Store sale spurs effort

Stewart's building purchase key part of west-side plan

Compensation for tenants

Most work planned to be completed by middle of 2001

June 21, 2000|By Edward Gunts | Edward Gunts,SUN STAFF

In a deal that would launch a crucial part of Baltimore's $350 million plan to redevelop the west side of downtown, the city plans to buy the former Stewart's department store for $1.5 million today and then immediately resell it to the developer.

The paper transaction would allow street-level tenants, who would be displaced, to qualify for public relocation money, officials said.

The city also plans to buy two properties east of the Stewart's building, demolish them, and sell the combined property for $1 to the same developer, according to a land sale agreement prepared for consideration today by Baltimore's Board of Estimates.

The buyer is a group headed by the Harry and Jeanette Weinberg Foundation of Baltimore, which owns the Stewart's building at Howard and Lexington streets and plans to convert it to a $15.9 million, high-tech office center.

"We'll own it for approximately 30 seconds, and then sell it back," said M. Jay Brodie, president of the Baltimore Development Corp., the agency in charge of the transaction. No money will change hands, he added.

Weinberg representatives say they are eager to move ahead with renovation of the Stewart's building and are optimistic that it will be filled with tenants. "Economically, the time is right," said chairman Bernard Siegel. "People are interested in the area. We're ready to get under way."

The Stewart's building conversion is the first phase of Howard Street USA, a mixed-use development the Weinberg Foundation and Grid Properties of New York have proposed for a four-block district bounded by Howard, Fayette, Liberty and Clay streets.

Howard Street USA represents a key element of the city's $350 million west-side rejuvenation effort, which seeks to link Charles Center with the University of Maryland, Baltimore by turning the area in between into a vibrant neighborhood with offices, shops and more than 2,000 new residences.

The Baltimore Development Corp. selected Weinberg and Grid to develop the four-block district last year after they submitted the only formal bid in response to the city's request for proposals.

Proposed elements of Howard Street USA include 400,000 square feet of retail space, 350,000 square feet of office space (including the Stewart's conversion), 350 apartments, a cinema complex and parking for 1,000 cars. Part of the project is modeled after Harlem USA, a $66 million shopping and entertainment complex that Grid and others recently opened on 125th Street in Harlem, New York.

If the city did not acquire the Stewart's building, 226-232 W. Lexington St., retail tenants on its first level would not qualify for relocation benefits, Brodie explained.

The other two properties, a four-story building at 222 W. Lexington St. that houses the Top Creations fashion store and the New York Jewelry building at 224 W. Lexington St., are being acquired so developers can construct an addition that will provide a new eastern entrance to the Stewart's building from Lexington Street.

If the Board of Estimates approves the agreement, the acquisitions and demolition work would take place after July 1, when the funds become available. Construction work on the Stewart's building is expected to be substantially completed by mid-2001.

Brodie said the city will be responsible for buying the properties, relocating tenants and razing the two buildings at an estimated cost of $1.576 million. The breakdown is $440,000 for property acquisition, $106,000 for demolition, $1.005 million for relocation and $25,000 for settlement costs.

The owner of the property at 222 W. Lexington St., Faris Stuntz, said she is unhappy with the plan and unsatisfied with the $220,000 offered by the city for her four-story property. She also questioned why the city is taking her building before others on the block. "It's not fair," she said. "I feel discriminated against."

The development corporation received City Council authorization to acquire the Lexington Street properties more than a year ago. The source of public money for the project is voter-approved bond funds for economic development.

Brodie said the city is acquiring the properties at 222 and 224 W. Lexington St. because they are needed as part of the Stewart's development, but the city is not yet moving ahead with acquisition of properties that would be needed for later phases of the Howard Street USA project.

He said separate agreements for additional components of the Howard Street USA project will be presented to the Board of Estimates as plans are firmed up and that tenants of other buildings on the north side of the 200 block of W. Lexington Street have been notified they will not be displaced before the end of the year.

Brodie said the public expense is justified because the Weinberg group plans to invest $7.9 million for the base building renovations and that another $8 million will be spent on tenant improvements - a significant private investment in that block and a ratio of private-to-public investment of more than 10-to-1.

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