West-side project in need of extra funding

Discovery of asbestos, lead paint escalates Centerpoint plan cost

October 01, 2002|By Scott Calvert | Scott Calvert,SUN STAFF

The price tag for a high-profile Baltimore residential and retail complex has grown between $3 million and $5 million, and developer Bank of America is quietly working with the state to close a funding gap on the Centerpoint project.

Centerpoint -- a combination of renovated buildings and new construction projected to have 394 apartments as well as retail shops -- is widely viewed as key to reviving downtown's west side.

The project's price tag jumped from about $70 million to "the mid-70s" after workers found more lead paint, asbestos and other environmental hazards than expected, a top bank official said yesterday.

"The quantities of what we found are more significant than what we originally projected, so that's caused about a $3 million swing," said Maria Miller, the bank senior vice president overseeing Centerpoint.

Miller declined to discuss details about what caused other cost increases, but the total gap is $5 million, according to internal discussions at the Downtown Housing Council, a group promoting residential development.

That would push the total cost to about $75 million. Most of it is being financed from private sources.

The cost escalation is not the first for Centerpoint. In December 1999, when the city picked Bank of America as the developer of Centerpoint, the bank estimated the job would cost $55 million.

As recently as this past spring, the total was listed at $61 million. The number climbed to $70 million after contractors said they would charge more than the bank initially expected, Miller said.

Miller stressed that Centerpoint, still in the very early stages, "continues to go forward." The rising cost is the second bit of recent bad news on Centerpoint, which is often listed with the Hippodrome Theatre as vital to the city's ambitious effort to revive the west side.

Last week, Miller confirmed that the bank dismissed a Centerpoint subcontractor whose workers apparently removed too much material from buildings that are to be restored. The damage was not enough to endanger at least $6 million in state and federal historic tax credits, state officials said. The removal of the subcontractor, Virginia-based Southern Environmental Companies, was not a factor in the most recent cost increase, Miller said.

To help balance the project's fattened budget, the bank is talking with the state Department of Housing and Community Development about a possible state loan with attractive repayment terms.

Already the bank is in line to get $1.5 million from a state fund that aids the conversion of outmoded office space into housing.

"We are trying to increase the office space conversion loan or find another source," said Peter Engel, director of multifamily housing at the state housing department.

The loans can be made "soft," meaning they must be repaid only in years when the project takes in enough money to cover debt payments. At this point Engel said discussions involve an increase of $500,000 for Centerpoint -- not enough to close the gap.

The bank could also turn to the Baltimore Community Development Financing Corp. for additional financing.

"We stand ready to look at the gap, see what role we could play," said Gary Brooks, executive vice president of the quasi-public agency, which runs programs for homebuyers and commercial developments.

He said his agency is "sort of a backup" at the moment but could make a loan if need be. Its loans might appeal to Bank of America, Brooks said, because borrowers can take longer to repay than under a typical bank loan.

Although Centerpoint is a Bank of America project, it is being undertaken by a subsidiary called Banc of America Community Development Corp. that cannot tap the bank's funds at will.

"We're confident we're going to get it in hand," Miller said of the rising cost.

She said the first portion of the project -- 70 apartment units and ground-floor retail on Howard Street -- is due to be finished in fall 2003. The rest of the project will wrap up between then and mid-2004, she said.

The only other public funds in the Centerpoint equation are a $300,000 streetscape grant from the state and $1 million the city has committed for utility improvements, Miller said.

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