City property owners amend State Center lawsuit

Downtown landlords question legality of state-financed garage

February 01, 2011|By Lorraine Mirabella, The Baltimore Sun

Downtown commercial property owners fighting the planned $1.5 billion State Center development in Baltimore are now questioning the legality of plans to build a $33 million parking garage that would be financed mostly by the state.

In an amendment to a lawsuit the group filed in December, plaintiffs say the state allowed developers to bypass competitive bidding laws and privately select their own contractors, architects and engineers, even though the state Board of Public Works voted that month to pay for the underground garage through a bond sale. The bond sale has since been postponed.

The plaintiffs accuse the state, which owns the site and is overseeing redevelopment, of engaging in a pattern of unlawfully awarding benefits and negotiating rights and development opportunities to the development team, led by Baltimore-based Ekistics LLC.

The lawsuit filed in Baltimore Circuit Court against two state agencies and developers seeks to stop work on the project to transform the outdated Maryland government complex on 28 acres into a transit-oriented mix of new offices, housing and shops. It says public officials failed to follow state procurement laws when they granted developers building rights and long-term leases at above-market rates for state agencies.

Plaintiffs say the project would divert business and tenants from the downtown commercial district — which landlords say has plenty of vacant office space — and is too costly for taxpayers.

"Saddling taxpayers with another $33 million in debt should never happen without due process," Alan M. Rifkin, lead council for the plaintiffs, said in a statement.

Caroline Moore, chief executive of Ekistics, has said she believes that all state laws were followed and that the redeveloped State Center would help, not hurt, downtown.

"We find the lawsuit to be frivolous, and we will seek a quick dismissal," she said in an interview Tuesday. "We've been working on this project for five years in an inclusive and transparent way and believe the state [used] the correct process in awarding it to us."

The amended complaint adds a North Charles Street restaurant, David and Dad's Inc., as a plaintiff concerned about the redevelopment's impact on downtown retailers.

The court challenge forced the Maryland Economic Development Corp., or MEDCO, to cancel plans last month to sell $33 million worth of bonds, which would have covered the state's $28.2 million portion of the garage construction as well as closing costs, interest and debt reserves.

The developer is to contribute at least $4 million toward the garage, which is to be the first phase of construction of the 15-year project that ultimately could include 2 million square feet of public and private office space, 1,400 rental and for-sale housing units, and 250,000 square feet of ground-level shops.

The project's $200 million first phase is to house three state agencies leasing more than a half-million square feet.

"MEDCO is standing ready to do the financing whenever they can get these suits dismissed," Robert Brennan, its executive director, said Tuesday.

Despite a delayed groundbreaking for the garage, "there is plenty of work to do and we are going forward as we would normally and not missing a beat to keep the project on track," Moore said. "We're not discouraged or concerned about the process of the lawsuit changing our normal schedule to proceed with Phase 1 of State Center."

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