Plans for city casino advance, but legal hurdle arises

Original developer seeks injunction to halt other proposals

April 27, 2011|By Julie Scharper and Nick Madigan, The Baltimore Sun

As state and city officials move to revive plans for Baltimore's long-delayed casino, a developer who struck a deal two years ago on the downtown site is seeking an injunction to halt new proposals for the land.

The casino, which could house 3,750 slot machines on a site south of the city's two sports stadiums, has been entangled in a knot of lawsuits since a 2009 deal with Canadian developer Michael Moldenhauer fell through. After he failed to meet certain requirements, the state rejected his slots proposal.

Moldenhauer's Baltimore City Entertainment Group filed a request today for a temporary restraining order that would prevent officials from pursuing competing proposals until there is a resolution to his appeal of his elimination from the process.

Officials are trying to sweeten rental terms on the 17-acre site as they seek new development proposals. The move is designed to propel plans for the casino on Russell Street, near Oriole Park at Camden Yards and M&T Bank Stadium.

The city's Board of Estimates was scheduled today to approve the terms to which potential developers must agree before applying for a state slots license. The terms will be outlined in the slots application, bypassing the need for additional negotiations between slots developers and the city.

"We think this provides a streamlined process for applicants," said Donald Fry, president of the state slots commission. "But this doesn't preclude the applicant from negotiating a sweeter deal with the city."

The commission hashed out the final details of the request for proposals at a meeting Tuesday and expects to release the document later this week, assuming the city spending board approves the terms. Applications would be due at the end of July, and the project would likely be awarded late in the year, Fry said. Construction would probably begin in early 2012.

Also on Tuesday, the slots commission decided to reconvene in June to negotiate the terms of a request for proposals at Rocky Gap, Fry said. The state has not been able to attract a casino developer for the Western Maryland location.

Kaliope Parthemos, first deputy mayor for economic development, said the new request for proposals for the Baltimore site is designed to ensure that the city receives a high-caliber casino.

"We want to make sure that we have bidders that come ready to have a premier gaming site," said Parthemos. "We want to be sure this is the place people come to. They have to knock it out of the park."

Revenue from the casino will allow the city to lower property tax rates, which are nearly twice as high as in most surrounding jurisdictions, she said.

Moldenhauer's company submitted the sole application to develop the site in 2009 and tendered the required $3 million license fee, which his court document says has yet to be returned.

The city and Moldenhauer filed competing lawsuits, which were partially resolved. In February, Baltimore Circuit Judge John Phillip Miller ruled that Moldenhauer had no claim to the slots parcel.

Lawyers for Moldenhauer asked the commission to delay the request for proposals, but the commission, after consulting with attorneys, decided to go ahead. "We thought we were on sufficient legal standing to move forward," Fry said.

Moldenhauer's legal filing today asserts that his company "will suffer irreperable injury if the court denies a temporary restraining order and preliminary injunction until after all appeals have been exhausted." Using the acronym for his company, BCEG, the document maintains that the developer stand to lose its statutory right "to have its bid fairly and equally evaluated" by the Maryland Video Lottery Facility Location Commission if the new request for proposals is allowed to go ahead.

For BCEG to participate in the new proposals process, Moldenhauer says, the company would have to tender an additional $3 million licensing fee, putting it at a competitive and financial disadvantage in relation to other developers. "The Location Commission is already holding $3 million of BCEG's money," the document says.

After Moldenhauer filed his initial application, other developers said that they had not understood where they could build. The request for proposals clearly identifies the land parcels where a casino can be built, as well as those that can be used for parking lots, restaurants and other amenities, Parthemos said.

"We're trying not to repeat the mistakes of the past," she went on. "That was a priority for [Mayor Stephanie Rawlings-Blake] when she came in and something I've been working on with the [Baltimore Development Corp.] and the commission."

Parthemos said several developers have expressed interest in building the casino. "I think we're going to have more than one [applicant]," she said. "The more the better."

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