www.baltimoresun.com/news/maryland/baltimore-city/bs-md-ci-superblock-suit-20130904,0,4965770.story

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'Superblock' developers want $50 million from city

Mayor wants to seek new bids for west-side site

By Luke Broadwater, The Baltimore Sun

5:54 PM EDT, September 4, 2013

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The former developers of Baltimore's long-stalled "Superblock" project have filed suit against the city, demanding more than $50 million after Mayor Stephanie Rawlings-Blake canceled their exclusive rights to the west-side property.

In a lawsuit filed Tuesday in Baltimore Circuit Court, Lexington Square Partners say they spent more than $7 million in their six-year effort to develop the site and were on the verge of securing financing to move ahead. The suit says city officials unfairly killed their deal with Baltimore.

"The city has taken an unreasonably aggressive position," wrote attorney Charles O. Monk of the Saul Ewing law firm, who represents Lexington Square Partners.

City Solicitor George Nilson said the mayor was right to end the developers' exclusive deal and invite outside bids. He said Lexington Square Partners are welcome to bid again as well.

"This is not a huge surprise," Nilson said of the suit. "I tried to point out to them that it would not be a smart idea to sue. The fact that they did sue suggests they are no longer interested in the site."

Citing numerous delays and city-approved extensions on the project, Rawlings-Blake in June declined to grant the developers another extension to come up with financing for the $152 million project. She said she intends to seek new proposals for the development by the end of autumn.

That decision forced the developers to "reluctantly" sue the city, Monk said.

"If the city is anxious to get development going on the 'Superblock,' they ought to be working with the developers, not forcing them to go to court," he said. "We hope the city would think about that, and come to the table. But they have to be realistic. You don't do a project of this magnitude in nine months."

The city entered into a sales agreement with Lexington Square Partners in 2007 after they won the right several years earlier to develop the property. Lexington Square Partners agreed to buy the site for $12.2 million, though the developer effectively would have to pay only $2.85 million of that price.

But the project was slowed by litigation, and it wasn't until December that the development was awarded $22.1 million in tax breaks, which Lexington Square Partners said it needed to secure financing. The tax breaks were awarded after the Maryland Court of Appeals dismissed a lawsuit filed by Orioles owner Peter G. Angelos, who argued that the plan failed to preserve historic buildings.

The site is bounded roughly by Lexington, Howard and Fayette streets and Park Avenue. Under the plan, the project would have had about 300 apartments, more than 200,000 square feet of retail space and a parking garage for 650 vehicles.

Rawlings-Blake said she's considering whether to break up the site — which spans several city blocks — into multiple bids or keep it as one large plan.

Luke.Broadwater@baltsun.com

Twitter.com/lukebroadwater