Lawsuit targets west-side project

Angelos, developer want city to scrap superblock deal

February 28, 2007|By Eric Siegel and Jill Rosen | Eric Siegel and Jill Rosen,Sun reporters

Companies controlled by Orioles owner Peter G. Angelos and developer David Hillman filed a lawsuit yesterday against Baltimore Development Corp. and the city, asking that a multimillion-dollar deal with a New York-based developer to overhaul a key swath of the city's ailing west side be declared illegal and scrapped.

The suit is the latest turn of events in the twisted and long-running effort to revitalize the superblock, a critical link in bridging downtown and the burgeoning University of Maryland. It brings into a contentious process two high-profile figures with major investments in the area.

The suit is also the latest challenge to the practices of the BDC, the city's economic development agency, which in recent months has been ordered by the courts to comply with the provisions of state open-meetings laws and to modify the way it uses eminent domain.

In the suit filed in Baltimore Circuit Court, the Angelos and Hillman companies say the agreement between the city and Lexington Square Partners LLC improperly included a key parcel not listed in the original bid package and inappropriately allows the developer to deduct nearly half of the $21.6 million purchase price for expenses such as demolition and environmental remediation.

"This is a suit by people who are very concerned with the delayed and nonexistent development of the former heart of the Baltimore City business district," said M. Albert Figiniski, attorney for the plaintiffs. "This process began in 2003 and has netted, to date, no appropriate plan for redevelopment."

City Solicitor George A. Nilson said he had not seen the lawsuit but that Figinski had met with him as a courtesy 10 days ago and that he "knew it was coming."

"We'll of course review the lawsuit, and we'll defend it and expect and hope to win and the city will proceed with its plans," Nilson said.

Nilson wondered how the lawsuit would speed up redevelopment of the block and questioned the standing of the plaintiffs to bring the lawsuit given that neither Angelos' nor Hillman's companies bid on the project.

The 3.6-acre superblock is bounded by West Fayette, Howard, Lexington and Liberty streets.

Last month, the city's Board of Estimates, which approves spending and contracts, approved the deal negotiated by the BDC to sell 37 properties on the block to Lexington Square Partners LLC.

Under the agreement, Lexington Square Partners could deduct up to $10 million from the purchase price for the costs of demolition and environmental cleanup. The agreement also calls for the city to pay unspecified costs of reconfiguring streets and relocating businesses.

Two years earlier, the city had selected a team that included Lexington Square principals to redevelop the superblock.

That ended a lengthy bidding process but did not end the controversy over the superblock.

The Harry and Jeanette Weinberg Foundation, which owns significant properties on the superblock, wanted to develop it through a partnership with Baltimore's Cordish Co.

The city and the foundation had been negotiating a land swap for the superblock properties. When no agreement resulted, the city threatened to seize the properties and the foundation said it would fight the condemnation.

If the courts force the city to put the superblock out to bid again, it could help the foundation.

Yesterday, a foundation executive said he was caught off guard by the filing of the lawsuit.

"We would have to rethink our position," said Joel Winegarden, the foundation's vice president for real estate.

The lawsuit filed by the Angelos and Hillman companies is the third against the city prompted by the superblock award.

In 2004, a group of nine business owners whose properties were to be seized for the redevelopment sued, arguing that the BDC's closed-door decision-making was illegal. The case made it to Maryland's highest court, which in the fall ordered the city's economic development agency to open its books.

The Court of Appeals remanded the case to Circuit Court, which must decide whether the city needs to solicit new bids for the project, in public this time.

Arnold Jolivet, president of the American Minority Contractors and Businesses Association Inc. in Washington and a founder of the Maryland Minority Contractors Association, filed a suit about a month ago claiming that the award process violated the city's competitive-bidding laws.

In the lawsuit filed yesterday, Angelos' and Hillman's companies argue that the project must be put out for new bids in part because the winning team ended up with valuable land, the former Greyhound terminal on West Fayette Street, that wasn't part of the city's original offering. That, the suit contends, was unfair to other bidders who didn't get a chance to include it in their proposals.

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