Mayor weighs settling lawsuit by former Superblock developers
Lexington Square Partners could get another chance to build on the site.
Above: A pedestrian yesterday walks along a lonely stretch of vacant storefronts on Lexington Street that constitute part of the “Superblock.”
The longest-running real estate soap opera in downtown Baltimore may be entering a new phase: reconciliation.
Mayor Stephanie Rawlings-Blake hinted that the city might settle litigation brought by the former developers of the West Side “Superblock.” This could mean that the developers, whose agreement was terminated last June because they failed to secure financing, will get a new crack at the project.
A settlement would be a setback to Kaliope Parthemos, deputy chief of development, and Brenda McKenzie, newly installed president of the Baltimore Development Corp. (BDC), who pushed to end the old agreement and were tasked to find new developers.
The mayor said yesterday that “we’re going to get it one way or another – either by settlement or through the courts,” referring to the redevelopment of the 3.6-acre parcel of dilapidated and vacant buildings on the city’s near West Side.
The city acquired the buildings a decade ago as part of a $150-million effort to revive the district by attracting national retail stores, a high-rise apartment tower and a possible luxury hotel.
Years of Controversy
From the start, the plan was engulfed by controversy. There was litigation by an entity controlled by Baltimore Orioles owner Peter G. Angelos. Public protests were held against the teardown of Read’s Drug Store, the site of a historic civil rights demonstration. Generous tax breaks granted to the developers stirred criticism.
All this was followed by the developer’s inability to secure private financing.
After agreeing to five extensions, Rawlings-Blake terminated the agreement last June and announced that the site would be open to new bidders. By this time, the city had spent more than $3 million propping up the water-damaged Read’s building and tearing down the former Greyhound Bus Terminal.
But Lexington Square Partners LLC struck back. In a lawsuit filed in September, the group of New York and Atlanta developers asserted that their rights under a 2007 exclusive purchase agreement had been violated.
City Loses First Round
Rawlings-Blake’s comments came in the wake of a Baltimore City Circuit Court judge’s ruling last week that the developers had legitimate standing to proceed to trial with their $50 million lawsuit against the city.
Sign on the vacant Brager-Gutman department store on Park and Lexington, part of the Superblock parcel. (Photo by Mark Reutter)
The ruling meant that the parcel could be tied up in fresh litigation for years, making it impossible for the city to dispose of the land to other developers.
Yesterday, compromise seemed to be in the air.
Charles O. Monk II, a Saul Ewing partner who represents the developer, told The Brew said that while he could not speak for the developers, it was his “personal view” that “sound business people can find a pragmatic way to resolve their differences and find a solution.”
He said his client wants to “work with the city in a constructive way” and noted that the project involves “enormous complexities” in an uncertain economic environment.
George A. Nilson, the city solicitor, struck a similar tone, saying, “Our job is to insure that the litigation does not impede progress, a long-delayed commodity for this project.”
West Side on the Mend, Mayor Says
After she took office in 2010, Rawlings-Blake made development of the city-owned block one of her top priorities. She put pressure on the city’s preservation board not to oppose the Superblock project (which critics said violated a 2001 agreement not to tear down historic buildings) and pushed a $22 million PILOT tax break for the developers through the City Council.
Yesterday she defended the pace of renewal on the West Side, citing the city’s partnership with the University of Maryland Baltimore and establishment of the Bromo Tower Arts District.
“One of the things I’m really proud of about our administration is that we took a fresh set of eyes to the whole West Side. I was not satisfied with the progress that had been made. I brought in national experts that have set us on the course for improvement,” Rawlings-Blake said.
“If you take a look around the West Side, [you’ll see] we are making a lot of progress.”
Even if the city reaches an agreement with Lexington Square Partners to end the lawsuit, there is no guarantee that the Superblock project will move forward anytime soon.
Financing remains a major issue for the developer, and the overall health of the area remains dicey – with long stretches of empty commercial buildings along Howard, Lexington, Liberty and Park Avenue that were once the heart of Baltimore’s retail district.