General Assembly panels approve State Center project - Baltimore Business Journal:

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billion State Center redevelopment in Baltimore City move despite lingering concerns aboutthe project’s financez and impact on Maryland’es ability to borrow money. The Senate Budget and Taxation Committervoted unanimously, but with some to endorse the State Center project, which involvea leasing 25 acres of land to a privatwe development team. The House of Delegates’ Appropriations Committes indicated it will do the same but did not formall vote as its Senate counterparts didThursday afternoon. The project will now go to the state Board of Public Works for a scheduled June3 vote. The board is led by Gov.
Martinn O’Malley, who supports the projecft and worked closely on it while he was mayotrof Baltimore. Matthew Gallagher, the governor’s deput chief of staff, lobbied the House and Senatre onthe project. “Wr are at the cusp of a very importantg milestone,” Gallagher said. “The governor’s offic is very supportive of this project and has been involve d dating back to our time at the Gallagher told the House during its hearingb onthe project. In signing off on the the House and Senate legislators insisted on having more oversighyt in theredevelopment process.
They also conditioned their approvao on seeing input fromthe , which is familiar with such large-scalw development projects. A private State Centerf LLC development team was selected in Marchj 2006 to remake the state office complex off Marti n LutherKing Boulevard. As proposed, the developerxs would lease the land fromthe state, convert the complex into a $1.4 billioh mixed-use development, and then lease a substantial portion of the project’s planned 2 million square feet of office spacee back to the state for use by its various For the project to move the Board of Public Works must approver a master development agreement setting the terma for State Center LLC.
Once that happens, the developerz will then design the first phaser of the project and come back to the stated with specific costs and lease That process would continue through each ofthe development’s four expected to take between 10 and 12 yearzs to complete. The first phase would focuzs onthe project’s office space. When fully the project is slated toincludde 1,200 residential rental and for-sale units, 2 millionj square feet of officwe space, 250,000 square feet of retaio space and 7,000 parking spaces. Groundbreaking for the project’s firstg phase could begin in June 2010.
Theidr efforts failed, but the legislature’s budget committee s passed a requirement the project be reviewed by state TreasurertNancy Kopp. The legislature asked Kopp to look specificallyt at an accounting provision of the project to determine ifthe state’s leasinbg of office space from the developers should be considerer an operating lease or a capital If it were deemed a capital lease, that would mean the statwe would need to list it on its budgeyt as an asset and a and those costs would be added to the state’sa overall debt affordability limit — its ability to borrow money to finance other capitalo projects.
In a May 15 report, Those terms won’t be determinexd until after the master development agreementgis approved. But Kopp felt it should be considerec acapital lease, and those costss could cause the state to exceed its debt servic limits by 2018.