Deal off for housing development on former Memorial Hospital site

Oct. 18—CUMBERLAND — A $36 million deal to construct more than 250 housing units on the former Memorial Hospital site is dead.

The mayor and City Council this week unanimously voted to give the Cumberland Economic Development Corp. $30,000 toward an $80,000 settlement that mutually releases the CEDC and Al Lateef Properties from an arrangement created nearly two years ago.

At that time, the CEDC transferred the nine-acre tract in South Cumberland to the Bethesda-based real estate developer.

Now, the parties have mutually decided to terminate the agreement, CEDC Executive Director Matt Miller said.

"In consideration of the developer's agreement to release the property from their exclusive development rights, and delivery of all of the development planning documents, the city and CEDC have agreed to reimburse the developer for certain costs associated with the development and planning documents," the CEDC stated. "In good faith, all of the parties are releasing one another from any claims associated with the project."

Miller said RAZ Development is a subsidiary of Al Lateef Properties LLC.

"The parties involved could not reach a mutual agreement on the scope of the project," he said and added the CEDC solely owns the property.

BackgroundThe former Memorial Hospital site was vacated when the facility was consolidated into the Western Maryland Regional Medical Center in November 2009.

By 2012, part of the old hospital building was leased, but the city still paid roughly $250,000 a year to maintain it.

The following year, all tenants had left the property, and city officials announced plans to raze the building.

In 2014, discovery of an unanticipated level of hazardous materials in the former hospital increased the demolition cost by $400,000 to make the project total $2.1 million.

Later that month, the building was destroyed.

The initial development plan for the tract was for RAZ, represented by Zak Elyasi of Bethesda, and Paul Kelly Jr., of Cumberland, to oversee construction of two four-level structures containing roughly 125 apartments each, plus some single-family homes.

Since then, the project has been discussed in private meetings, including among the mayor and City Council members.

In recent months, the CEDC and RAZ were unable to agree on contract contingencies, which meant there was no deal for the mayor and council to approve.

In August, Kelly said RAZ remained under contract with the CEDC.

He was unavailable for comment this week.