State officials say the proposed charges are based on the cost of real estate in the area, and the use of a state waterway. But the affected businesses contend the charges are prohibitive: $779,275 for Phillips, $585,850 for Dick's Last Resort and $378,000 for Hard Rock Cafe.
The restaurants' landlord, chief executive David Cordish ofthe Cordish Cos., called the proposed charges "ridiculous."
Cordish said the charges were so high that the tenants requested that permits be withdrawn — calling off the proposed improvements. "We would hope that [the Maryland Department of the Environment] would come to its senses. You can't count on that, can you?"
State Comptroller Peter Franchot called the charges "confiscatory" and said they could scuttle the projects. "The city needs tax revenue, the state needs jobs, the private sector wants to do something," he said.
The comptroller's comments came Wednesday after wetlands licenses for the three restaurants were withdrawn from the agenda of the Board of Public Works, which had been scheduled to vote on the environmental agency's proposed charges.
Those on both sides of the issue hold out hope for a compromise.
A spokesman for Phillips restaurant said that while the amount proposed by environmental officials would be too high to let its project go forward, the agencies have indicated that they will be flexible. Doldon W. Moore Jr., the state wetlands administrator, said officials plan to talk with the companies about the charges and could bring back a revised proposal as soon as the board's June 20 meeting.
Phillips and its predecessor, the ESPN Zone, as well as Hard Rock, have operated dining facilities on piers at the harbor for more than a decade. This year Phillips and Hard Rock sought permission to add roof systems over the outdoor dining areas for greater sun and rain protection.
In Phillips' case, the plans went far beyond adding more shade. The company wants to turn the existing facility into a 4,453-square-foot "crab deck" focused on Chesapeake Bay seafood. As part of its plan, Phillips proposed installing a permanent roof and a steaming facility with a hood. The chain has said that during warm weather months the deck would be used for such "Celebration of the Chesapeake" activities as crab-picking lessons.
Laurie Schwartz, president of the Waterfront Partnership, said the restaurants' plans would be enhancements to the Inner Harbor, adding that visitors like to sit out over the water. Phillips' plan, she added, "would be a terrific addition to the offerings of Phillips, being able to learn about the Chesapeake Bay, seafood, the harbor."
In setting the square-footage charge, the state accepted the larger of two assessments submitted by Cordish as part of the application, Moore said. One appraiser proposed an assessment of $110 per square foot, but the other put the value at the $175 per square foot — an amount the state accepted for all three properties. Individual assessments were based on the size of the barges.
Moore said that in accepting the higher of the two assessments, he relied on the advice of the Department of General Services' real estate office and followed the Maryland code.
"That's the cost of real estate in that pier area of Baltimore," he said. "The tenants were very surprised at the price — as I was."
Moore said the public works board, but not the environment or general services departments, has the option of waiving compensation or setting a lower rate.
In the cases of Phillips and Hard Rock, the proposed charges represent a change in the state's approach to the use of the piers. Moore told the board that when the restaurants first sought permission to use the piers for food service, they were required to pay for environmental mitigation but not compensation.
According to the Board of Public Works agenda, the wetlands administrator and Department of the Environment determined that the improvements at the two restaurants "by converting a deck area to a substantial fixed non-water development facility [are] creating upland."
Jay Apperson, a spokesman for MDE, said "creating upland" is the terminology used for adding to the existing platforms over the water.
Apperson said that in the case of Phillips, the proposed pier would be 827 square feet larger than the one installed by ESPN Zone. He said the department had determined that the environmental impact of the larger pier would be "de minimis" — requiring a mitigation fee of $2,849 to a state wetlands fund. The additional money would be compensation to the state for the use of its property — the waters of the harbor.
Hard Rock had been asked to pay the $175-per-square-foot rate for a 2,160-square-foot pier, where it plans to add a roof. A spokeswoman for the company did not return calls requesting a comment.
The issue with Dick's Last Resort is somewhat different, because its charge would be for the original use of that space, not simply improvements.
Peter Mellits, an engineer with Dick's, said his company expected to pay a fee for a pier extending over the waters of the harbor — but not as much as the state recommended. "It was larger than what we anticipated," he said.
But Mellitts said Dick's expects to sit down with state officials and work out an appropriate level of compensation. He said the company's continued use of the space is not in jeopardy.
"We just need to get to the table," he said.
Franchot urged state officials to come back with a more reasonable rate. "I would hope that when they come back, they will have a little more sensitivity to what's going on in the economy," he said.
Gov.Martin O'Malley, who sits on the Board of Public Works along with Franchot and Treasurer Nancy K. Kopp, said the discussion had been "fascinating."
He added: "It sounds like a nightmare law school problem."
An earlier version of this story misidentified Laurie Schwartz's agency. The Baltimore Sun regrets the error.