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BDC BIDDING RAISES ISSUES

THE BALTIMORE SUN

The Baltimore Development Corporation, the city's quasi-public development arm, over the past year and a half awarded six contracts totaling $2.3 million to demolish buildings without publicly advertising the work, documents have revealed.

Each of the six contracts was worth more than $25,000, the amount that is supposed to trigger public notice when work is requested by city agencies. Instead, the BDC asked companies for their prices, and, in the case of two contracts - including one for $1.5 million - did not award the work to the firm offering the lowest price. The BDC was in the process seeking a seventh contract - this time for warehouses occupied by a nonprofit - when The Baltimore Sun reported on the practice last month.

The list of contracts includes four that were not known publicly. It is the first full accounting of demolition work initiated by the BDC, which in theory is supposed to only make recommendations about development to the mayor and City Council, not actually engage in public works.

At the request of Baltimore Mayor Sheila Dixon, the BDC has halted the practice of bulldozing buildings, including rescinding a $1.5 million contract that had been awarded to knock down eight buildings on a downtown block. The BDC also curtailed the search for a firm to demolish a cluster of warehouses at the site for a garage for the proposed slots casino.

In each instance, the BDC contacted anywhere from two to eight demolition firms and asked them to submit prices on the work. For each contract, the BDC included at least one minority-owned firm in its list.

"I just believe that it is better to have an open and public process," Dixon said. "They should be transparent and be sure that all people get those opportunities" to win contracts.

The mayor said she has faith in the agency, particularly what she called its strong board of directors, and viewed the demolitions as a rare instance where she said the BDC moved "more quickly than they should have without checking things or fully vetting them."

Each of the awarded contracts was approved by the city's housing commissioner, Paul T. Graziano, who said that he had believed the BDC followed the city's procurement rules when he signed off. Though the BDC is technically a nonprofit, its authority to negotiate on behalf of the city comes from the housing department.

The deals were also approved by the city's Board of Estimates, which rarely engages in public debate about spending unless a contractor raises concerns about an award.

Baltimore Development Corporation's president, M. J. "Jay" Brodie, said he believed his organization had the power to award contracts to demolish buildings and thought his agency did not have to follow city processes because it is allowed to circumvent city rules when it contracts with other types of third parties, such as consultants and appraisers. He concedes that he did not check the myriad of agreements and memorandums that govern the BDC.

"I didn't go back and look at the source material which you might argue I should have done myself," Brodie said.

But, even if he had, it is unclear that he could have easily arrived at an answer. Unlike the more recently formed quasi-public agencies like the Parking Authority, the BDC does not have a charter and was not created by a statute, leaving some of its powers and authorities uncertain.

"We all have varying levels of information on what BDC is allowed to do," said Baltimore City Solicitor George Nilson. "There is not an easy way for the law department to look at BDC and simply say 'Here is what you can do. Here is what you can not do.' "

Instead BDC employees share knowledge about the organization's limitations through institutional memory. "For those of us who have worked at BDC, [the rules] passed on from generation to generation," said Deputy Mayor Andrew B. Frank, who worked as a BDC executive vice president before joining Dixon's administration.

BDC critics say that such a fluid understanding of the agency's authority gives it unfettered latitude, particularly because until 2006 it operated outside the state's open meetings rules. M. Albert Figinski, an attorney who is challenging whether the city has the authority to outsource urban renewal authority to the BDC, has called it a "rogue" agency that "is acting beyond the wildest conceptions of their legitimate role."

Figinski wants the Superblock project in the 200 block of W. Lexington St. re-bid in part because the current agreement includes a piece of land not in the initial bid and out of concerns that the developer will tear down important historic buildings.

Dixon disputes Figinski's characterization of the agency, saying that the deals the BDC negotiates are scrutinized by its board, the City Council and the Board of Estimates. Nonetheless, she has asked her law department to review the BDC's authority. Nilson is in the process of gathering all of the documents that govern the agency.

The task is not an easy one. Some memorandums date back as far as September 1965, and some have been photocopied so many times that portions of the type are filled in by hand. The BDC was founded in 1991, but retains the authority of three earlier economic development organizations.

The BDC has not previously knocked down buildings, but in the spring of 2008, the BDC started asking for bids for demolition projects in part because the economy was slowing and it wanted to find ways to spur development. Developers are expected to reimburse the city for the cost of the demolition, but Brodie acknowledged this carries some risk to the city: If the development falls through, the city is stuck with the bill.

The first to be approved was the wrecking of 12 rowhouses to make way for a grocery store in Howard Park. In that case the BDC asked five demolition companies to submit prices for the work and all responded. It picked JLN Construction services, which was not the lowest. Brodie said that two firms offering to do the work for less did not understand the full scope of the work - although he said the agency does not have paperwork to support that claim.

The BDC also did not pick the lowest bidder for the $1.5 million City Center demolition at Lombard and Calvert - by far the largest contract that was awarded. In that case, Berg Corp. won the work, though two firms Celtic Demolition Inc. and Terra Technical Services Inc., offered lower prices. Brodie said that Celtic and Terra were excluded because their paperwork was submitted late.

The contract the BDC signed in that case was binding, though it was re-purposed from a different contract between two private parties. BDC officials crossed out the parts of the contract they did not want - including the signature blocks - and handwrote in other conditions.

In two instances the BDC contacted only two firms before awarding a demolition contract. It asked Banks Contracting and Doracon Contracting to offer prices to knock down the former Magnet Bar at 1924 N. Charles St. Also, two firms were contracted to flatten a partially burned warehouse on Warner street.

Berg was awarded two of the six contracts, P&J; Contracting was awarded two, and the others went to JLN Construction and Banks Contracting. The seventh contract was never awarded, though Berg offered the lowest bid. Three of the contracts involved clearing buildings at the proposed slots parlor site.

Initially, city officials had said that one of the demolition contracts - the $378,477 contract to bulldoze the Maryland Chemical building, where the proposed slots casino will be located - was awarded without public bidding because it presented an immediate threat to public safety.

But Graziano, the city's housing commissioner, said that none of the contracts he approved authorized that type of demolition, which is only triggered if a housing inspector deems a building in imminent danger of collapse.

Brodie acknowledges now that his organization does not have the wherewithal to determine a public safety threat and said with an uncomfortable laugh that his staff members have "taken an oath" not to knock down any more buildings.

"It is not worth the hassle," he said. "It is not worth the criticism."

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