Harbor East Boomtown

A waterfront investment that began as a favor is shifting the gravity of Baltimore's downtown

City Development

March 04, 2007|By Jill Rosen | Jill Rosen,Sun reporter

When she envisioned a deluxe newsstand, the kind of place to find glossy magazines in dozens of languages, obscure literary journals and fashion quarterlies that cost as much as $90, Christina Cieri thought of only one location. Harbor East.

"If I couldn't do it here, I didn't want to do it," the Harbor News owner says. "Do you see it in Federal Hill? In Mount Vernon? In Fells Point? In Canton? I don't."

She felt this neighborhood's promise and wanted a part of it. Here, she says, "it's all about the future."

Brick by brick, building by building, block by block, this neighborhood rising in a hurry at the water's edge is growth more intense than Baltimore has known.

The latest piece alone, and just an element of the mix, shatters city records for private investment with its fusion of offices, hotels, condominiums, stores and a multiplex.

Roads, if not the public transportation system, will have to bend to meet Harbor East's needs. Someday its tax payments will change what the city can afford.

While vast swaths of the city struggle to lure development, confidence saturates these streets. Stylish boutiques are moving in next to trendy restaurants, which open underneath exclusive apartments - even as coveted companies forsake the traditional business district to set up amid it all.

Harbor East, people agree, is tilting Baltimore's axis.

It's grabbing at downtown's boundaries - if not the essence of downtown itself - and forcing people to rethink truisms about everything from Baltimore's unrefined tastes and its economic potential.

All on what not long ago was an industrial stretch so grim that the businessman - a baker, of all things - who ended up with it only wanted it off his hands.

"This?" gasps John Paterakis, the H&S Bakery magnate behind Harbor East. "Whoever tells you we had it all planned, that's bull crap.

"When I look out at all of this I say to myself, `Not in our wildest dreams.'"

$11 million favor

All swagger and cigar smoke, Michael Silver looked like the man to watch in 1984.

Though just a couple of years earlier the bushy-haired former aide to Gov. Marvin Mandel was pulling in less than $40,000 a year at the state property tax office, the 39-year-old had become an overnight real estate force, amassing a breathtaking portfolio of expensive waterfront property.

When asked about his plans for the land, which stretched for blocks along the eastern side of the just-beginning-to-bloom Inner Harbor, Silver, puffing on his ever-present stogie, would say something like what he told The Sun that year: "I'd be foolish to tip my hand now. ... All you have to know is that I think the land is valuable and will become more valuable."

Within a year of that comment, Silver was bankrupt. Baltimore's Old Court Savings & Loan, which backed his land purchases, had collapsed after accusations of mismanagement prompted a run on the bank.

The would-be developer's fast talk and bad checks couldn't keep creditors at bay. Eventually they threatened to start selling his property, piece by piece by piece.

Although the land might have been desolate, dead space between Fells Point and the Inner Harbor, home to little beyond lots, lumberyards and warehouses, Mayor William Donald Schaefer worried what would happen if the wrong person picked it up in a fire sale. He couldn't have any mistakes so close to his five-year-old Harborplace, the city's first attempt at a real tourist attraction.

So Schaefer called on one of Baltimore's most well-to-do businessmen, someone with his own interests in the east side of town, someone who had given profusely to the mayor's campaign -Paterakis.

The mayor asked the millionaire to stave off Silver's banks by writing a check for $11 million. For the favor, Schaefer promised that in a year the city would buy the land for $13 million.

Paterakis put up the money. But Schaefer didn't honor the deal.

He told Paterakis the city budget was dry - and that even if it weren't, he thought Paterakis making $2 million off the arrangement would be a public relations disaster - as if the mayor had set up a sweetheart deal for a big donor.

"When Schaefer decided that, it was not the brightest day of my life," Paterakis says. "I walked out of his office and said, `What am I going to do with 20 acres of land?'"

Bigger ideas

John Paterakis, who turned 78 Friday, is posing, stiffly, for photos in the lobby of his corporate headquarters on Fleet Street. He's affably, though not exactly enthusiastically, making an exception to his long-standing media avoidance practices.

The modest lobby, more of a roomy vestibule, would be bare if not for sedate portraits of Paterakis' parents, Greek immigrants who started the bakery from an East Baltimore rowhouse, and a bronze casting of a cowboy fighting to stay atop a bucking horse.

Together the two get at the heart of the Paterakis formula for success: Respect what got you here. Don't shy away from a wild ride.

Developing those 20 acres would prove to be a tumultuous ride indeed.

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