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State Center developer to sue state after its contract was voided

Baltimore, MD -- The State Center complex in the early evening as workers leave their offices. Amy Davis [Sun Photographer]
Baltimore, MD -- The State Center complex in the early evening as workers leave their offices. Amy Davis [Sun Photographer] (Amy Davis / Baltimore Sun)

The would-be developer of the State Center in Baltimore said it would file a countersuit Tuesday alleging the voiding of its $1.5 billion agreement to develop the state government complex was politically motivated.

A legal battle could hold up the redevelopment of the aging complex for years. The stalled project would have redeveloped the area near Mount Vernon and Bolton Hill with a mix of office, retail and residential properties, with state agencies as the primary tenants.

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Last month, the Maryland Board of Public Works voted to void the state's 7-year-old agreement with the developer of State Center, allowing Gov. Larry Hogan's administration to seek a new developer for the project.

State Center LLC, the developer chosen by the O'Malley administration, alleged in its lawsuit that when Hogan took office in 2015, the developer tried to work with his administration but was "met with resistance at every step." The developer said Monday it intends to file the lawsuit in Circuit Court in Baltimore on Tuesday morning.

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In a draft copy of the lawsuit provided to The Baltimore Sun, the developer states that Hogan's administration "manufactured" a reason to void the contract and "made misrepresentations of fact." The lawsuit alleges that Hogan is "disinterested" in Baltimore and that the move would "condemn" the area to more blight and economic stagnation.

The lawsuit also said that the state and developer had entered into more than a dozen contracts related to the project and that the state could not just walk away from its obligations. The lawsuit seeks either a court order to allow the project to proceed or for the developer to be awarded damages.

"We're prepared to put a shovel in the ground within months if the state would get out of our way," said Michael Edney, a Washington lawyer who represents the developer. "It's not just an investment for us in a project, it's an investment in a midtown Baltimore community."

Doug Mayer, a spokesman for Hogan, dismissed the allegation of political motivation, citing the votes on the Board of Public Works to void the contract. In addition to the Republican governor, the other members of the board, Treasurer Nancy K. Kopp and Comptroller Peter Franchot, are Democrats.

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The board voted Dec. 21 to void the contract after a mediation effort between the developer and the Hogan administration failed. The state filed suit hours later to force the developer to terminate its right to redevelop State Center.

"It is very disappointing to see that this developer and their D.C. law firm have decided to follow through on their threat to hold up the development of this site in court for the next decade," Mayer said. "That said, no one, including this group of people, are going stop the governor and Mayor [Catherine] Pugh from redeveloping this site into something great for the city, the community and the state."

Mayer called the allegations that the state misrepresented facts and concealed facts "vague and rather dubious." As for the analysis that the Board of Public Works used to void the contract, which the lawsuit alleged was based on incorrect information, Mayer said it was "based on information that's best for the state's bottom line and the taxpayers."

"They might not like the way it affects their checkbooks, but the governor's not concerned about their personal finances," Mayer said.

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