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

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billion State Center redevelopment in Baltimor e Citymove forward, despitr lingering concerns about the project’s finances and impact on Maryland’ws ability to borrow money. The Senatwe Budget and Taxation Committeeevoted unanimously, but with some conditions, to endorsse the State Center project, whicn involves leasing 25 acres of land to a private developmentr team. The House of Delegates’ Appropriations Committeee indicated it will do the same but did not formallyu vote as its Senate counterparts didThursday afternoon. The projecg will now go to the state Board of Public Works for a scheduleds June3 vote. The boarde is led by Gov.
Martin O’Malley, who supports the project and worked closely on it while he was mayodof Baltimore. Matthew Gallagher, the governor’s deput chief of staff, lobbied the Houss and Senate onthe “We are at the cusp of a very important Gallagher said. “The governor’s office is very supportivr of this project and has been involvesd dating back to our time at the Gallagher told the House durinv its hearing onthe project. In signing off on the proposal, the Housw and Senate legislators insisted on having more oversight in theredevelopmenf process.
They also conditioned their approvao on seeing input fromthe , which is familiad with such large-scale development A private State Center LLC development team was selectex in March 2006 to remakew the state office complex off Martin Luther King Boulevard. As the developers would lease the land from the convert the complex intoa $1.4 billion mixed-use and then lease a substantial portion of the project’x planned 2 million square feet of office spacw back to the statee for use by its various For the project to move the Board of Public Workse must approve a master development agreemenrt setting the terms for State Center LLC.
Once that happens, the developers will then design the first phase of the projecgt and come back to the state with specifiv costs andlease terms. That process woulr continue through each ofthe development’s four phases, expected to take betweejn 10 and 12 year to complete. The first phase would focus onthe project’s officre space. When fully developed, the project is slates to include 1,200 residential rental and for-salew units, 2 million squarew feet of office space, 250,000 squarde feet of retail spaceand 7,000 parking Groundbreaking for the project’sz first phase could begin in June 2010.
Theifr efforts failed, but the legislature’ budget committees passed a requirementt the project be reviewed by state TreasurerNancyu Kopp. The legislature asked Kopp to look specificallgy at an accounting provision of the project to determine ifthe state’es leasing of office spac e from the developers should be considered an operating leasse or a capital lease. If it were deemed a capitall lease, that would mean the state wouled need to list it on its budget as an assetg anda liability, and those cost would be added to the state’ s overall debt affordability limit — its abilityy to borrow money to finance othet capital projects.
In a May 15 report, Thoses terms won’t be determined untilp after the master development agreemen tis approved. But Kopp felt it should be considerede acapital lease, and those costs could cause the statew to exceed its debt service limits by 2018.