Rascovar’s State Center column was misleading

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By Jim Peiffer

For MarylandReporter.com

Barry Rascovar’s Sept. 4 column about State Center is very misleading.  The stakes are high and clarity on details surrounding this project is very important –– particularly as the lack of transparency from the state grows.

Key parts of his tale about a faulty plan, greedy developers, and changing economic circumstances are just not true.

I was Maryland Department of Transportation’s principal staff to this project from 2005 – 2011.  I am happily retired and not in the employ of anyone.

Misunderstood project

The proposal to redevelop State Center was never widely understood, which was one of its major problems.

The project Mr. Rascovar demeans sought to accomplish two major goals.  It was designed to finance a renovation of obsolete state office buildings without impacting an over-booked state capital budget.  It accomplished this by producing an “occupancy cost” for new state facilities that resembled the state’s existing cost to occupy and maintain its crumbling campus.

To lease rather than own is not a novel strategy.  It has financed projects in Maryland several times (e.g., the DHMH laboratory facility in East Baltimore) and many times around the U.S.  It works! Aside from the political vetting, the project was reviewed by leading real estate practitioners including: JLL, JP Morgan, Lazard, BAE, Partners for Economic Solutions, not to mention the state’s auditor.

The project was hotly debated and support for it could wax and wane.  However, the budget committees of the General Assembly and the Board of Public Works repeatedly set aside the objections of the Department of Legislative Services.

On overwhelming majorities, they approved the selection of a minority development team, a Master Development Agreement governing the project, ground leases of the development site, occupancy leases for the first two state buildings and an appropriation of funding for a new state parking facility.

Transit oriented development

The state’s second goal, and of particular interest to MDOT, was the opportunity to capitalize on its tremendous investment in transportation infrastructure by encouraging transit oriented development.  This vision enjoys the support of every community affected, which in a very diverse part of the city is highly unusual.

Its untapped economic potential could bring vital jobs and cultural, recreational and retail opportunities where very little exist today.  In the process, a more livable West Baltimore would emerge. The opportunity is lost once the governor starts dispersing state offices downtown and outside of Baltimore.  Extensive rebuttals of state office dispersion exist in the 2010 press.

The ink was hardly dry on the project’s contracts when a lawsuit, paid for by Peter Angelos, was brought against the project.  It dragged on for three years until the Court of Special Appeals tossed it out.  However, it was a major strategic success as it stalled the project long enough for its tepid and inconsistent political support to evaporate.

Hogan takes over

Gov, Hogan took office and was left to decide what to do with the existing State Center contractual obligations.  He asked for time to consider the project.

In the meantime, he decided to pull the plug on the “Red Line” (Baltimore’s east/west Light Rail expansion).  As his later actions demonstrate, I would guess that he wanted to end State Center too, but the optics of crushing Baltimore again were just too bad.

From what I hear, the governor’s staff dallied with the development team for almost a year.  Eventually, they agreed to third-party mediation.  It was a one-sided conversation.

In December 2016, the governor walked away from mediation.  The night before the last meeting of the year, he whisked an agenda item before the Board of Public Works that proposed to cancel the State Center office space leases.

No notice was given and no public testimony was allowed.  The Board acted — Peter Franchot continued to vote against the project, and Nancy Kopp, a stalwart supporter from the beginning, changed her mind and supported the governor.

Gov. Hogan quickly brought a lawsuit against the development team.  Naturally the embattled development team counter sued.  The governor appropriated approximately $900,000 to hire outside lawyers rather than use the attorney general in this suit.  Later he spent more tax dollars with the Maryland Stadium Authority as his agent on a secret study of the State Center site.

I suppose that at some point this secret study will see the light of day.  The governor and perhaps the mayor will stand in front of a microphone and declare that they care for West Baltimore and this new plan, however infeasible, proves it.

No briefings, consultations or warnings

 My issue with all of the above is that the community, and often City officials, were not briefed, consulted or warned of any of these acts.  Attempts to meet with the governor and hear what he’s trying to do were ignored.

I hope this stonewalling ends.  The lack of community engagement fuels the community’s cynicism.  It is a very poor way to do business.

One can infer that the legal battle will drag out for years — certainly beyond the next election.  It seems that Gov. Hogan, like Angelos, seeks to use the courts to delay a day of reckoning.

Why else would he walk away from a mediator trying to find a path for the existing developer to get out of the way?  Would he rather sue and fritter time away in court until he can safely say “no” to Baltimore again?  He could also offer up his own plan that, if not buildable or fundable, would be tantamount to saying “no.”

Either way the expensive mess that State Center has become during this administration is entirely his fault.

  • TellTruth

    Complete miss by this writer! … Ekistics had no capital or experience of any kind, and was trying to pre-sell the project for a $20 million profit … manipulating the community and the press in the process.