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Red Line cancellation stops property acquisitions

As Red Line land negotiations stop, Fells Point property owner sues: "This guy got screwed."

Maryland officials plan to notify about 500 property owners that the state no longer intends to buy their land or underground rights to make way for the Red Line light rail project.

Gov. Larry Hogan in June pulled the plug on the 14.1-mile project, which would have crossed the city and linked Woodlawn to Bayview, citing its costliness.

The abandoned negotiations with private property owners are the latest fallout from that decision, which angered city officials who had hoped the project would provide an economic boost and improve the transit system.

The Maryland Transit Administration had already made 16 purchases, spending close to $2 million, but its land acquisitions ceased with Hogan's decision, leaving some property owners who expected a payday in the lurch.

Nick Argetakis was upset when he learned that he might lose his Fells Point building to make way for the Red Line. Now that the state has backed away from a deal, he's not happy either.

The MTA's interest made it impossible for Argetakis to find a new tenant to replace the pizza parlor that moved out last November, according to his attorney, John C. Murphy.

"It's a simple case of fairness. I think this guy got screwed by the change of mind of the state," Murphy said. "I'm not saying the state didn't have the right to change its mind, but I think this guy got hurt and he ought to be compensated."

Argetakis was negotiating a lease with the agency, slated to start in August, after he rejected a deal in December that gave the MTA the option to buy his Fleet Street building within six months for $375,000. On Aug. 7, he filed suit against the MTA in Baltimore City Circuit Court, seeking $150,000 in economic damages.

Construction of the Red Line had been supposed to start next year. In October 2013, the city Planning Department sent letters to dozens of property owners, kicking off discussions of eminent domain.

The MTA had 10 people, including nine contractors, working on land acquisition, spokesman Chuck Brown said.

The MTA is now notifying property owners that it's no longer interested, Brown said. About 645 properties — 500 of them privately owned — had been targeted, many of them for underground easements, access during construction or pieces to go toward road widening.

Before Hogan took office in January, the state had approved the purchase of 13 underground easements, a rowhouse, a four-story office building downtown and 1.25-acre warehouse site in West Baltimore, according to public records. It also assumed control of a work-release center on Calverton Road that belonged to the Department of Public Safety.

After January, the state made no new offers, Brown said.

On June 26, the day after Hogan made his announcement, the MTA told consultants to start shutting down operations and reassigned its staff to other work — mostly the Purple Line, Brown said. The project's website is blank and documents are being archived. The office space leased in downtown Baltimore will be used for other purposes.

The properties the MTA acquired will be evaluated for use by state agencies or sold, Brown said. In the case of the warehouse, the former owner, an underwear distribution company, is leasing the site back for now.

The city has not decided what to do with its properties that had been slated for the route, said Howard Libit, a spokesman for Mayor Stephanie Rawlings-Blake. Any action before Hogan definitively returned the federal funding committed to the project would have been "premature," he said.

The MTA halted its talks with Argetakis over his building in March amid a review of the project, according to the lawsuit.

Argetakis was in Greece and could not be reached for comment for this article.

Murphy said the Red Line loomed like a shadow over the property, resulting in what he described legally as substantial interference — especially after the pizza parlor left. The MTA, which approached Argetakis in May 2014, said construction would cut utility service to the property and asked him not to release it, the suit says.

"If you've got a tenant in there and the state says they're going to buy it and then changes their mind six months later, if the tenant continues, you haven't really lost anything," said Murphy, estimating rent at about $3,000 a month. "If you've got an empty building and you've got a question of whether the state's going to acquire the property, then it's a much different thing."

Brown said he had not seen Argetakis' suit and could not comment. He said he was not aware of any other suits or claims arising from the decision.

"Generally if individuals feel they are entitled to compensation through this acquisition process, they can submit a claim to MTA," he said. "We'll have to thoroughly review each circumstance on a case-by-case basis to see if it warrants compensation."

The MTA also considered leasing space at Broadway Market, which, like Argetakis, had difficulty attracting tenants because of the Red Line project, said Richard Manekin of WorkShop Development. His firm started working on the market in 2013, after the city agreed to lease it to private developers for redevelopment during the Sheila Dixon administration.

Manekin, who supported the Red Line, said he does not intend to sue. Hogan's decision may clear the way for progress at the markets, which have lain underutilized for years, Manekin said.

The agreement that gave private developers access to the market had already been extended several times, most recently in June. A September expiration deadline looms.

"Up until the time that Governor Hogan made his decision, there was a cloud over the development," Manekin said. "We are currently in the process of re-keying up the project because the financing was dormant, the interest that we had in the south market went away. … We have to decide whether we have all the component parts in order."

Some said they are hopeful that other buildings will see new life, now that the Red Line discussions are over.

Steven Bloom of PMC Property Group said he wanted to buy 114 E. Lombard St., as well as a city-owned building next door, when he started plans in 2012 for a 170-unit apartment redevelopment in historic properties on Calvert Street.

Instead the state paid a hefty $550,000 for it, with plans to use it as an air shaft for the Red Line, which was to have tunneled under downtown Baltimore.

PMC has finished one apartment building— with nearly half of the 85 apartments leased since June — but Bloom said he's still interested in the Lombard Street property and has had informal conversations with city officials about it.

"It's an eyesore. We're leasing apartments and you're looking at all kinds of decay," he said. "We would love to go in there and just keep renovating."

nsherman@baltsun.com

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