In the waning days of the Schaefer administration, the state is pushing to wrap up negotiations to buy a site from AlliedSignal Inc. for an Inner Harbor cruise ship terminal.
The terminal -- expected to cost $50 million, or double initial projections -- is a priority with Gov. William Donald Schaefer. And state officials are hoping at least to purchase the 1.2-acre site adjacent to the old chrome works plant before the governor leaves office in January.
"The Inner Harbor needs a shot in the arm," Mr. Schaefer said in a recent interview. "Can't you just see it? Cruise ships in the Inner Harbor with the sun setting behind them?"
But as a possible agreement nears, questions remain about potential environmental problems, which could further increase costs. Port officials, who are negotiating on behalf of the state, concede they do not know the extent of chromium contamination on the river bottom.
And, regardless of the site chosen in Baltimore, it is not at all certain that the terminal can attract enough cruise ships and tourists for the project to succeed.
In the past decade, the cruise ship industry has grown roughly 10 percent a year, with 4.8 million passengers now traveling the North American and Caribbean routes. But Baltimore remains a relatively small player, since most international cruise lines sail from New York or Miami.
Currently, only 17 cruise ships call on Baltimore -- up from 10 in 1989 -- and they dock at the Dundalk Marine Terminal, a working cargo facility located far from the heart of the city's business district.
With the price tag on the proposed terminal unexpectedly high, the state is looking for a partner to help fund the facility or a cruise ship line that would commit to Baltimore as its home port once the terminal was built, and bring up to 26 ships a year here.
So far, however, the plans have not attracted such a commitment.
"This shouldn't be a 'build it and they will come' project," said Michael P. Angelos, executive director of the Maryland Port Administration. But in interviews with state officials, the possibility of purchasing the site without such a commitment was not ruled out.
"This is an important project to the economic development for the city and state," Mr. Angelos said. And it is a longtime dream of outgoing Governor Schaefer, who believes little has been done to spruce up the Inner Harbor since he left as mayor eight years ago.
The terminal, if built, also could spur development on the Allied peninsula -- the city's last major undeveloped waterfront property -- which is seen as critical to completion of the waterfront area stretching from Canton, around the Inner Harbor and back out to Locust Point.
The site is located near Inner Harbor East, a 20-acre parcel south of Little Italy where baking magnate and longtime Schaefer ally John Paterakis is developing a $350 million complex of offices, residences and retail space.
The terminal on the Allied site is heavily favored by Fells Point business leaders, who believe it would lure well-heeled tourists to the area. Port officials also hope a private developer would build a hotel on the site, which has been mentioned as a possible location for a waterfront casino.
Allied was one of two sites, including a parcel next to the HarborView condominiums below Federal Hill, considered by the state and evaluated by Post, Buckley Schuh and Jernigan, a Florida engineering consulting firm.
Neither site was perfectly suited, the consultant concluded. But, it added: "The Allied site is clearly the only one of the two sites that can be said to allow for safe navigation and for the berthing of two vessels."
However, the report raised the possibility that the dredging necessary for a cruise ship berthing at the Allied site could present some environmental problems.
"Previous dredging has shown some to be contaminated," concluded the study, which was reviewed by The Sun.
For example, three years ago, in connection with its $90 million cleanup efforts, Allied dredged the site to build a retaining wall. "In some cases, the material was highly contaminated with chromium," said George Perdikakis, former head of Maryland Environmental Service, a quasi-public agency that assisted the state and Allied in dealing with chromium contamination.
But, he said, any contaminated waste could be disposed of at Hart Miller Island in southeastern Baltimore County.
The proposed terminal site is located near the intersection of Philpot and Thames streets near the chrome plant, which was shut down in 1985 and has been undergoing a state-monitored cleanup for more than three years. The parcel under consideration for the terminal is not contaminated, Allied says.
Last week, the MPA advertised for a contractor to take borings of the river-bottom and analyze them. The testing -- a routine step necessary for obtaining federal dredging permits -- is likely to confirm the presence of chromium, a known carcinogen.
"Naturally there are concerns when you hear the word chromium," said Mr. Angelos, who said the agency would not recommend that the state buy the property until the testing was complete.
But the presence of chromium alone, Mr. Angelos said, would not necessarily cause the state to scrap the Allied site. "If we discover some chromium, it would not automatically disqualify the site," he said.
In fact, an Allied official involved in the negotiations for the passenger terminal site, said possible contamination from the dredging for passenger ship berthing had not been a part of the company's talks with the state.
"That's never been an issue in any of the discussions," said Bill Blank, senior project manager for Allied. "We're not aware of any concerns."
Some environmental advocates suggest dredging for the terminal could disperse toxic material.
"The harbor bottom is heavily contaminated in many spots, so that's always been a concern about dredging," said Dru Schmidt-Perkins, director of the Maryland chapter of Clean Water Action.
And one state official familiar with the Allied negotiations said:
"There's certainly going to be far more environmental concerns at the Allied site. . . .more concerns and more potential costs."
Port officials already are familiar with the costly ramifications of a different type of chromium contamination. Dundalk Marine Terminal, the largest state-owned cargo handling facility, is partly built on some 3 million tons of chrome ore tailings that the state bought from Allied and dumped there from the 1950s through 1970s.
The waste, used as fill dirt to construct the terminal, came from the AlliedSignal chrome works plant.
For years, the chromium has contaminated the soil at Dundalk and caused the pavement to buckle. Lime-green contaminated water has leaked from the terminal's storm drains into the Patapsco River.
Estimates about long-term cleanup costs have ranged from $10 million to $100 million, according to people familiar with the issue.
State officials -- now convinced of Allied's liability -- have been negotiating with the company about assuming a share of the cleanup costs.
While negotiations about the Dundalk cleanup and the cruise ship site are occurring simultaneously, state and Allied officials insist they are unrelated. And they said the state was not willing to bargain on Allied's cleanup costs at Dundalk as part of the deal to obtain the cruise ship terminal site.
Although there is no estimate on the cost of the dredging -- or whether it would be included in the sale price -- the passenger terminal site is far smaller than the contaminated area at Dundalk, which is roughly 100 acres. Because of Hart Miller, disposal of contaminated dredge from the harbor should be far less expensive than disposal of contaminated soil from Dundalk.
The environmental ramifications are one of only several concerns associated with constructing a terminal. Initially projected to cost about $20 million, estimates now have soared to $50 million or more, raising questions about how the state would pay for the terminal if private investors did not pick up much of the cost.
Gov.-elect Parris Glendening has said he strongly favors the terminal. About $12 million is now earmarked in the state's transportation budget for the project. But a new legislature convenes in January, and the terminal would compete with a host of the state's other transportation projects.
Proponents say the passenger terminal would boost business and tax revenues, though projections vary about just how much. According to a study by Martin O'Connell Associates of Bethesda, the cruise operations could create a maximum of 244 jobs -- such as those dealing with tugs, taxis, food and advertising -- and generate a maximum of $21.2 million in business revenues, largely for the city. In addition, it would generate $807,000 a year in state and local tax revenues, under the most optimistic predictions.
Allied -- which envisions a mixed-use complex with dramatic views of the water and downtown Baltimore -- would also benefit from the proposed passenger terminal. With such an attraction there, Allied's overall development prospects would be enhanced.
"If we didn't look at it as a positive thing, we wouldn't be pursing it," said Mr. Blank of Allied. "We're making every attempt to resolve this in order to let the port make some announcement before the end of the year."