May 29, 2009|By Gadi Dechter | Gadi Dechter,gadi.dechter@baltsun.com
A planned $1.5 billion redevelopment of Midtown Baltimore's State Center complex came under harsh criticism Thursday from legislative analysts who told lawmakers that the current public-private deal "is not in the best interest of the state."
In two afternoon briefings, for the Senate and House of Delegates budget committees, nonpartisan analysts questioned the viability of the State Center expansion, arguing that it is based on excessively rosy assumptions of commercial and housing demand in the city. Budget analyst David B. Juppe testified that the proposed financing scheme is more expensive than usual for state construction and that projected tax revenues are "overly optimistic."
Despite those concerns, the Senate Budget and Taxation Committee voted unanimously to recommend that the Board of Public Works approve next week a master development agreement that could allow the project to break ground by summer of 2010. The lawmakers' conditioned their recommendation on oversight authority by the legislature and on-going independent supervision by the Maryland Stadium Authority, as analysts recommended.
The House of Delegates' panel is likely to take a similar position, a spokeswoman for Speaker Michael E. Busch said.
The mixed-used development around the 28-acre office complex, which holds the largest concentration of state workers in Maryland, has been hailed as a model for urban renewal that would include commercial and residential space near a number of major public transit hubs.
But its future has become uncertain amid a recession that has relegated the original developer, Struever Bros. Eccles & Rouse, to a smaller role because of mounting debt.
More than 3,500 state workers work in State Center's aging buildings, some of which are in urgent need of repair or replacement. The redevelopment proposal envisions a combination of new and rehabilitated buildings that include 2 million square feet of commercial office space, 1,100 housing units and 5,300 parking spaces.
The developers also expect to bring 250,000 square feet of retail space, including a grocery store, to a major urban parcel that is now largely empty after state workers leave for the day.
The master development agreement faces scrutiny from the Board of Public Works at its June 3 meeting.
The future of the State Center project had been thrust into doubt recently after a legislature-commissioned report by Treasurer Nancy K. Kopp indicated that the project could cause the state to exceed its debt limit within 10 years. Kopp sits on the spending board, along with O'Malley and Comptroller Peter Franchot.
Matthew D. Gallagher, O'Malley's deputy chief of staff, told the budget committees that the administration welcomes oversight by the legislature. He emphasized that signing a master development agreement next week "does not commit the state to this project" - though it does put the state on the hook for $3 million to $5 million in payments if it ultimately chooses not to sign a long-term lease assuring state agencies as the project's anchor tenant.
Legislative analysts criticized the O'Malley administration for not "sufficiently" considering lower-cost alternatives to the aging State Center, such as selling bonds to finance smaller-scale renovations, or simply selling the complex and relocating state agencies.
But state officials said that leveraging the state as a major office tenant would attract the kind of mixed-use development in midtown Baltimore that the market otherwise will not support.
"This is probably the single-best opportunity in the state for transit-oriented development," said Transportation Secretary John D. Porcari, who argued that a dense commercial, residential and retail district would link now-separated light rail and subway hubs at State Center, and encourage use of mass transit.
While the legislature's approval is not required for the state to enter into a deal with private developers, the General Assembly could withhold future funding for the project.
