Ruling gives new life to Ritz project on Harbor

Stalled luxury complex seems to be moving ahead

January 14, 2004|By June Arney | June Arney,SUN STAFF

A long legal dispute that delayed progress on a Ritz-Carlton luxury hotel-condo complex on Baltimore's Inner Harbor has been settled, and the developers met with the mayor and city officials yesterday to discuss how to move the $155 million project forward.

The closed-door City Hall session was attended by lead developer Edward V. Giannasca II, representatives of his New York partner, Joseph Cayre's Midtown Equities LLC, and new participants in the project. It came a day after a Baltimore judge approved an agreement to end a lawsuit that had stalled the project since spring.

The lawsuit alleged that owners of the HarborView residential complex, which has 75 percent ownership of the 5.6 acre-site off Key Highway in Federal Hill, had reneged on a promise to sell their interest in the property for $5.4 million and had sought $16.5 million instead.

The court sealed the terms of the settlement, and the project's principals are not talking.

During the long legal delay, the likely composition of the Ritz project appears to have changed, adding more condominiums than originally proposed. The initial proposal called for 220 guestrooms and 97 condominiums.

Some believe the project could end up being exclusively residential.

Not established

"The mix at this point is not fully established," said Milton Pajak Jr., business development manager for Harkins Builders Inc., which had been involved in earlier planning of the project. "It's not what the initial concept was of a hotel/condo project. It has been changed since then."

Although the project has cleared public review, if there are changes that affect design and zoning, another review might be necessary.

"As methodical as Ed Giannasca is, I know that the project will happen, and it's one that Baltimore will be proud of," Pajak said. "He has put his heart and soul into it for years."

Giannasca did not return telephone calls yesterday.

Ritz-Carlton operates residential projects in Washington, Georgetown, New York City's Battery Park, Boston, Coconut Grove, Fla., Berlin, Md., and elsewhere and plans to open one in Grand Cayman late this year.

Michael Gotwald, a Washington architect and interior designer, said he is familiar with the Ritz-Carlton residences in Washington and Sarasota, Fla.

"Ritz properties are always a good investment because there aren't that many of them," he said.

"They're really quite elegant and wonderful with acres of marble in the bathrooms. They always pick prime spots. It's got water views and city views. They're very smart about it."

Gotwald, who used to live in Baltimore, predicted the project would be a tremendous boost for the city.

"I know it would be a good investment," he said. "They're only going to go up."

Initially, there were reservations to purchase more than 50 percent of the condo units, but reservations dropped to about 25 percent because of the long legal delay, according to a recent interview with T. Ross Mackesey, a branch vice president at Coldwell Banker and director of sales for the Ritz.

But definitive news on the project breaking ground would likely cause a big increase in people securing options to buy the units, he said.

"Many of the people who have gotten their deposits back have let us know, `When you're ready to go to hard contract, get in touch with us,'" he said. "They haven't done something else."

Progress on the Ritz project comes days after a competing Four Seasons hotel and residential project across the Inner Harbor received preliminary approval from Baltimore's Design Advisory Panel.

That 23-story development, with a proposed 200 hotel rooms and 26 to 28 condominiums, is a project of John Paterakis Sr.'s H&S Properties Development Corp., Struever Bros. Eccles & Rouse, and Doracon Contracting President Ronald Lipscomb.

Entertainment mogul

Giannasca secured Cayre, the wealthy New York entertainment mogul, with his Midtown Equities LLC, as a partner in the Ritz development in 2002.

Giannasca has spent about $9 million on plans, models and other expenses for the Ritz project. He also has won over skeptical neighbors and the city's architectural review panel.

With an agreement from the Ritz-Carlton Hotel Co., equity partners and demolition permits in hand, he had expected to close the deal to buy the land months ago.

Under the terms of an option granted in 1999, a partnership led by Richard Swirnow, developer of the neighboring HarborView project, was to be paid $5.4 million, Giannasca has said.

Another $2.5 million was to go to the Johns Hopkins University, to which Swirnow had given a 25 percent stake.

However, in a request for judgment filed in May, Giannasca charged that Swirnow and his partner, Lupert-Adler, a Philadelphia venture capital company, had refused to honor the agreement and wanted $16.5 million for their part of the 5.6-acre site, more than three times the original price.

In his court filing, Giannasca said the landowners were claiming that the original option for the site - extended several times - had lapsed and that the owners had an offer from Paterakis.

Swirnow's office declined to comment on the matter yesterday.

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