State Center legal fight ramping up with no end in sight

This article originally appeared in The Daily Record on Monday, August 21st.

State Center legal fight ramping up with no end in sight

By Adam Bednar

Gov. Larry Hogan’s hopes that a legal battle with the developer of the beleaguered State Center overhaul could be finished by this fall aren’t realistic, according to the builder’s attorney.

Michael Edney, a partner at Norton Rose Fulbright, which represents State Center LLC, said the state’s withdrawing a motion for summary judgment and a decision by a Baltimore City Circuit Court judge ordering discovery in the case to proceed show the legal fight is ramping up.

“There’s really no pathway for this case to be resolved in the fall of this year,” Edney said.

A hearing is scheduled for Aug. 29 to set a timeline for proceeding with discovery. Earlier this month Judge Dennis Sweeney ruled the state must produce documents that could shed light on the decision process that resulted in the state canceling leases for the planned redevelopment of the aging State Center complex.

Earlier this month, Hogan and Baltimore Mayor Catherine Pugh toured the State Center complex in the city’s Madison Park neighborhood. The governor used the tour to express frustration with the lack of progress toward redeveloping the complex, and he placed the blame for the delay squarely on the ongoing legal fight.

After the tour the governor dismissed the possibility of reaching an agreement that would allow State Center LLC to begin work on the $1.5 billion overhaul of complex. The state’s leases for the project were illegal, he said, because they were capital leases, which require General Assembly, not Board of Public Works approval, and would max out the state’s debt limit.

“It’s not really about a deal that we can agree to. There were capital leases in there that were illegal for us to sign and they were unanimously rejected by the Board of Public Works,” Hogan said at the time. “The legislature doesn’t want to move forward with that plan, the Board of Public works voted against the plan and it’s illegal for us to do the plan, so it’s not going to happen.”

Despite the governor’s stance, Caroline Moore, CEO of Ekistics, State Center LLC’s managing partner, said the end game, as far as she’s concerned, is finding a way to move ahead with the project as proposed. She said the redevelopment of State Center is not a priority for Hogan, who she said has never been able to properly explain his objections to the State Center overhaul.

“We’ve been begging the governor to tell us what’s wrong with this project,” Moore said. “He’s never told us what the problem is.”

The project was first proposed under former Gov. Robert L. Ehrlich Jr., a Republican, and proceeded under former Gov. Martin O’Malley, a Democrat. A legal challenge over the procurement process the state used to selected the developer delayed the project until 2014 when the Court of Appeals ruled plaintiffs waited too long to challenge the procurement process.

Disagreements between the Hogan administration and the developer began after the administration took office. Eventually State Center LLC and the Hogan administration ended up in mediation to reach an agreement on the project. Mediation collapsed, and the developer blamed the state for rejecting an agreement that retired U.S. District Judge Frederic Smalkin offered.

In December, the Board of Public Works voted to terminate the state’s leases, essentially killing the proposed redevelopment. The state then sued the developer, seeking a finding that state leases were invalid and unenforceable. State Center LLC countersued seeking to compel the state to go ahead with the development.

Caroline Moore