Bankruptcy suit reveals details about Turner's tries to develop Westport waterfront
Group from Nevada attempted to buy loan secured by 43-acre tract
Former industrial land that Patrick Turner planned to turn in to Westport Waterfront remains undeveloped. (Kim Hairston, Baltimore Sun / February 27, 2013)
By now the 43-acre tract, assembled and cleared over several years with millions of dollars and personal resolve, was supposed to house hundreds and bustle with office workers. There should be a towering skyscraper and a stadium.
Instead, the development company that was going to make that happen is in bankruptcy and the future of the $1.4 billion Westport Waterfront project, thought of as a potential "Harbor West," is uncertain.
But Patrick Turner, the man whose idea it was to remake this industrial waterfront as a vibrant mixed-use community, is fighting to keep the project alive — and in his hands.
Turner and a partner, Towson-based developer Thomas B. Fore, are accusing investors they thought might save the project of acting as a Trojan horse. Invited into the development's inner circle, according to court filings, the investors really intended to acquire rights to the land and make off with millions of dollars.
"We are confident the legal hurdles will quickly disappear so we can ... finally put our shovels in the ground," Turner said in an email
Assembling the land
Turner methodically collected the land along the Westport waterfront until he controlled every inch from Waterview Avenue to Interstate 95.
"When we started the project ... most people in Baltimore had never heard of Westport," Turner said. "We spent years assembling the real estate, developing a relationship with the community, the city and other stakeholders."
Sheila Dixon, who was president of the City Council and then mayor during Turner's planning phase, said she supported bringing retail and commerce to an underserved community.
"That was an area that had really been deprived," Dixon said. "It took a lot of work to consolidate. A lot of businesses had to be relocated."
The Westport Waterfront rectangle is roughly six-tenths of a mile long and 500 feet wide. The west side is bordered by a street that runs parallel to the light rail line, which has a stop at the site.
Between 2004 and 2011, Turner assembled the land from more than a half-dozen parcels — a former power plant, a shuttered factory and other businesses — at a cost of more than $13 million.
"We ... have invested great amounts time and money into the project," Turner said.
Vision needed funding
Turner's ambitious plans for the site — 2,000 residences, stores and offices, a hotel, bicycle trails and a beach, plus a 65-story skyscraper — were revealed in 2006 to members of "Old Westport," the small, increasingly blighted and crime-plagued community across the tracks. The first buildings were to open in 2008.
Turner's undertaking follows in the vein of his earlier projects — the conversion of South Baltimore General Hospital into residences called 1211 Light Street and the transformation of a grain elevator in Locust Point into luxury residences overlooking the harbor and downtown.
But Westport Waterfront would be adaptive reuse on a grander scale, not just the makeover of one building but of a whole section of the city. If successful, Turner would make his mark on Baltimore's skyline.
"It was really a cutting-edge development for Baltimore," said M.J. "Jay" Brodie, who headed the Baltimore Development Corp., the city's economic development agency, when Turner proposed Westport Waterfront.
Excitement about the project abounded, apparent from the incentives approved related to the environment, transit and even the military.
In 2008, the City Council and Mayor Dixon approved the issuance of $160 million in bonds to pay for roads, sewer and water lines and other infrastructure at the site. It is the largest such deal the city has ever authorized, said Kim Clark, executive vice president of the BDC.
The arrangement, called tax increment financing, would allow the city to pay for the construction work and then repay the bond holders with property taxes generated by the development. If tax revenue from Westport were inadequate, Turner's development company would be required to supplement the payments.
But the city could not find anyone to buy the bonds.
"It ran smack into the recession," Brodie said. "The TIF market absolutely dried up."
Without the infrastructure, development partners who planned to build structures at the site began to drop off, Brodie said.
"Sometimes, it's purely timing," Brodie said. "It should happen at some future date. ... I'm not less excited about it today."
