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That total includes 2 million square feet of public and private office space — about 1 million of which are planned for state agencies currently at State Center — as well as 1,400 rental and for-sale housing units and 250,000 square feet of ground-level shops. Plans call for the developer to lease the ground from the state, build and own the office buildings, and then rent space to the state.
Not moving ahead would be a costly mistake, State Center proponents say.
Not only would it would waste what backers call possibly the best transit-oriented development site in Maryland — with access to light rail, Metro and train service — but it would cost the city $170 million in private investment in new construction, as many as 1,000 construction jobs, and tens of millions in new tax revenues.
Those benefits will accrue only if the state anchors the mixed-use project as a key tenant, said Christopher Patusky, director of the real estate office for the Department of Transportation.
Though officials emphasize that they are moving ahead, the recent brouhaha over the State Center has made some project backers uneasy. Further delays, they say, could be destructive.
"If there are a series of projects that are significantly delayed or canceled as a result of litigation, that can have a kind of chilling effect on new investors and businesses and people who want to develop and build things in Baltimore," O'Doherty said.
In addition, a potential loss of jobs in the city — which would happen if the state were to begin moving agencies elsewhere — has officials concerned, said M.J. "Jay" Brodie, president of the Baltimore Development Corp., Baltimore's development arm.
"The retention of the state jobs in Baltimore City is critical for us," Brodie said. "The mayor and the governor and everyone recognizes that they are vital to the future of the city. There are other jurisdictions in the state that would be happy to have those jobs."
Residents of neighborhoods near State Center are also concerned, said John E. Kyle, president of the State Center Neighborhood Alliance Inc., a coalition of nine neighborhoods that support redevelopment, including Seton Hill, Marble Hill, McCulloh Homes, Madison Park and Mount Vernon.
They worry that the project will never be constructed, leaving an aging set of buildings that will continue to deteriorate and drag down an area that already closes after office hours.
"We're certainly worried that there will be a derailment," Kyle said. "We don't think anything that's been brought to light should derail it. But we're worried. The needs of the community surrounding it ought to be the paramount concern."
Continued Kyle: "The concern is that … there will be delay, delay, delay, and this is an area of the city that has experienced delay, delay, delay before."
The recent State Center headlines come after months of simmering debate over potential costs to taxpayers, centered on the above-market-rate rent that state agencies would pay the developer — at a time when downtown is struggling with a vacancy rate of 24 percent for newer office buildings.
In December, a group of downtown landlords, restaurants and small retailers filed a lawsuit contending that the project would unfairly compete with downtown office buildings and that the state had used a noncompetitive process to select developers. Baltimore Circuit Judge Althea M. Handy denied the state's motion to dismiss the lawsuit on July 13. State officials have defended their procurement process.
The MPPI's July 7 report focused on what the group estimates to be a taxpayer cost of $127 million in the project's first phase, based on state agencies paying above-market-rate leases, the value of a state-financed parking garage, and tax credits and subsidies.
Opponents of the project took heart last week when Franchot announced he would no longer support efforts to complete the State Center as planned. Undertaking a commercial real estate venture in a bad economy, he argued, would plunge Maryland taxpayers into deeper debt and threaten the state's fiscal health.
"We've asked to hit reset on this project, and now that's been validated by the comptroller," said David E. Johnson, a senior vice president of Lexington/Charles Limited Partnership, the owner of the 201 N. Charles St. office building and a plaintiff in the lawsuit.
The State Center "will compete with downtown office buildings for tenants," Johnson said. "This is a state-subsidized development competing with private businesses for tenants."
Recent events have given lawsuit plaintiff Bonnie Scible hope that the State Center project may be stopped.
The owner of The Peanut Shoppe in Charles Plaza on North Charles Street, Scible fears the project would pull more state workers out of downtown. The loss of downtown companies over the years already has cut into lunchtime business, she said.
"There are so many empty buildings downtown, and they're not being filled," Scible said. "So many businesses have left. Twenty years ago there were so many people out at lunchtime. Now the customers aren't out there. All these little things eat away at a small business."
She said she's all for redevelopment in the city but urges the state to "put [its] money into projects that are started. Or buy some buildings that are vacant and for sale."
