By Luke Broadwater, The Baltimore Sun
11:42 PM EDT, June 24, 2013
Mayor Stephanie Rawlings-Blake won't grant another extension to the developers of the long-stalled "Superblock" project on the city's west side, putting the future of the ambitious plan in jeopardy.
Kaliope Parthemos, the city's deputy chief of economic development, said Lexington Square Partners has until week's end to come up with financing for the $152 million project or it will lose its exclusive land-use rights to the property. She said the developers have acknowledged they will not be able to meet the deadline, which was set six months ago.
"At this time, the mayor has decided not to grant the developer's request for a six-month extension," Parthemos said. "The developer has failed to provide the city with satisfactory evidence of the existence of financing for the initial phase of the project."
Harold Dawson Jr., a representative of Lexington Square Partners, did not respond to requests for comment.
What's next for the project is unclear. City officials could seek new bids for the site or try to work out an alternative agreement with Lexington Square.
"The city is reviewing all of its options," Parthemos said.
Last month, Lexington Square Partners sought its fourth extension in six years from the Baltimore Development Corp., the city's quasi-public development agency. Lobbyist Sean Malone, who represents Lexington Square, said his clients weren't to blame for litigation that he says slowed down the project. He also cited a tough economy as contributing to the difficulty in lining up financing.
"The developer wasn't responsible for the suits," he said. In April 2012, Maryland's highest court cleared the way for the city to move forward with its plans for the "Superblock" by dismissing a lawsuit filed by Orioles owner Peter G. Angelos that challenged the project, arguing that it failed to preserve historic buildings.
Parthemos praised the developer's willingness to "hang in there" despite the lawsuit and tough economy. She said the administration had worked hard to push the project forward, including gaining approval by historical preservation commissions and for $22.1 million in tax breaks.
But she said the administration was reluctant to grant yet another extension for a development that has languished for years. The mayor's decision "demonstrates that the city is serious — developers have to meet the conditions of their agreements," Parthemos said. "This isn't a decision the mayor makes lightly."
Kirby Fowler, president of the Downtown Partnership of Baltimore, said the move could open up new opportunities for the area.
"Of course I'm disappointed," he said. "But I understand that if the developer is not able to come up with the financing, you can't pursue the project."
He said he hoped to work the administration to "find a new solution."
"There are examples of successful projects that have been split up into smaller pieces," he added.
Ron Kreitner, executive director of WestSide Renaissance Inc., said Rawlings-Blake openly expressed her frustration with the pace of development at a recent meeting concerning downtown's west side.
"She clearly expressed her concern about the requested extension," he said. "They've certainly had more than ample time to deliver on the project. It's been nine years since they put in a proposal, and it's apparent there hasn't been any substantial progress."
Kreitner said the project is "very important in terms of synergy with the rest of the area." He pointed to the Atrium, Centerpoint and Hippodrome as successful nearby developments.
He said he hopes city officials will consider issuing requests for proposals on individual parcels of the "Superblock," rather than trying to select one team to develop the project.
"The west side had a lot of very early success," he said. "The momentum suffered with the management of the Superblock situation. There's a real opportunity to regain the momentum. It definitely makes sense to approach it differently than how it was handled in the past."
In December, the city's Board of Estimates approved a six-month extension of the land disposition agreement with Lexington Square Partners. That amendment to the purchase agreement gave the partnership until June 30 to purchase 3.6 acres from the city for its proposed $152 million mixed-use development.
At the time, the partnership told city officials "that this extension will be the last one that is necessary in order to secure financing for the project," according to Board of Estimates records. The partners said they would be able to secure a construction loan once a $22.1 million tax break was approved by the City Council. That tax break for the development was granted in December.
The development, delayed by legal challenges and a floundering economy, would be bounded roughly by Lexington, Howard and Fayette streets and Park Avenue. When finished, it would have about 300 apartments and a parking structure with space for 650 vehicles, plus more than 200,000 square feet for retail.
The city entered into a sales agreement with Lexington Square Partners in 2007 after getting the proposal several years earlier. Lexington Square Partners has agreed to buy the site for $12.2 million, though the developer would receive credits for all but $2.85 million of that price. The developer also needs financing for the first phase of construction.
Financial consultant Bert Ely of Ely & Co. Inc. said it's prudent for the city to rethink the project, considering current market demands for housing, retail, commercial and office space. He said credit conditions have been tight, but they're "loosening up some and deals are getting done."
"It comes down to a question: Does it make economic sense now?" he said. "It sounds as if the developer has not been able to convince a lender to finance the deal. A lot has changed in six years. Maybe something that made sense six years ago doesn't make sense today."
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