Gov. Hogan wants to turn over State Center complex to Baltimore City

Maryland Gov. Larry Hogan’s administration announced intentions Wednesday to turn over the aging State Center office complex to the City of Baltimore once all the state employees who work there are relocated to other offices.

But the plan faces multiple legal steps and will likely carry over to the next governor — who could either continue the process or scrap it altogether.

The announcement came from Lt. Gov. Boyd Rutherford during a regular meeting of the state’s Board of Public Works, which was considering approval of a lease to move a group of State Center workers to a downtown office. Rutherford was substituting for Hogan, who is in New Hampshire fundraising for Republican candidates.

Rutherford said during the BPW meeting that he informed Mayor Brandon Scott, a Democrat, of the state’s intentions on Tuesday.

“Surplussing State Center’s campus to the city of Baltimore will allow its citizens and city leadership to determine the best use for the property in their own right,” the Republican lieutenant governor said. “We really feel that the best decisions with regard to the future use of that property should come from the city and its residents and not necessarily in Annapolis.”

Scott’s spokeswoman Monica Lewis said in a statement that many details of a potential transfer need to be worked out, including funding for demolition and remediation needed to restore the site to productive use. But she added that the city will work with Hogan and his successor “to develop a plan for the site that we can all be proud of — a plan that fits into our shared vision for Baltimore’s renaissance.”

State Center has been the source of legal and political drama for nearly two decades, as three different gubernatorial administrations have wrestled with what to do with the old buildings and the thousands of state employee who worked there. The complex sits on 28 acres north of downtown and is seen as a gateway to West Baltimore. Construction began in the 1950s and the complex has housed labor, human services, assessments and taxation, aging and other state agencies.

State Center’s future has been in limbo since 2016 when Hogan and a state spending board canceled a $1.5 billion contract to redevelop the site.

Rutherford said prior redevelopment plans for State Center “would have put a financial albatross around the necks of the state.” He said the state and taxpayers would have been locked into “exorbitant rents” far higher than market rates for that part of the city.

The announcement potentially charts a new course for State Center, moving the fate of the complex out of the hands of the state government and into the hands of the city government.

Several steps would need to take place before such a transfer could happen, according to state officials. The state would need to finish finding new work spaces for about 3,300 employees, resolve ongoing litigation and then start the legal process to declare the property “surplus.” All that will fall to Maryland’s next governor to complete.

Hogan, a Republican, is limited to two terms and will leave office in January. The top contenders to succeed him are Democrat Wes Moore and Republican Dan Cox, whose campaigns did not respond to requests for comment on Wednesday’s announcement.

If the proposal makes it that far and the next governor wants to see it through, city officials would need to agree to accept ownership of the State Center property.

Councilman Eric Costello, whose district encompasses State Center, said acquiring the complex could mark a “great opportunity” for Baltimore, though he said the state needs to take responsibility for several crucial steps before making the transfer.

Hogan’s decision to kill State Center redevelopment plans in 2016 was “beyond unconscionable,” Costello said, and the state needs to provide funding for demolition work and either settle litigation or commit funding to resolve legal fights over the building before the city assumes control.

State Center redevelopment plans were first floated under Republican Gov. Robert L. Ehrlich Jr., and then Democratic Gov. Martin O’Malley led a process to pick a private company to redevelop the site with new state offices and also housing and shops.

Other property owners in Baltimore objected, saying the state-backed project would undercut their projects. Litigation backed by attorney and Orioles majority owner Peter Angelos followed, though it was ultimately dismissed.

When Hogan and Board of Public Works canceled the contract, concerns included whether the state would take on too much debt to finance the redevelopment.

That decision also led to litigation, this time between the chosen developer — Baltimore-based Ekistics, operating as State Center LLC — and the state.

In August, a court ruled that the state was within its legal authority to cancel the contract with State Center LLC, though the developer can seek damages for the amount of money it spent on pre-development costs, according to the governor’s legal staff.

State Center, LLC attorney Michael Edney declined to immediately comment on the state’s announcement.

As the court case dragged on, Hogan announced, first in 2019 and then again in 2021, that he would start relocating workers from State Center and putting them in leased offices elsewhere in downtown Baltimore.

In May, the Board of Public Works approved a lease to move 700 Department of Human Services employees from State Center to 25 S. Charles St.

And this week, the board was tasked with approving a 10-year lease for Department of Assessments and Taxation workers to move to the Candler Building at 700 E. Pratt St. The state is getting the first year’s rent for free and will pay nearly $1.2 million per year after that.

This story will be updated.

pamela.wood@thebaltimorebanner.com

adam.willis@thebaltimorebanner.com

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