December 16, 2010

Franchot protests state taking on $33 million in debt for State Center garage

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By Megan Poinski
Megan@MarylandReporter.com

The $33 million state debt burden for the State Center parking garage, as well as the absence of a formal agreement on labor costs or local hiring, led Comptroller Peter Franchot to vote against approving the parking garage lease agreement at Wednesday’s Board of Public Works meeting.

The lease agreement was ultimately approved, with the board’s other two members Gov. Martin O’Malley and Treasurer Nancy Kopp voting for it.

Franchot said he could not understand the high level of state funding for the parking garage, which is estimated to cost nearly $36.5 million to build. The remaining $3.5 million will be paid by the private sector, said Christopher Patusky, director of the Transportation Department’s Real Estate office.

The 928-space parking garage will sit underneath office buildings that make up the planned $1.5 billion public-private partnership intended to revitalize west central Baltimore.

Patusky said that the state is contracting with the Maryland Economic Development Corporation for the garage. MEDCO will finance, construct, operate, repair and maintain the garage, which Patusky said is expected to be half-filled with state employees at the complex.

Kopp said that the state has already anticipated having this debt on its books in budgeting, so the impact has already been realized. Franchot said he was not convinced that the state should bear the debt.

“All the payments come to us, but all of the debt also sits on our books,” he said.

In the first phase of the project, which is currently underway, the private sector is funding the majority of the two office buildings that will also be constructed. The state has already committed to leasing office space in the buildings for the Department of Health and Mental Hygiene, the Department of Planning and the Maryland Transit Administration.

Franchot said he was going to vote against the two items on the board’s agenda that dealt with the garage contract because of financial factors. But he also wondered why a construction project that is being so heavily subsidized by the state did not have a written agreement in place to ensure that Maryland contractors and laborers got most of the work. Franchot advocated a project labor agreement be in place for the garage construction. Project labor agreements are government contract awards to unionized workers, establishing the terms and conditions of employment.

Franchot made a motion to approve the garage contract, as long as a project labor agreement would be included. Neither Kopp or O’Malley supported the motion.

“The problem is, we’ve got 40 to 50% unemployment in the building trade,” Franchot said. “These people know about the project, they’ll read about it, and then they drive past the construction site and see out-of-state license plates.”

Patusky and Michael Gaines from the Department of General Services all said that project labor agreements were not considered when negotiating the entire development. Because the office buildings will be constructed on top of the parking garage, they said it was important that the same contractors be retained for the entire project.  Additionally, they said, the developers have already shown their willingness to serve the community by promising a high proportion of minority business participation, and has said that they are committed to local hiring.

Caroline Moore, chief executive officer of Ekistics, LLC, the managing partner of the project’s private development team, said that they do want to hire local employees, and want to avoid the out-of-state license plate scenario.

The Rev. Alvin Hathaway of Union Baptist Church in Baltimore told board members that he had spoken to the project developers about local hiring. Hathaway said he and several others in the neighborhood had proposed that half of the project workers are qualified local residents. The developers agreed, Hathaway said, but no agreement had been put in writing yet.

Franchot suggested delaying the vote on the agreement until the Board of Public Works’ next meeting so there is time for a formal written agreement to be drawn up – and the government would have proof that “the reality is as good as the rhetoric.” But Hathaway did not want that, saying that he will take the developers’ word for now. The project is extremely important to the community, and Hathaway said that he believes the developers will be true to their word.

“It is not a matter of leverage. It is a matter of integrity,” Hathaway said.

Kevin Johnson from the State Center Development Group confirmed that they had been in touch with Hathaway and other community groups about local hiring.

“We are absolutely committed to this, and we’re absolutely going to make it happen,” he said.