State Center project was a 'taxpayer-funded boondoggle'
By Christopher B. Summers
Jan 12, 2017 | 10:31 AM
The Maryland Board of Public Works' decision to void the controversial State Center project in Baltimore was a refreshing affirmation that Maryland taxpayers have advocates in Annapolis.
Few contracts in recent Maryland history raised more concerns than the one former Gov. Martin O'Malley awarded for the State Center redevelopment in 2009.
Despite advocates' best efforts to pretend otherwise, the State Center redevelopment project was a taxpayer-funded boondoggle plagued by shady procedural processes, artificially high rental rates and high costs for taxpayers.
First, consider the project's costs. The Maryland Public Policy Institute has conducted extensive research on the State Center redevelopment plan and concluded that the project, as agreed to by the O'Malley administration, would burden taxpayers with a $127 million handout to a private development team that had no tenants committed to State Center other than a few state agencies.
Next, consider the special provisions that favored developers politically connected to Governor O'Malley. The State Center deal burdened its state agency tenants with guaranteed long-term, above-market leases — about $10 extra per square foot. Worse, members of the winning development team had cut thousands of dollars in campaign checks for Governor O'Malley leading up to his decision on awarding the contract.
Forcing government agencies to pay above-market rates to a developer that helped fund the governor's campaign should make even the most morally flexible politician blush.
Next, consider how the contract was awarded. Questionable procedural issues and the lack of transparency abound. The initial development team was selected after a non-competitive request for qualifications process, rather than the more competitive request for proposal process used in standard procurement situations and designed to ensure the selection of the most cost-effective bid.
For these reasons and others, a Baltimore City Circuit Court judge halted the project in 2013, stating that the O'Malley administration failed to follow procurement law.
"The court finds, and the defendants admit, that defendants did not comply with the procedures required in the code, therefore, the [contracts] and the ground leases are void," Judge Althea Handy wrote in her decision.
These sordid details and others prompted the Board of Public Works to vote unanimously to void the project. The board consists of Gov. Larry Hogan, a Republican, and Comptroller Peter Franchot and Treasurer Nancy Kopp, both Democrats. While the board was right to nix this project, it was not the first time state government leaders threw the flag on State Center.
The nonpartisan Department of Legislative Services warned lawmakers in 2014 that State Center's financial burden could prompt the state to violate its debt limits and estimated that the artificially inflated rental rates would cost taxpayers an additional $18.5 million.
Comptroller Franchot pulled his support for the State Center project back in 2011, arguing in a letter to the O'Malley administration that he, "cannot and will not support further efforts to complete this project as currently proposed. … It is difficult, for example, to justify the willingness of state agencies to rent space at above-market rates at a time when Maryland's structural budget deficit continues to exceed one billion dollars."
Maryland's structural budget challenges remain. Fortunately, its questionable interest in procurement law and poor stewardship of tax dollars do not remain.
Governor Hogan, Comptroller Franchot and Treasurer Kopp deserve credit for putting fiscal responsibility and honesty in government contracting above yet another taxpayer-funded boondoggle.