Neighborhood leader Keisha Allen said members of the Westport community hope Turner can resume his plans but they're more focused on getting the city to resurface their main thoroughfare, Annapolis Road, and improve lighting, landscaping and signage.
"We have a plan of how we want the neighborhood to work," Allen said. "No one feels like they're stuck because of the waterfront."
Fighting to save Westport
In mid-2007, Turner negotiated a $30 million loan with Citibank Global Markets Realty Corp. to pay for the work being done at Westport. The loan was secured by the 43-acre tract Turner's companies held. By 2010, the recession had taken a toll, and Turner's development group was not able to make payments, according to court filings.
That year, Citigroup agreed to sell the loan to Turner for $8.5 million. Turner turned to Fore for help, and Fore and others made payments to stave off foreclosure, court documents show. But the Westport group was never able to secure sufficient financing to buy the loan.
"Over the last two years I have made a major commitment to the Westport project," Fore said in an email. "It is one of the most exciting real estate development projects in Baltimore, with the potential of creating an exciting lifestyle community and thousands of new jobs."
Last July, Citigroup dropped the purchase price to $7.1 million. The bank declined to comment.
Seeking a partner to buy the loan on their behalf, Turner and Fore connected in mid-November with an investment firm from Utah, Vision Capital Partners LLC. Days later, Citigroup initiated foreclosure on the Westport land.
Vision quickly conducted due diligence on the property, according to court documents. During the holidays, Vision offered Citigroup $5.5 million for the loan. The bank considered the offer inadequate and did not make a counter offer, according to court records.
While Vision and Citigroup dickered, it appeared to Turner and Fore that final terms were close. Then, in mid-January, Vision dropped out of the negotiations — but not before passing along what it knew about the Westport property and the Citigroup loan to three Nevada men, court filings say.
The Nevada group, who formed a company called Warhorse-Baltimore Real Estate LLC in mid-January, entered into a contract with Citigroup to buy the note without Turner and Fore's knowledge. (Warhorse is not affiliated with War Horse LLC, the real estate development company recently formed by Scott Plank, a former Under Armour executive.)
Warhorse intended to acquire the loan and foreclose on the Westport land, according to a $225 million lawsuit that Turner and Fore filed Feb. 20 against Vision, Warhorse and their principals. Turner and Fore allege that the two firms violated a confidentiality and nondisclosure contract, misrepresented themselves and conspired to profit from the property's foreclosure sale and resale of the loan.
Ed Bailey, Vision's managing partner, referred inquiries to their attorney, Ezra S. Gollogly, who declined to comment. None of the Warhorse principals, two of whom have been in personal bankruptcy, responded to interview requests. Neither Vision nor Warhorse have filed court documents responding to Turner and Fore's complaint.
According to Turner and Fore's lawsuit, Warhorse never closed on the loan's purchase. Warhorse filed a bankruptcy petition in Nevada on Feb. 21, listing Citigroup as its major creditor. The bankruptcy could be intended to prevent Citigroup from negotiating with other potential purchasers of the loan.
"Citibank wants this project to succeed," said Kenneth B. Frank, an attorney representing Fore and Turner in their suit. "They were very helpful and cooperative ... for a long time."
Citigroup scheduled a foreclosure sale of the Westport property on Valentine's Day, but the auction was canceled after a construction company and land consulting firm filed an involuntary bankruptcy petition against Inner Harbor West LLC.
Turner is attempting to have the bankruptcy converted to a Chapter 11 filing, which would allow his company to attempt to reorganize its finances and might prevent the Westport land from being sold.
Turner and Fore remain confident that the project can be saved.
"I am committed to seeing this project succeed and look forward to a quick resolution of the legal hurdles," Fore said. "Our goal is to finalize the transaction with Citibank so the project can move forward."
Turner said his team is "in the final stages of re-capitalization." But for the Vision-Warhorse saga, the refinancing would be done by now, he said.
"Westport is a dynamic and complicated project," Turner said. "It has the potential to make an enormous contribution to Baltimore City."