City board clears superblock deals

Board of Estimates appears to resolve final obstacles

November 08, 2007|By Lorraine Mirabella | Lorraine Mirabella,SUN REPORTER

Baltimore's long-stalled superblock project has cleared two of the last remaining hurdles, a move that city officials say should allow redevelopment of a blighted swath of downtown's west side to begin next year.

The Board of Estimates approved deals for several properties considered crucial to the project after years of opposition from their owners.

One of the owners also agreed to drop a lawsuit challenging the validity of the city's choice of developer Lexington Square Partners at a closed meeting three years ago. That suit, which was due for retrial in Baltimore Circuit Court, could have resulted in lengthy delays.

FOR THE RECORD - Because of a computer malfunction, several names were inadvertently changed in an article about the superblock redevelopment project in yesterday's Business section. The correct names are Chera Group, Feil Group, Kresge's store and Seon G. Koo.
THE SUN REGRETS THE ERROR

The agreements appear to resolve the major outstanding obstacles to the project, which has been mired in numerous controversies, including one that pitted the city against one of its largest and most influential charitable foundations.

"This removes a big uncertainty," said M.J. "Jay" Brodie, president of the Baltimore Development Corp.

In addition to abandoning its lawsuit, Carmel Realty also agreed to give up its right to contest the seizure of its Valu Plus store at 223-227 W. Lexington St. It also will forgo its right to develop a nearby property on North Howard Street in exchange for $2.7 million.

The Board of Estimates approved a separate settlement with the owners of New York Fashions to acquire its 12,000-square-foot flagship store and warehouse at Lexington Street and Park Avenue for $3.75 million.

The property was a key element in a land swap with the Harry and Jeanette Weinberg Foundation Inc., which is developing part of the project along with Baltimore's Cordish Co.

The land swap settled a bitter dispute between Weinberg and the city, which was threatening to seize the foundation's properties.

Yesterday's board actions mean Lexington Square can start next summer to build 400 to 500 new market-rate apartments and up to 250,000 square feet of shops and parking, said Jerome Hagley, executive vice president and chief operating officer of the Dawson Co., of Atlanta, a member of the Lexington Square team.

Hagley expects the city to convey the property by June and construction on the $250 million project to start shortly thereafter.

"We have significant amount of interest in the site." Hagley said. "When you're marketing to retailers, one of the main things they want to know is specifically when they'll be able to open, and that all goes back to when we have access to the site."

Lexington Square had been selected in 2004 to redevelop 37 properties in an area bounded by Howard, West Lexington, Liberty and West Fayette streets.

As part of the agreement approved yesterday, Lexington Square also will redevelop property at 117 to 121 N. Howard St., which had originally been awarded for development to Carmel.

Lexington Square will give up its right to develop buildings in a block bounded by Park Avenue and West Lexington, Liberty and Marion streets.

The board also approved a reduction in the price Lexington would pay for the properties to $16.8 million from the original $21.6 million because of the changes in its development site and to reflect the city's $2.45 million contribution to the Carmel settlement.

As in the original land sale agreement, the developer, which also includes team members Cheer Group and the Feel Group, both of New York, can deduct up to $10 million for environmental remediation and demolition.

Carmel plans to move its retail store, Valu-Plus, in the 200 block of W. Lexington St., to a former Presage's store it owns in the 100 block of West Lexington, said John C. Murphy, an attorney representing Carmel.

Carmel's lawsuit, originally filed on behalf of Carmel and other condemned properties in the superblock, argued that BDC, the city's development arm, had selected Lexington Square behind closed doors.

The suit had been dismissed by a Baltimore judge, but was reinstated when Maryland's highest court ruled that the BDC must open its meetings and its paperwork for public review.

"Carmel has a very successful store there in the 200 block, and that's always what they were fighting for," Murphy said. "They're losing that location, so it's difficult for them from that standpoint."

Murphy also represented New York Fashions owners Nam S. Koo and Seon G. Good. He said the two sides had reached a compromise between a July offer of $1.7 million from BDC and the owners' request for $5.98 million to cover the value of the buildings and losses in rent, income and inventory.

"It's been a long struggle for the Koos, and I was glad to see some recognition was given to the fact that they had lost a great deal of money staying in that location," Murphy said.

The store sits in an area north of Lexington Street, between North Howard Street and Park Avenue, where Cordish and the Weinberg Foundation plan at least 70,000 square feet of offices, apartments, shops and restaurants.

"Both the Weinberg Foundation and the Cordish Co. are delighted that the city and New York Fashions were able to amicably resolve their differences," e-mailed Cordish President David Cordish. "This opens up the rest of the Stewart's block for the Foundation/Cordish partnership."

But the timing of construction hinges on Lexington Square's plans, said Shale D. Stiller, Weinberg's president.

"Our agreement is, we don't begin our work until the group from New York has begun to do its work and build some buildings on the south side of the street," to enable the north side to attract tenants, Stiller said. "We would hope we could all get started as soon as possible."

lorraine.mirabella@baltsun.com

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