Ruling stalls city plan

Redevelopment by Penn Station frozen by `quick take' case

April 24, 2007|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

An ambitious city plan to redevelop a moribund site across from Penn Station is on hold more than a year after Baltimore officials approved seizure of the long-vacant Chesapeake Restaurant to make way for new shops, restaurants and housing.

After winning a key approval in October 2005, city economic development officials had expected to move quickly, hoping to build on momentum in the Charles North neighborhood spurred by the popular Charles Theatre, thriving nearby restaurants and new condos and townhouses promoting train station access. But a recent high court ruling favoring the property owner in his challenge of the taking has stalled redevelopment.

In its decision April 12, the Court of Appeals ruled that Baltimore Development Corp. showed no justification for using a condemnation tool called "quick take," which allows jurisdictions to take immediate title to a property. Rather, the court said, such a speedy condemnation could violate property rights.

City officials now say a failure to take control of the former restaurant and adjacent properties would mean the end of the multimillion-dollar makeover of the gateway to the Charles North arts and entertainment district.

"If for some reason, we are unable to acquire it, that's the end of this development," said M.J. "Jay" Brodie, BDC president.

In September 2005, the agency chose Station North Development Partners LLC to build Chesapeake Square, an estimated $40 million to $50 million development of shops, restaurants, an art gallery, subsidized artists' lofts, a 91-unit condominium tower and 11 townhouses.

The project in the 1700 block of N. Charles St. was to incorporate the four-story restaurant, vacant since the mid-1980s, a parking lot and two rowhouses on East Lanvale Street.

It would be the largest new development ever for a neighborhood on the cusp of renewal, where vacant homes are being renovated and developers are investing in building new condos and townhouses, such as the Station North townhouses on Calvert Street a block north of Penn Station.

The city and Station North Development Partners had planned to enter into a six-month negotiating period over the project and purchase of the Chesapeake properties. But because the BDC has been unable to acquire the properties, the city never entered into the agreement with the team: Tower Hill Development & Consulting LLC; Michael and Alan Shecter, the owners of buildings on the block; Florida-based developer The Miller Group and Stephen A. Masciola.

"We still believe this is potential major development at the gateway to Charles North," Brodie said. He said the developers have continued to express interest, "but they have not spent any serious money moving forward until they know we are able to assemble the site on which they made their proposal."

Matt Hoffman, a spokesman for Tower Hill, declined to comment on his team's plans.

The city's Board of Estimates approved the "quick take" condemnation of the property for $770,000 in October 2005, and in December of that year, the city filed to condemn the property, including in its Circuit Court action a petition to take immediate title. The court granted the petition several months later. Chesapeake owner Robert A. Sapero appealed. At the time, Sapero said he had a contract to sell the property for $2 million.

In its April 12 ruling, the Court of Appeals said the city failed to show a need for immediate possession of the properties. That ruling came on the heels of another that favored individual property rights over the city's use of quick take.

In that case, the Court of Appeals ruled in February that the BDC had no immediate need to condemn The Magnet bar, one of more than a dozen properties the city has identified for condemnation as part of the urban renewal of Charles North, an area bounded by 20th Street, Hargrove Alley and Falls Road. Owner George Valsamaki has closed the bar and is working to negotiate a settlement with the city, said his attorney, John C. Murphy.

In the case of the Chesapeake, the city still has the option of proceeding with a regular condemnation and will likely do so, City Solicitor George Nilson said.

"We've already made the decision. ... I would say we'll act on it with dispatch," Nilson said. "Obviously, the developers and the city alike would have preferred we'd been in a position to move more promptly. The developer has been patient. Our hope is the developer will continue to be patient."

He said the city is obtaining fresh appraisals on the properties and that it is possible the original appraisal would increase. If no settlement is reached with Sapero, the case would proceed to a jury trial.

A regular condemnation, unlike the quick-take process, will give Sapero the necessary time to go through the discovery period to seek out information to better defend the case, said his attorney, Alan R. Engel.

"If it can be shown that there might be some ulterior motives behind what's going on, and if this is not a truly taking for public purpose, it's possible the condemnation case could be thrown out," Engel said.

Sapero, contacted yesterday, would say only that there would be additional litigation, "unless the city recognizes its responsibility. At this point the city is presumably going forward and we will proceed accordingly."

"There are a lot of ramifications to the current status," he said. "We're reviewing the conditions, and we expect to respond and proceed according to the circumstances. I'm considering the ramifications and the future for the Chesapeake."

Sapero said he has had no contact with the city since the court ruling voiding the quick take.

lorraine.mirabella@baltsun.com

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