a vacant lot in the place of the once-glamorous "Queen of Light Street" hotel frustrates some preservationists and City Council members.

"They are trying to put pressure on the city, saying, `We'll only build if you give us money,' " said City Councilman Nicholas C. D'Adamo Jr., chairman of the Budget Committee. "Everybody wants to build with city money. When does it stop?"

Supporters of One Light Street say it will provide a much-needed boost to downtown. The tower will include a 267-suite hotel, 660 parking spaces, 385,000 feet of office space and will create more than 500 jobs and $3.3 million a year in taxes, advocates say.

Conditional recommendation

The city's Commission for Historical and Architectural Preservation in October recommended that the city allow demolition of the building.

The city concluded that it would be impractical to preserve and reuse the vacant Southern Hotel, said Kathleen Gilbert Kotarba, executive director of the commission.

But the panel said the city should issue a demolition permit only "after receiving confirmation of financing for the proposed replacement construction and after confirmation of a lead tenant for the proposed project," according to city records.

Clarke has neither financing nor commitments from tenants. He said he is negotiating with the Embassy Suites hotel chain to use part of the building.

`Terrible mistake'

Tyler Gearhart, director of Preservation Maryland, said it would be backward for the city to approve the demolition before Clarke has tenants and money.

"Allowing it to be demolished before financing is in place for the proposed project would be a terrible mistake," Gearhart said. "If it were left as a parking lot, it would leave a gaping hole in the downtown landscape."

At least twice in the past 13 years, downtown landmark buildings have been demolished by developers who never followed through with plans to build offices in their place. Vacant lots remained because the money fell through.

The 1910 Tower building at Baltimore Street and Guilford Avenue, which was 341 feet tall and topped with a 17-foot clock, was torn down in 1986 and remains a parking lot. The 1921 McCormick and Co. headquarters beside the Inner Harbor was razed in 1989 and also remains a parking lot.

Demolition permit needed

John Wesley, a spokesman for the city's Department of Housing and Community Development, said the city would probably issue a demolition permit for Clarke. He said it would be impractical to hold up the project to demand proof of financing.

Martin O'Malley, chairman of the City Council tax and finance committee that recommends tax breaks, said he needs to study Clarke's request but generally supports breaks for economic development projects.

With the tax breaks already approved by the city for One Light Street, Wyndham International Hotel and the Redwood Towers projects downtown, the city will earn $7 million a year in fees and hotel taxes from properties now not generating any money, he said.

"This is the only economic development tool the city has," O'Malley said.

Hotel for 46 years

The Southern Hotel -- best known as Baltimore's first large Jewish-owned hotel -- opened in 1918 and closed in 1964, although it continued to be used as a seamen's training center until 1984.

The Southern is one of six buildings Clarke plans to demolish over the next year for the the One Light Street project, which will occupy the area bounded by Light, Redwood, Baltimore and Grant streets.

In June, Clarke and his partners in Mirecourt Associates received a $6.1 million tax break and a $16 million loan from the City Council.

Clarke is seeking an additional break that would allow the owners of One Light Street to pay about $53,000 a year in city real estate taxes on the upper-floor offices for 10 years instead of the approximately $1 million a year he would have to pay otherwise.

With this legislation, Clarke predicts he will be able to lure office tenants and about $80 million in bank loans.

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