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Senate panel urges caution on $1.5 billion State Center project

The State Center complex in Midtown is slated for redevelopment.
The State Center complex in Midtown is slated for redevelopment. (Gabe Dinsmoor / Baltimore Sun)

A state Senate committee decided Tuesday to urge the state Board of Public Works to withhold approval of the first phase of the $1.5 billion State Center renovation if the project could push the state over its self-imposed debt limit.

The board is expected to take up critical changes to the project at its Dec. 17 meeting.

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Some committee members also expressed discomfort with moving forward before Gov.-elect Larry Hogan can review the project. Hogan said Tuesday that "it would make a lot of sense" for the board to defer action on State Center until after he takes office Jan. 21.

"There's a lot of controversy, a lot of concern, for a very good reason," he said. Hogan said he had opinions about the project but would not elaborate.

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The project would renovate the existing state complex just south of Bolton Hill with a mix of office space, retail and residences. The current complex, built in the 1950s and 1960s, has badly deteriorated.

Legislative analysts and the project's managers told senators during a briefing Tuesday that they can't say for certain whether lease payments the state would make on office space for 3,500 employees at the complex would be classified as an operating expense or a capital obligation.

That difference is critical, analysts said, because the state will be so close to its debt ceiling by 2018 that additional capital debt from State Center could push the state over the line. Observance of debt limits is a critical factor when bond rating agencies decide whether Maryland will keep its AAA ranking.

Most of the panel's Democratic and Republican senators agreed on the position, to be outlined in a letter, with the exception of members from Baltimore.

Sen. Edward J. Kasemeyer, a Howard County Democrat and the committee's chairman, said the panel wouldn't tell the board whether to leave the matter to the next governor.

Outgoing Democratic Sen. Verna Jones-Rodwell argued that the project's approval should not be left to the new governor. The Baltimore Democrat said the delay will only drive up the cost of the needed renovation.

"I go down to State Center. I see how decrepit those office buildings are. I think our employees deserve better than that," said Jones-Rodwell.

But Sen. Joseph M. Getty, a Republican from Carroll County, warned that Hogan could be forced to cut other construction projects if it appears State Center would breach the debt limit.

The letter is in effect a message to Treasurer Nancy K. Kopp, the only member of the board elected by lawmakers. Because Gov. Martin O'Malley supports the project and Comptroller Peter Franchot is a vehement critic, Kopp could hold the deciding vote if the administration decides to put the contract on the agenda.

Earlier in the day, Hogan warned Marylanders of "tough decisions" ahead as he prepares to take on a budget with a projected $900 million revenue shortfall over the next two years.

"We've maxed out all the credit cards. We've drained all the savings accounts. We've broken into the kids' piggy banks. We have no money left," he said.

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