High-profile building on Baltimore's West Side goes to auction

Daily Record, The (Baltimore), Aug 18, 2005 by Jen DeGregorio

The sale of a high-profile building on Baltimore's West Side - expected to fetch more than $1 million at auction Friday - could throw a wrench into the city's urban renewal plans for the blighted downtown neighborhood.

The former Kresge store at 117-119 West Lexington St. stood under the threat of condemnation for more than five years, ever since the Baltimore Development Corp., the city's economic development arm, gained the right to acquire properties in the West Side via eminent domain.

The 44,000-square-foot building occupies a key corner of the so- called superblock, a five-block area bordered by Clay, Fayette, Howard, Lexington and Liberty streets that is considered a linchpin in the West Side's revitalization.

Although the city chose a development team for the superblock in February, it has not moved forward with plans to acquire buildings there.

The building's owner, Lexington Park Associates, is tired of waiting for the city to make a move, according to the company's lawyer, David H. Fishman of Gordon, Feinblatt, Rothman, Hoffberger & Hollander LLC.

Lexington Park's partners put the building up for auction to see if private investors would offer a better price for the building than they would get from the city, which is required by law to pay fair-market value for properties it takes via eminent domain.

It's been under a phony threat of condemnation for years and years, Fishman said. How do you spend money on a building when you think it's going to be condemned?

Maybe somebody would be more interested in being in the position that we're in right now, he said.

Plenty of people are interested, said Paul R. Cooper, vice president of Alex Cooper Auctioneers Inc.

Despite the threat of eminent domain, the property is expected to sell for more than $1 million at auction, he said.

There has been a lot of interest from far and wide, from New York, Philadelphia, Washington and Baltimore, Cooper said. And we've been advising everybody about the threat of the city's pending offer to purchase the property.

There is a great lease on the property, the Lots Stores, and they simply want to take advantage of a strong real estate market, and that's what is motivating them to sell, he said.

The demand for property in the city's West Side was demonstrated when another condemnation-threatened building, 419 W. Baltimore St., was bid up to $316,000 at an auction in May, Cooper said. The building was only about 4,500 square feet, according to state land records.

I've had no problems selling properties on the West Side whether they are under the threat of condemnation or not, he said.

But Baltimore's hot real estate market could complicate the city's urban renewal plans.

When the city compensates owners for the property it takes, the payment is based on appraisals that are often obsolete by the time the purchase is finalized.

With Baltimore property values rapidly appreciating from year to year, even month to month, property owners are often shortchanged.

Lou Boulmetis, owner of Hippodrome Hatters, said the city only offered him half of what his Eutaw Street property was worth when it condemned his building. After going through litigation, he received more than twice the city's original offer.

But it's in the city's interest to keep the value down as much as possible, Cooper said.

If the Kresge building sells for more than the city previously appraised it, then the redevelopment of the superblock could take longer than projected.

Officials at the Baltimore Development Corp. did not return calls.

The longer they wait, the higher the real estate values go and the harder it is for them to follow through on the condemnation, the more difficult it will be for them to compete in purchasing these properties, Cooper said of the city.