Gov. Hogan, rethink State Center, don’t rebuild it

Gov. Larry Hogan and Mayor Catherine Pugh toured the stalled State Center development in Baltimore Thursday afternoon, lamenting the lack of progress at the site as a legal battle between the state and the company that planned to develop it rages on. (Luke Broadwater / Baltimore Sun)

On Monday, the Maryland House of Delegates voted to pass a bill that would put certain parameters on any effort to resuscitate the stalled State Center redevelopment project in West Baltimore. Problem is, redeveloping the site was a bad idea when first hatched by former governor Robert Ehrlich, and it got worse in the administration of Martin O’Malley.

Now Gov. Larry Hogan needs to rethink it entirely rather than tweak it, or it will merely enrich a few developers at the expense of state and city taxpayers.

The latest version of the $1.5 billion, 28-acre project north of downtown called for replacing aging buildings that house about 3,500 state workers with new offices, retail and green space. Comptroller Peter Franchot has suggested building a new arena there, and a recent taxpayer-funded study suggested apartments, medical offices and senior living be built on the site. The House bill adds a requirement for community involvement in the process, restaurants, a high-quality grocery store, adequate parking, and local and minority business hiring, in addition to making state agencies the lead tenants.

The current buildings were ugly at their opening in the 1950s and ‘60s and are now technologically outdated. Renovation plans, as envisioned during the 10-plus years the project has been under discussion, are as beautiful as artists’ renderings always are. But like so many “game changing” projects in Baltimore — including the Hilton, which lost $5.5 million in 2016 and has run a deficit every year it has been open — they are designed to please developers and politicians who want to prove their influence. This redevelopment is not for residents of a city increasingly squeezed by a shrinking population, a surfeit of non-taxable property and giveaways to developers.

First, the government shouldn’t build offices designed for 1980s needs. With high-speed Internet almost everywhere, many workers have the ability to produce anywhere they are located and don’t need to report to a particular building every day. That means boxes designed for a set number of workers are unnecessary at best, not to mention intrinsically overpriced as they don’t allow for changes in the workforce by size or function. Why should the state — a.k.a. taxpayers — be locked into a mortgage for decades for a building that could be obsolete in less than five years?

Why not consider other options, like co-working spaces that allow businesses to lease as much or as little space as necessary on a temporary basis? Cordish Companies’ Spark Baltimore offices have 30,000 square feet of flexible space at Power Plant Live. And late last year Amsterdam-based Spaces, which provides shared offices, leased almost 33,000 square feet at 145 West Ostend St. They are two of many co-working spaces that have opened locally in recent years as businesses new and old shift their office routines to become more competitive. Globally, the number of co-working spaces has grown exponentially over the past decade.

If the state is determined to have traditional offices, there is plenty of Class A space available in the Baltimore Metro region: 4.9 million square feet, according to a 2017 fourth quarter report by commercial property broker Cushman & Wakefield. Maryland could also move many workers to Montgomery Park off I-95 in Baltimore, where the Maryland Department of the Environment and Maryland Lottery Agency rent space — and support the property tax rolls.

With so many options that provide both flexibility and competitive rates, why build? A new State Center locks in taxpayers for years regardless of the success of the project and the needs and desires of state workers. At the very least, as the Maryland Public Policy Institute showed in 2011, the project would be a $127 million taxpayer handout, a number that will only have grown in the last seven years.

Second, burdening residents with more debt in a city where the median household income is $44,262 and 22 percent of people live in poverty is the opposite of what leaders need to do to attract the next Amazon, which is currently considering 20 finalists — and not Baltimore — for its second headquarters. And with brick and mortar stores cannibalized by online sellers, there are no guarantees that stores attached to the project would thrive. Plus, the proposed new arena would more than likely be a debt burden as have been all projects by the Maryland Stadium Authority, which excels in crafting deals good for professional sports teams and other tenants and a burden for taxpayers.

Let’s learn from past mistakes instead of repeating the same “build it and they will come” ones that have proved so disappointing in past decades. Baltimore may have lost Amazon’s second headquarters, but to claim the next big opportunity, it needs to think like the companies it wants to attract for the sake of current residents and a thriving city. Tearing down State Center and letting companies bid for the property would be a good place to start.

Christopher B. Summers is president and chief executive officer of the Maryland Public Policy Institute. His email is csummers@mdpolicy.org.

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