The developer of the proposed Ritz-Carlton at the Inner Harbor began the process of acquiring the land yesterday, but serious hurdles remain before the often-delayed $165 million luxury hotel and condominium project can break ground.
New York-based L.I. Square Corp., the developer, notified the property owners that it intends to buy the 5.6 acres at 801 Key Highway within 15 days under terms previously negotiated and about to expire.
A sale price and terms were not disclosed.
"Today was a big day in the history of the project and the history of Baltimore," said Edward V. Giannasca II, president and chief executive officer of L.I. Square.
Giannasca said Philip Pilevsky, L.I. Square's principal owner, came to Baltimore yesterday to "make funds available" for the land purchase. The land is owned by Richard Swirnow, president of HarborView Properties Development Co., which is developing the neighboring housing complex; Philadelphia-based venture capital firm Lubert-Adler; and the Johns Hopkins University.
Swirnow could not be reached for comment yesterday but said recently that he expected a deal soon.
As part of the agreement, the wife of the original developer, Stuart C. "Neil" Fisher, will also receive a fee from L.I. Square for giving up rights to the land.
Fisher was replaced as head of the Baltimore development team in January 2000 after reports of past development failures, multiple bankruptcies, business associates with criminal convictions and an unpaid judgment for fraud in a Maryland land deal put off the city and the Ritz-Carlton Hotel Co., which will operate the hotel.
Fisher said yesterday that his wife, Tamara Jeanne "T.J." Mize, is the option holder and will collect the fee.
"The option was exercised. It will be closing in 15 days, and my wife will get paid," he said.
Fisher had said within the past several months that he would earn no less than $3.35 million - the same as the assessed value of the land. But he said yesterday that the fee would be much lower.
Giannasca would not discuss the fee. But he did say costs were an issue in the decision to close on the land.
L.I. Square's option to buy the land had already been extended once - through October - by the landowners. A proposed second extension until the end of the year would have been costly.
"The revision included quite a few new terms that were different, in some cases more expensive," Giannasca said. "It was so radically different that it absolutely forced us into closing at this time."
The project, proposed by Fisher more than 2 1/2 years ago, has grown in cost by tens of millions of dollars.
It's now a 225-room hotel and 97-unit condominium project. None of the condominiums, which would range in price from $475,000 to $3 million, have been sold yet. But the developer said more than half are committed to people who have put down refundable deposits of $25,000.
The largest remaining hurdle is financing.
The project still does not have all the needed lending commitments, and the increasingly tough economic climate has dimmed its chances somewhat.
Giannasca said a deal for financing is near. But L.I. Square has missed several deadlines to close on the land and break ground.
He said L.I. Square signed an agreement yesterday with a lender for a construction loan, one of two loans the project requires. However, he declined to identify the lender.
No mortgage for the project has been arranged.
Real estate experts have questioned the chances of securing loans now that the economy has soured and major hotel developers and owners say they will cut their development pipelines.