Wednesday, July 27, 2016

State Center Show Down

State Center is the name of a Baltimore Metro stop and it is the State of Maryland's largest agglomeration of State offices. It is also an example of failed urban renewal in that it planted isolated office buildings on 28 acres at the critical seam between neighborhoods and downtown that had the effect to separate areas instead of connecting them. It may soon become an example of a failed private-public partnership (P3).
State Center rendering (Howard Street LRT in the foreground)

It was under Governor Ehrlich and his Secretary of Transportation, Bob Flannigan, that the desire to utilize State assets such as land and transit to highest possible extent reached new buoyancy. Making better use of State owned land near existing State owned transit makes a lot of sense. It falls into a development category called transit oriented development (TOD). State Center is a prime example for a potential TOD.

Plans for a redevelopment that keeps the State offices, knits the communities more tightly to Mount Vernon and Midtown and eliminates the vast dead surface parking areas in favor of a potentially vibrant mixed use part of town that feels more like a neighborhood have been developed for over ten years. An agreed upon plan sits on a shelf since 2014.

The redevelopment plan would build a dense urban center on the State-owned land, the State would maintain the property of the land but the development would be privately-held mixed-use of 2,000 residential units, retail and 2 million square feet of office space. The state would lease back the necessary office space at an estimated cost of $18.5 million a year (BBJ).

The development team has been in limbo since 2014 when Governor O'Malley left the decision about this project to his successor after various lawsuits by Peter Angelos were dismissed. Angelos had alleged wrongful award of the project to the selected development team and was generally opposed to it because of the expected competition with his downtown office space.
State Center aerial: location plan: Offices in a sea of parking

Governor Hogan, although winning his election under the slogan "Maryland, open for business", has left the matter dangling, even though the development team reportedly has been patiently waiting, stating it was still ready to go.

According to the SUN, the project is now in conflict mode, meaning that the development team is ready to sue the State for not following up on the P3 agreement. A necessary step is "mediation", i.e. the developer and the State government will try to hash out their differences starting tomorrow.

The timing for coming to a positive conclusion may be unfortunate as this process overlaps with the Council hearings on Port Covington beginning today. That much bigger project and its large Tax Increment Financing (TIF) has renewed anxieties in certain circles about public private collaboration and anything that smacks of public subsidies.

However, the State Center project does not ask for any TIF  and the only City tax break it would provide is in form of a PILOT for the State uses only.  The State complex currently pays no property taxes at all. Opponents of the project, which is supported by the surrounding communities, allege that the State would pay inflated office lease rates after the project is complete. The developer maintains that the calculated rates are just regular market rates.

Clearly, the State's lease back guarantee is what makes the project work and allows building a much more ambitious project than a State funded renovation of the current office buildings would be. Since the current offices are functionally obsolete (i.e. they need a major overhaul), a private public partnership like the proposed State Center deal has many upsides for urban planning, transit utilization, the State and its employees and the City, which will finally receive tax benefits from the large swath of land.

Alternatives for the State include leasing office space elsewhere or building their own facilities elsewhere, each of those options would be a major blow for Baltimore, unless it were to occur in a city location that hasn't been suggested to date.

Still hopeful that the project may go forward, the State Center developers signed a community benefits agreement in the spring of this year. The Community Law Center helped community groups to form the State Center Neighborhood Alliance a few years back. The center also assisted the communities in negotiating the community benefits.
That agreement requires community involvement in the refinement of plans, improved access to transit, community jobs and environmentally sensitive construction as well as financial support for certain community-led projects.
Just in case Governor Hogan will actually continue what Governor Ehrlich had begun and give the project finally a green light. Actual tangible support for the City. Why am I not holding my breath?

Klaus Philipsen, FAIA

see also previous article on this site:
Why the State Center is a good idea

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