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The Daily Record: Montgomery Park argues that Md. spending board was misled

The owners of Montgomery Park have asked the Maryland’s spending board to examine what they call inaccurate information provided to the board prior to voting in favor of a sole-source lease with Kornblatt Co.

Operating as Montgomery Park LLC, developers Samuel K. Himmelrich Jr. and David F. Tufaro signed a letter dated Monday and addressed to the three members of Maryland’s Board of Public Works. The letter contends that details discovered since the Jan. 8 Board of Public Works’ hearing call into question the validity of information the board relied on to approve a 10-year, $1.68 million lease for the Maryland Insurance Administration at Kornblatt’s 200 St. Paul Place property in downtown Baltimore.

“This new information suggests that the basis upon which the MIA Lease was approved in the face of Montgomery Park’s protests may not have been accurate, and accordingly, the BPW should further investigate these issues,” according to the letter addressed to Gov. Larry Hogan, Comptroller Peter Franchot, and Treasurer Nancy Kopp.

The 15-page letter, with roughly 40 pages of supporting documents attached, accuses Kornblatt of providing misleading information to the spending board during the hearing in Annapolis.

Hogan and Kopp, over Franchot’s objections, voted in favor of the lease even though the state’s contract appeals board had not ruled on two objections from Montgomery Park over the decision to scuttle a competitive bid process. During the board meeting Hogan and Kopp said they were concerned about the potential for Kornblatt to lose control of the building and for state agencies to end up “homeless.”

Montgomery Park’s letter follows the Maryland State Board of Contract Appeals delay of a hearing, initially scheduled for Wednesday at the Department of General Services behest, on objections regarding Maryland abandoning its competitive bid process. That hearing has been rescheduled for Feb. 3.

“(The hearing) will not get pushed back any further, despite DGS’s request. We are not going to let this drag on any further,” Bethany N. Bean, chairwoman and presiding judge on the board wrote in an email. She added that the board hopes to issue a decision in a few days on the first appeal filed over the issue.

Kornblatt officials have said they won’t comment on the dispute until after the Board of Contract Appeals issues its rulings.

In the letter to the Board of Public Works Himmelrich and Tufaro dispute Kornblatt’s claim its lender was pressing the company to secure a lease with the state or was pressuring the landlord to start charging the state double rent, purportedly because Kornblatt had not refinanced its loan by Oct. 10, 2019, as required in the loan’s covenants as a condition of retaining financial control of 200 St. Paul Place.

Documents from Bloomberg CMBS attached to the letter show Kornblatt’s loan remains in good standing, is currently not on a “watch list” of potential problem commercial properties, and lists a Jan. 1, 2021, deadline to refinance the building.

Montgomery Park’s letter also reasserts arguments made during the Board of Public Works’ hearing that the state lease with Kornblatt does not allow it to charge double rent, and, citing a letter from Kornblatt’s CEO Tim Polanowski, argues that the company has been threatening to take such action since late September.

The letter also repeats Montgomery Park’s stance that the lease approved by the Board of Public Works does not include a “termination for convenience clause” like Kornblatt’s lobbyist assured the Board of Public Works. The letter includes a copy of the section of the lease that lists the termination for convenience clause as “intentionally omitted.”

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