Trade center buyer may be chosen soon

The state is considering `multiple offers' with decision likely this month

Democrats protest

August 18, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

The Maryland Department of Transportation could pick a buyer this month for the signature World Trade Center tower at Baltimore's Inner Harbor, an asset that has produced lackluster returns since it was damaged in Tropical Storm Isabel three years ago.

Top Democratic lawmakers who have been briefed on the process say they think the Maryland Port Administration has done a poor job of managing the 31-story building - now half-vacant - but also question whether the Ehrlich administration will get a good deal if the sale proceeds.

Transportation Secretary Robert L. Flanagan said he is reviewing "multiple offers" for the pentagonal I.M. Pei-designed tower just steps from the water. He said that it is not a foregone conclusion he will accept one of them, and that he is "keeping all options open."

Flanagan said the building has never been managed well because the state lacks the expertise to act as a landlord for a first-class office building. Selling it would allow the port administration to focus on its core mission, provide a welcome boost of cash and put the building back on the state and local tax rolls, Flanagan said.

"The original purpose of the building had been to anchor the Inner Harbor development back in 1980, and that purpose has long since been served," he said. "I became convinced that the building should be sold."

Del. Galen R. Clagett, a Frederick Democrat who is also a commercial real estate broker, said he thinks the two appraisals that the state received for the building reflect about half of what the building is worth. One pegged its potential sale price at $30 million and the other at $37 million.

"In my opinion, and I've been in this business for 20 years, this is the worst possible time because they only have a 50 percent occupancy rate," Clagett said. "Anybody knows to sell a commercial property like this one, you should have no more than a 5 percent vacancy rate. It drives the value of the building way down."

When the state designated the building as excess property in April last year, it estimated the sale could generate $30 million to $45 million. In last year's budget, the port administration estimated that it would net $35 million from the deal, which would be used toward dredging a 50-foot channel at Seagirt Marine Terminal.

Now, state fiscal analysts and legislators who have been briefed on the negotiations say the offers are closer to $30 million. Democrats say it looks as if Gov. Robert L. Ehrlich Jr., a Republican, is trying to push through the sale, whether it's in the state's long-term interests or not.

"It's an uncertain market, and it's really unfortunate to discuss it at this time with the election only a couple of months away," said Senate President Thomas V. Mike Miller, who said he wants another appraisal of the building. "This was a recommendation by Ehrlich's transition team, and for four years they've done nothing until right before the election."

Running for office during a time of fiscal distress, Ehrlich made disposing of excess state property a campaign promise, and he ordered government departments to review their assets to determine what could be sold.

The effort raised the ire of the state's environmental community in 2004 when his administration worked out an arrangement to buy a tract of St. Mary's County land for preservation and immediately sell it without an appraisal to an anonymous buyer, who was later revealed to be prominent construction company owner Willard Hackerman.

About the same time, the state Department of Natural Resources identified 3,000 acres in and around state parks that could potentially be sold, leading to a backlash in the Democrat-controlled General Assembly.

Transportation Department spokesman Jack Cahalan said the number of bids, the identities of the bidders and the details of their offers for the World Trade Center property are being kept confidential.

News reports this spring identified Orioles owner Peter G. Angelos as one of the bidders. But Angelos - an Ehrlich supporter who is planning a fundraiser for the governor next month - declined to say whether he has an active offer for the building.

A briefing document prepared by the Department of Legislative Services says the Department of Transportation picked a bidder this April and signed agreements to allow him or her to perform due diligence on the building. But the two sides couldn't agree on final sale terms, so the department reopened the process to the top six bidders, allowing them each access to the building for closer inspections.

Offers from them were due Aug. 4. Cahalan said Flanagan would likely have a decision within about two weeks.

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