Otherwise, she said, downtown businesses will lose a large chunk of their customer base — "and I don't think I'll survive that."
lorraine.mirabella@baltsun.com
Text BUSINESS to 70701 to get Baltimore Sun Business text alerts
Not moving ahead would be a costly mistake, State Center proponents say.
Those benefits will accrue only if the state anchors the mixed-use project as a key tenant, said Christopher Patusky, director of the real estate office for the Department of Transportation.
Though officials emphasize that they are moving ahead, the recent brouhaha over the State Center has made some project backers uneasy. Further delays, they say, could be destructive.
"If there are a series of projects that are significantly delayed or canceled as a result of litigation, that can have a kind of chilling effect on new investors and businesses and people who want to develop and build things in Baltimore," O'Doherty said.
In addition, a potential loss of jobs in the city — which would happen if the state were to begin moving agencies elsewhere — has officials concerned, said M.J. "Jay" Brodie, president of the Baltimore Development Corp., Baltimore's development arm.
"The retention of the state jobs in Baltimore City is critical for us," Brodie said. "The mayor and the governor and everyone recognizes that they are vital to the future of the city. There are other jurisdictions in the state that would be happy to have those jobs."
Residents of neighborhoods near State Center are also concerned, said John E. Kyle, president of the State Center Neighborhood Alliance Inc., a coalition of nine neighborhoods that support redevelopment, including Seton Hill, Marble Hill, McCulloh Homes, Madison Park and Mount Vernon.
They worry that the project will never be constructed, leaving an aging set of buildings that will continue to deteriorate and drag down an area that already closes after office hours.
"We're certainly worried that there will be a derailment," Kyle said. "We don't think anything that's been brought to light should derail it. But we're worried. The needs of the community surrounding it ought to be the paramount concern."
Continued Kyle: "The concern is that … there will be delay, delay, delay, and this is an area of the city that has experienced delay, delay, delay before."
The recent State Center headlines come after months of simmering debate over potential costs to taxpayers, centered on the above-market-rate rent that state agencies would pay the developer — at a time when downtown is struggling with a vacancy rate of 24 percent for newer office buildings.
In December, a group of downtown landlords, restaurants and small retailers filed a lawsuit contending that the project would unfairly compete with downtown office buildings and that the state had used a noncompetitive process to select developers. Baltimore Circuit Judge Althea M. Handy denied the state's motion to dismiss the lawsuit on July 13. State officials have defended their procurement process.
The MPPI's July 7 report focused on what the group estimates to be a taxpayer cost of $127 million in the project's first phase, based on state agencies paying above-market-rate leases, the value of a state-financed parking garage, and tax credits and subsidies.
Opponents of the project took heart last week when Franchot announced he would no longer support efforts to complete the State Center as planned. Undertaking a commercial real estate venture in a bad economy, he argued, would plunge Maryland taxpayers into deeper debt and threaten the state's fiscal health.
"We've asked to hit reset on this project, and now that's been validated by the comptroller," said David E. Johnson, a senior vice president of Lexington/Charles Limited Partnership, the owner of the 201 N. Charles St. office building and a plaintiff in the lawsuit.
The State Center "will compete with downtown office buildings for tenants," Johnson said. "This is a state-subsidized development competing with private businesses for tenants."
Recent events have given lawsuit plaintiff Bonnie Scible hope that the State Center project may be stopped.
The owner of The Peanut Shoppe in Charles Plaza on North Charles Street, Scible fears the project would pull more state workers out of downtown. The loss of downtown companies over the years already has cut into lunchtime business, she said.
"There are so many empty buildings downtown, and they're not being filled," Scible said. "So many businesses have left. Twenty years ago there were so many people out at lunchtime. Now the customers aren't out there. All these little things eat away at a small business."
She said she's all for redevelopment in the city but urges the state to "put [its] money into projects that are started. Or buy some buildings that are vacant and for sale."
Otherwise, she said, downtown businesses will lose a large chunk of their customer base — "and I don't think I'll survive that."
lorraine.mirabella@baltsun.com
Text BUSINESS to 70701 to get Baltimore Sun Business text alerts
