State Center rendering

Rendering of the proposed State Center complex at Howard and MLK. (Mithun / January 14, 2013)

A court battle over the State Center development, a $1.5 billion project that would put offices, apartments and shops in midtown Baltimore, has intensified with a series of legal volleys in recent days.

Among the legal maneuvering: The Maryland attorney general's office has filed a counterclaim seeking $100 million from downtown property and business owners the state blames for stalling the project, which would be built along Preston Street over 15 years. The opponents had filed a lawsuit in December to block the state's redevelopment of State Center.

For their part, the project's opponents have opened a new line of legal argument by filing a motion accusing state officials of disregarding a court order to turn over tens of thousands of public documents. And on Wednesday, they filed to dismiss the state's counterclaim in Baltimore City Circuit Court.

The legal sparring has clouded the State Center development's future while spawning a public debate over taxpayer funding and the need for such a project when downtown merchants say they are struggling to fill empty commercial space. Mayor Stephanie Rawlings-Blake and other public officials defend the ambitious transit-oriented project, which would replace a rundown state government office complex, as a way to revitalize the area.

The state agencies overseeing the project contend that the lawsuit from opponents has caused delays and increased the costs of construction, financing and building maintenance. The state's counterclaim filed Friday seeks $100 million in compensatory damages.

Christopher Patusky, the State Center project director for the Maryland Department of Transportation, called the lawsuit "the sole obstacle right now to financing the first phase of construction," which he said would create 1,000 construction jobs, yield new tax revenue for city coffers and help spur revival of the west side.

The first phase would include a state-owned garage, a grocery store and two private office buildings to be occupied by state agencies.

"We need to replace that office space because the workers are in obsolete, dilapidated working conditions. … That needed to happen yesterday," Patusky said. "Every month we delay results in higher interest rates and higher construction costs. At some point the state could be required to absorb some of those increased costs."

The state's counterclaim accuses the downtown landlords and businesses of filing the lawsuit "not in a good faith effort to seek judicial relief but instead for the express purpose of delaying and derailing the project's progress and forestalling perceived business and economic competition from the project." The commercial property owners are using the lawsuit to divert state offices and parking business to their own properties, the counterclaim said.

State Center opponents are seeking to dismiss the counterclaim, saying it violates their First Amendment rights. The state's counterclaim also violates a law forbidding "strategic lawsuits against public participation," or SLAPP lawsuits, and failed to identify any actual damages, the opponents contend in their motion.

"It is unconscionable and unprecedented for the state to sue their own citizens for simply exercising their First Amendment right to seek redress in the courts," said Alan M. Rifkin, lead counsel for the plaintiffs.

The plaintiffs argue in their lawsuit filed in December that the project would unfairly compete with downtown office buildings, many of which are struggling with high vacancy rates. The suit also accuses the state of using a noncompetitive process to select developers. In July, the state's motion to dismiss the case was denied by Baltimore Circuit Judge Althea M. Handy.

The plaintiffs filed a motion Friday to compel state agencies to turn over tens of thousands of documents related to the project, saying the agencies refused to produce a single document by an agreed-to date of Aug. 29.

The plaintiffs have made 136 broad requests to the Department of General Services and Department of Transportation seeking tens of thousands of documents produced over several years, and the state argues that some are subject to exceptions under the Public Information Act. Documents being sought include leases, state officials' calendars, telephone and text messaging records.

"This is the government we're talking about; their documents are presumptively public," Rifkin said. The project, which he called one of the largest construction projects in state history, "should be open and transparent, not secretive and confidential."

David Paulson, a spokesman for the state attorney general's office, said Wednesday that talks among attorneys over which documents would remain confidential during the discovery process had broken down. At that point, the state asked the court for a protective order to prevent "confidential, nonpublic records" from being used by plaintiffs outside of the discovery process.

lorraine.mirabella@baltsun.com