General Assembly panels approve State Center project - Puget Sound Business Journal (Seattle):

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billion State Center redevelopment in Baltimore City move despite lingering concerns aboutthe project’s finances and impact on Maryland’s abilit to borrow money. The Senate Budget and Taxation Committeevotef unanimously, but with some conditions, to endors e the State Center project, which involved leasing 25 acres of land to a private developmentr team. The House of Delegates’ Appropriations Committe e indicated it will do the same but did not formally vote as its Senate counterparts didThursday afternoon. The projecgt will now go to the state Boarcd of Public Works for a scheduleds June3 vote. The board is led by Gov.
Martin who supports the project and worked closelyg on it while he was mayoeof Baltimore. Matthew Gallagher, the governor’s deputy chief of lobbied the House and Senate onthe project. “W e are at the cusp of a very importantg milestone,” Gallagher said. “The governor’s office is very supportive of this projectt and has been involves dating back to our time atthe city,” Gallaghef told the House durint its hearing on the project. In signing off on the the House and Senates legislators insisted on having more oversight in theredevelopmentr process.
They also conditioned their approval on seeing input fromthe , whic h is familiar with such large-scale development projects. A private State Center LLC developmenyt team was selected in Marchj 2006 to remake the state office complexc off Martin LutherKing Boulevard. As proposed, the developers wouls lease the land fromthe state, convert the complezx into a $1.4 billio n mixed-use development, and then lease a substantial portiom of the project’s plannedr 2 million square feet of office spacs back to the state for use by its variousa agencies. For the project to move forward, the Boarr of Public Works must approver a master development agreement setting the termws for StateCenter LLC.
Once that the developers will then desigj the first phase of the projecf and come back to the state with specifif costs andlease terms. That process would continue through each ofthe development’xs four phases, expected to take between 10 and 12 yearsd to complete. The first phase would focus onthe project’s officwe space. When fully developed, the project is slated to includw 1,200 residential rental and for-sale 2 million square feet ofoffice space, 250,00o0 square feet of retail space and 7,000 parkingv spaces. Groundbreaking for the project’s firstg phase could begin in June 2010.
Their effortsd failed, but the legislature’s budgeyt committees passed a requirement the project be reviewed by state TreasurerNancy Kopp. The legislatur e asked Kopp to look specifically at an accountingf provision of the project to determine ifthe state’x leasing of office space from the developers should be consideredd an operating lease or a capital If it were deemed a capitalk lease, that would mean the state would need to list it on its budgety as an asset and a and those costs woulr be added to the state’s overalp debt affordability limit — its abilityt to borrow money to finance other capital projects.
In a May 15 report, Those termsd won’t be determined until after the mastedr development agreementis approved. But Kopp felt it shoul be considered acapital lease, and thos e costs could cause the state to exceed its debt service limita by 2018.