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Emails Show O’Malley Approved Politically Connected Developers for Taxpayer Subsidized Project

Emails between state officials and developers obtained by WBFF Fox 45 in Baltimore show Governor Martin O’Malley approved the controversial State Center development team before his administration presented it to the Board of Public Works.

 The emails show that all of the developers had political ties to Governor O’Malley, some even major campaign contributors. The emails also show O’Malley approved the current development team before it was presented to the Board of Public Works.

 Afterwards, state officials celebrated the contract’s approval at the Owl Bar. O’Malley’s Chief of Staff Matt Gallagher said in an email, “it’s not every day you get to be part of a 10 figure deal, let alone architects of it.”

The controversial development project is now on hold after a Baltimore City circuit judge ruled the O’Malley administration violated state procurement law by not competitively bidding the project.  The O’Malley administration is appealing the decision.

The emails reveal that even one members of O’Malley’s preferred development team, Chris Kurz, said of the process, “If the likely form of the venture is going to materially different that [sic] was approved by the Executive Committee, it seems to me that to go to BPW and imply that nothing has changed is a misrepresentation of fact and misleading.”

The State Center project, a plan to redevelop 28 acres of state-owned real estate in downtown Baltimore, which houses state agencies, began under former governor Robert L. Ehrlich.  However, the original development deal collapsed after the developers Struever Bros. Eccles & Rouse scaled back operations after the recession, and the Sheila Dixon corruption scandal ensnared Ronald Lipscomb the head of its minority contracting partner, Doracon Contracting Inc.  O’Malley once called Doracon’s Lipscomb “a man of vision, talent, and commitment to the greater good.”

In 2011, a coalition of businesses in Baltimore’s Central Business District sued to stop the state and O’Malley’s new handpicked development team, State Center LLC, from moving forward with the State Center Project.  The coalition claimed the O’Malley administration failed to open the project up for competitive bidding thereby violating state procurement law.  During the 2012 legislative session the O’Malley administration attempted to kill the lawsuit with retroactive legislation.  However the bill did not make it out of committee.

A February 2009 email from Maryland Department of Transportation State Center Project Director Christopher Patusky to Leif Dormsjo, then chief of staff to John Porcari, former Maryland Transportation Secretary stated that a member of the old development team Caroline Moore had “plan B.”  Moore, according to Patusky inquired if the existing procurement contract could  “handle a swap of developers.”  Meaning the administration and developers were looking to excise Struever Bros. and Doracon from the approved development team and replace them with another set of developers.

Two months later on April 18, 2009, responding to a query from the Executive Director of Capital Budgeting, Chad Clapsaddle, Patusky wrote “The Executive Committee approved a reconstituted team on Monday. The Governor needs to approve. If you change too much, you risk requiring a new RFP. I think we got it just right.”

Later that month on April 29, 2009 Patusky wrote to Transportation Secretary John Porcari, “John, The Governor approved the restructured state center llc today… We will focus like a laser on the treasurer report, the Comptroller staff, and the Joint Committee for the next few weeks.”

Comptroller Peter Franchot, along with O’Malley and State Treasurer Nancy Kopp, sits on the Maryland Board of Public Works, the body that approves all state procurement contracts.  Franchot initially voted for the State Center project, but later rescinded his support due to concerns about the financial cost to taxpayers.

Another email shows that Patti Konrad, Director of Debt Management in Kopp’s office, worried that the state was paying too much for the project without any guarantee of profit sharing. “Furthermore” Kopp wrote, “when this gets going and construction costs and interest rates get recalibrated there is no assurance that financing won’t be considered a capital lease an be counted in the debt affordability.”

There were indeed close political connections between O’Malley and State Center LLC.  Many on the development team are generous campaign contributors to O’Malley and other Maryland Democrats.

The developers retained the services of Steven Kearney of Kearney O’Doherty Public Affairs.  Kearney is O’Malley’s former communications director, and his partner Damian O’Doherty is a former top aide to O’Malley ally, and former Baltimore County Executive, Jim Smith.  O’Doherty’s brother Ryan, is a top aide to Baltimore Mayor, Stephanie Rawlings-Blake, an ardent supporter of the State Center project.  Kearney and O’Doherty held a series of high-dollar fund raising events for O’Malley during his 2010 reelection campaign. State lobbying disclosures show lobbyist Sean Malone, O’Malley’s labor commissioner during his time as mayor, represents State Center LLC.

A study by Maryland Public Policy Institute found that state taxpayers would subsidize the new development deal to the tune of $127 million, more than 46 percent of the budget for the first phase of the project alone.  MPPI estimates the total cost of the State Center project to be $1.5 billion.

 

Mark Newgent

Mark Newgent is the editor of Watchdog Wire - Maryland, and a contributing editor to Red Maryland, the premiere blog of conservative politics in the Free State, voted one of the best state political blogs by the Washington Post two years in a row. His writing has appeared in the Baltimore Sun, Washington Examiner, National Review Online, and more. Contact: Maryland@WatchdogWire.com, Twitter: @MarkNewgent

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Categories: Budget and Finance, Government Transparency, Must Read, News, Politics, Waste, Fraud and Abuse
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