This article appeared on Baltimore Fishbowl on Tuesday, February 6.
Voided State Center Plan Still Offers a ‘Competitive’ Deal for State, City in 2018, Report Says
By Ethan McLeod
The master plan for Midtown’s aged State Center complex that the Hogan administration voided in 2016 is still a strong deal for Maryland, the city, state employees and surrounding neighborhoods, a new report commissioned by the developer argues.
“When Governor Ehrlich decided to do this project, he did it because it was the most fiscally conservative, economically advantageous way of not only providing space for state agencies, but creating a catalytic economic development program for West Baltimore,” said Caroline Moore, CEO of Ekistics, on Monday. “And no other alternative came close to providing that benefit.”
Ekistics worked with Ehrlich’s administration on its plan to redevelop the 28-acre complex off of Martin Luther King Jr. Boulevard, eventually getting the state’s sign-off in 2009. But in December 2016, the State Board of Public Works nixed the deal. Hogan, one of the board’s members, called the deal “totally unworkable” and said Maryland would incur too much debt on the project.
The state sued State Center LLC, which includes Ekistics and other partners, to end the lease, and the latter filed a counterclaim. The legal fight is now headed to court.
But to test Hogan’s criticisms of the deal, Ekistics recently hired Baltimore-based Urban Information Associates to pour through state research on the project from the 2000’s to see if the agreement still offered a solid deal for the state and its taxpayers. Josef Nathanson, the report’s author, said his research affirmed exactly that.
The original plan was “designed to provide state-of-the-art 21st century office space,” he said. “By redeveloping this area, you’re creating a mixed-use environment in an area that’s rich in transit resources and provide additional benefits including affordable housing and new retail opportunities, like an iconic supermarket in the old armory building.”
Nathanson calculated the city would draw more than $39 million in tax revenue during a full build-out of the complex under the old plan, while the State of Maryland could bring in nearly $60 million. Each year thereafter, city and state would bring in $12.4 million and $47 million in new tax revenue, respectively.
“You’re taking land that is occupied by state buildings and putting it on the tax rolls,” he said.
He also found the base market leasing rate in the 2009 plan — $25.85 per square foot per year – remains competitive or lower than the median rental rates for new commercial office space downtown. To compare, he calculated that downtown properties built or renovated since 1999 lease out for a median of $28 per square foot per year, meaning the rate for the original State Center plan could offer a better deal to commercial tenants.
Upon cancelling the deal in December 2016, Hogan paid Florida-based Crossroads Consulting Services $79,000 to conduct a new study of the land’s development potential. Findings released two weeks ago said a mix of apartments, commercial retail and offices would be a viable option, but also proposed additions like a gas station, fast food and a 55,000-square-foot grocery store, smaller than what Ekistics originally proposed.
Moore, who worked for years with neighborhood on a blueprint that she said would bring them a “new main street,” said Crossroads’ report undersold State Center’s development potential.
“I think it’s so demeaning to all of the community residents that did put their blood, sweat and tears into this plan, and a lot of exercises with world-renowned architects and planners, and over a long period of time,” she said.
Ekistics’ development plan also included office spaces tailored to the needs of each government agency that would use the new buildings, such as the state departments of Health and Planning.
“It’s not as if you are looking at a rowhouse in Charles Village and there are lots of other sales you can look at,” Nathanson said. “This is a little bit of a unique thing.”
And by further delaying a re-do of State Center, Moore argued the Hogan administration is pushing back long-awaited economic development for the neighborhoods bordering the complex, and losing out on jobs created by construction in the process.
“You’re delaying economic development in an area that really is crying out for it. You’re denying jobs for a community.”
Shareese DeLeaver-Churchill, a spokeswoman for Gov. Larry Hogan, sent Baltimore Fishbowla statement saying Ekistics’ leases under the old plan would have had to be approved by the General Assembly because they “would be characterized as capital leases,” as opposed to operating leases under which the state would not incur a risk of ownership. That was why the Board of Public Works rejected the deal in 2016, the statement said.
“As the governor has said repeatedly, the administration is committed to creating a vibrant and multi-use development at the State Center site. We will fully committed to working with Mayor Pugh and community stakeholders to bring the full potential of this project to fruition for Baltimore City and its citizens.”
The Hogan administration also funded a separate Crossroads study to explore the potential for an arena at the site, though it hasn’t been released.
Moore said she hopes as the case is resolved in court – be it by settlement and Ekistics and the state parting ways, or an outcome that allows Ekistics to carry out its original plan – that surrounding neighborhoods can get a deal that makes them economically viable.
“All we can do now is go through the process that the governor has put us in to defend ourselves in the lawsuit,” she said, “and try and put the roadmap and the vision and all the tools that have been mightily invested in, into the hands of the community and the institutions there.”