State Center Project Stuck in Court by Lawsuit

Development of the $1.5 billion State Center in midtown Baltimore has been stymied by litigation since a group of downtown landlords and business owners, led by Orioles owner Peter G. Angelos, filed a lawsuit in December 2010 claiming the project would create unfair competition and impair downtown’s already hobbling economy.

“The lawsuit has been disappointing” and surprising,” said Caroline Moore, president and CEO of Ekistics, State Center’s lead developer. The project underwent five Board of Public Works approvals and more than 200 public meetings with stakeholders since the public-private partnership deal was first conceived under the administration of Gov. Robert L. Ehrlich Jr. in 2004.

“There were certainly plenty of opportunities for people to raise their hands and voice any objections,” said Moore. “But this group came up after we had invested millions of dollars and lots of time.”

Attorney Alan Rifkin, who is representing the disgruntled landlords and business owners, said he could not comment on matters pending before the court.

Since the suit was filed, however, things have been going the plaintiffs’ way. In the past two years, Circuit Court Judge Althea Handy denied the state’s motion to dismiss the case and threw out a $100 million countersuit by the state, which argued that the delay caused by the lawsuit had increased the costs of construction, financing and building maintenance. And, in January, Handy sided with the plaintiffs and voided the project’s development contracts, saying they did not adhere to state law.

Despite the obstacles—if Handy’s decision is upheld, the plan will have to be reconfigured—state officials remain hopeful that the project will come to fruition.

“With developments of this magnitude it is like riding a rollercoaster with a lot of ups and downs but a good project will overcome them and push on through,” said Andrew Scott, director of the Office of Real Estate with the Maryland Department of Transportation, which is overseeing the midtown overhaul.

The design for the mixed-use, 28-acre development received an award for excellence in urban, sustainable design, for its inclusivity and transit-oriented, “green” design.

Under the plan, the state would lease the land to the developer, who would, over 15 years, enliven the area. The planning process brought the surrounding communities together in an unprecedented way, officials said.

“I’ve never seen nine neighborhoods come together as they did and embrace a shared vision for change. The level of involvement was unbelievable,” Moore, the developer, said.

Local support was buoyed by the plan’s purported benefits which include more than 5,000 new jobs and almost 5,000 indirect jobs; millions in new tax revenue for the city; easy access to retail stores, including a supermarket, and other services; and the boost to minority businesses—the developer has committed to 35 percent MBE participation.

But community enthusiasm is flagging, said the Rev. Alvin Hathaway Sr., pastor of Union Baptist Church. He championed State Center.

“The energy in the community is being dissipated by this long drawn-out process,” he told the {AFRO}. “…. It is tough to hold on when you have no sense of how long you will have to wait.”

One of those MBE contractors is Kevin Johnson, president and CEO of Commercial Group.

“This project marked arguably one of the largest legacy wealth-building opportunities in the country for minorities in the state of Maryland,” Johnson said. And, he added, that’s why the delay is such a “tragic outcome.”

“It has tied up millions of dollars for many years; as first-generation entrepreneurs this type of delay really hurts us and our community,” he said.

Attorney General Douglas F. Gansler’s office has mounted an appeal of Handy’s January ruling and is currently preparing its brief for the appeal hearing which is slated for Oct. 3. The office has also asked the Maryland Court of Appeals to hear the appeal case, bypassing the Court of Special Appeals and speeding up the process, said Gansler’s spokesman David Paulson.

In her summary judgment, Handy said the state’s lease agreements with the State Center developers are not legitimate.

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State Center Project Stuck in Court by Lawsuit


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