Construction starts on long-delayed Zenith apartments

October 07, 2005|By DOUG DONOVAN | DOUG DONOVAN,SUN REPORTER

The price tag has gone up by $12 million, and the height has come down by 50 feet.

But after years of delays in design and financing, the Zenith apartment tower is finally set to rise from a city-owned parking lot across from Camden Yards.

The $46 million downtown project celebrated its official groundbreaking yesterday at Pratt and Paca streets, the same corner where Mayor Martin O'Malley stood with the African-American development team in May 2002 to herald the Zenith as a showcase of his efforts to foster minority-owned businesses.

Economic development is not easy, O'Malley said yesterday.

"Politically it's not easy; it's even more difficult for those who are risking their dollars and putting their livelihoods on the line to make things happen," O'Malley told a crowd gathered beside a Zenith construction site bustling with earth-moving equipment. "This is an exciting time for our city."

Developer Brian D. Morris, chief executive of Legacy Harrison Enterprises, said the 191-unit Zenith is on track to open in the spring of 2007 - a far cry from earlier promises of a 2004 delivery.

"Things are progressing on schedule," said Morris, chairman of the city school board.

As O'Malley runs for governor, the Zenith construction and the neighboring convention center hotel project could significantly buttress the mayor's standing with labor unions and developers.

Both stand to benefit from jobs and contracts created by the two skyline additions in downtown's west side.

For example, the $305 million hotel is projected to create 500 union jobs and will be subject to a city law requiring certain percentages of subcontracts to go to firms owned by minorities and women.

The 21-story, glass-encased Zenith is expected to generate $17 million in union labor wages and 120 jobs over the next two years, officials said.

Ron DeJuliis, president of the Baltimore Building and Construction Trades Council, said yesterday that the Zenith will also create 440,000 hours of work and boost membership in trade unions.

In addition, about 30 percent of subcontracts for Zenith construction, led by Whiting-Turner Contracting Co., will go to firms owned by minorities, city officials said. And 5 percent is slated to go to companies owned by women.

DeJuliis said the work force should be just as diverse. "This is a unique partnership," he said.

Much of the project's delay involved difficulties securing financing by Morris and partner Dean S. Harrison. But the result gave the Legacy Harrison Enterprises partners, who are both black, a 20 percent ownership stake and a well-heeled partner.

The majority investor is the national Multi-Employer Property Trust, a real estate investment vehicle financed by 246 pension plans, most of them union plans. A dozen or so represent Baltimore-area unions.

The project's original price tag was about $34 million, but has increased by $12 million because of rising construction costs, Morris said.

"We've come a long way and we have a long way to go," Harrison said.

The city has been supportive of the Zenith deal since its inception. The Board of Estimates, which the mayor controls, granted the Zenith a 15-year break on its property taxes.

The board also accepted $750,000 for the half-acre site - $450,000 less than Legacy Harrison first offered - after the Zenith's height had to be cut by 50 feet to avoid a helicopter flight path.

The final sale in December 2003, however, has come under recent criticism from City Councilman Robert W. Curran. His Judiciary and Legislative Investigations committee is examining why the city sold the land for far less than its appraised value.

The city's appraisal was completed Sept. 14, 2001, more than two years prior to the sale. It stated the value of the 23,015- square-foot property to be $1.96 million, or $85 per square foot. The final $750,000 price represents a value of $33 per square foot.

M.J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development agency, has said the developers could not maximize the land's value because of the reduced height.

He and O'Malley also said the city frequently sells land for below-market prices to get economic development projects moving faster.

"It took a little longer to get to this point, but it's under way," Brodie said yesterday. "It could have been a brick box with windows."

City Council President Sheila Dixon praised Morris and Harrison yesterday for their perseverance.

"We're going to make sure we see them through all the way," Dixon said.

Morris said the project could have been completed by now if the development team had replaced their vision for a luxury high-rise apartment building with a scaled-down, generic brick tower.

"Let me tell you why it took so long - we promised a world-class building," Morris said. "And we are going to deliver a world-class gateway building. We stuck to our guns and delivered."

doug.donovan@baltsun.com

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