October 1, 2014

Board of Public Works reluctantly approves costly purchase of Balto. building for Red Line

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By Alexis Webb

Alexis@MarylandReporter.com

The Board of Public Works Wednesday reluctantly approved buying a downtown Baltimore building for more than twice its appraised value because the site is needed to construct a ventilation shaft for the Red Line transit project.

A vacant four-story brick building at 114 E. Lombard St. in Baltimore is “exactly positioned” where the Red Line shaft needs to be, transit officials said.

The property was appraised for $240,000, but after negotiations, the owner was willing to accept $550,000, the value of its mortgage. The owner, developer Mark Sapperstein, “wanted four times the estimated value” but the $550,000 was “all we could get them to settle for,”said George Fabula, manager of the Real Estate Division at the Mass Transit Administration.

The bank holding the mortgage for what was once a larger commercial project refused to accept less than the full debt, Fabula said. The property is “under water,” worth less than its mortgage.

“The fact is it’s worth about half the amount that your paying,” said Comptroller Peter Franchot, “…and I would say no.”

Nearby properties worth even more

Nearby properties that were possible sites for the ventillation shaft were taken off the table.

“There are two more properties that could be utilized but they are very successful businesses that would cost a lot more [over time] than the property [we] are acquiring,” Jim Smith, secretary of the Maryland Department of Transportation, told the board.

The asking price for the East Lombard building is due in part to the prime location of the land and the desire of MTA officials to avoid costly litigation.

Franchot remained opposed to the $310,000 increase in the purchase price. He told the transit officials to “start litigating on these things. It’s not just expensive for us, it’s pretty gosh darn expensive for the other side too.”

Franchot went on to suggest that Maryland start “flexing our muscles,” and should, “feel free to go to court,” with stubborn sellers.

Fabula and Smith said owners of commercial properties are not budging when it comes to selling buildings they know the government needs for transit lines, causing the agency to try and settle as amicably as possible without lengthy proceedings.

Feds approve purchase

A survey of other Maryland Department of Transportation projects similar in size to the Red Line Project showed there was 145% increase from the state’s original “Offer of Just Compensation” to what the figure was after the state went to trial to condemn the property.

This survey allowed MTA officials to submit written justification to the Federal Transit Administration for the inflated purchase on May 12. The FTA, which is expected to supply half of the $2.6 billion cost of the Red Line, concurred with the property purchase on Aug. 15.

Gov. Martin O’Malley favored the acquisition despite the high price. “There are special considerations to think about with this one… infrastructure and engineering challenges,” said O’Malley.

The light rail transit project will connect Woodlawn in Baltimore County with East Baltimore communities such as Harbor East, Fells Point, and Canton. It is likely to begin construction in 2015 and begin operating in 2022.

  • KatieSilverSpring

    who is developer Mark Sapperstein, and to whose campaigns does he normally contribute? do we have a repeat Rales Bros here in the form of one developer? or, in line with the Dem favorite contributor, is Mark Sapperstein just another Koch Bros type who wants to bankrupt Maryland taxpayers? oh, this is such a point of attack for Maryland Republicans if they grab it.