City On The Hook For Developer's Loan

Struggling Struever Project Leaves $700,000 Debt

April 30, 2009|By Annie Linskey | Annie Linskey,annie.linskey@baltsun.com

The financial woes of one of Baltimore's best-known development companies are rippling through government, with Baltimore lawmakers allowing the developers to walk away from $700,000 in loans on Wednesday and state officials growing concerned that the company will be unable to fulfill its commitments for a planned $1.6 billion office complex in midtown Baltimore.

Struever Eccles and Rouse is known for its historic rehabilitation of city industrial buildings, including Tindeco Wharf and Clipper Mill. Facing millions in debt, the company has in recent months sought to sell key pieces of property, including the gleaming headquarters it redeveloped at Tide Point.

On Wednesday, the city's Board of Estimates renegotiated a loan it granted Struever 25 years ago to redevelop Church Square Shopping Center in East Baltimore.

The effort was heralded as a "textbook project in community development," according to a 1987 Sun article. The project included a partnership between Struever and four inner city churches, and brought 11 stores to an impoverished part of the city at Ashland Avenue between Caroline and Bond streets.

But the grocery store that was the anchor for the project pulled out recently. Owner Bill Struever is now considering a $1.5 million offer for the property, and for the past few months has sought to change the terms of the $1.7 million he still owes the city.

Baltimore's housing department initially accepted a deal that allowed Struever to take almost all of the proceeds of the sale, paying only $100,000 toward outstanding city loans. That arrangement caught the attention of Comptroller Joan M. Pratt, who called it "an insult" and who pressed the housing department to drive a harder bargain.

Officials next negotiated to let the city and the developer split sale proceeds, giving developers a $434,000 profit. Again, Pratt pushed back. In the end, the developer will receive $217,000 if the sale goes forward.

"I believe we should get 100 percent of it," Pratt said.

Speaking before the Board of Estimates on Wednesday, Housing Commissioner Paul T. Graziano said the project has created over a hundred jobs. Peter Engel, an assistant housing commissioner who worked on the deal, said the original proposal left the city to recover more than $100,000, and stressed that developers rely on public incentives to develop low-income areas. "We do the lending that the private sector wouldn't do to stimulate these projects," Engel said. "That almost always puts our money at greater risk."

Across town, it is now uncertain whether Struever Bros. will be able to maintain its lead role in a planned $1.6 billion, mixed-used redevelopment around the state's 28-acre office complex in midtown Baltimore.

Maryland officials still hope to ask the Board of Public Works to approve in June a master development agreement that would allow the project to break ground by late 2010, said Michael A. Gaines Sr., assistant secretary for real estate in the Department of General Services. But Howard Freedlander, an aide to State Treasurer Nancy Kopp, said "we've been told that the state is examining the structure of the development team in light of what everybody knows" about Struever Bros.

Gaines said the development team, led by Struever, is "pursuing a financial strengthening," but would not provided specifics. Bob Rubenkonig, a Struever spokesman, refused to answer any questions, other than to affirm that the firm remains involved with State Center. Struever could not be reached for comment to discuss either project.

Meanwhile, in Charles Village, Johns Hopkins University officials are trying to buy a prime parcel of land that was to be developed by Struever into a mixed-use residential, retail and parking development called The Olmsted, in the 3200 block of St. Paul St.

The project was initially envisioned as a 12-floor building of luxury condominiums, but switched to smaller, more affordable apartments as the market began to slow

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