In rebuff of mayor, Mosby delays vote to assess value of conduit system

BALTIMORE -- City Council President Nick Mosby delayed a vote to assess the value of the city's conduit system until after Election Day, rebuffing Mayor Brandon Scott's desire to enlist a contractor to determine how it could be monetized.

In November, Baltimore voters will weigh in on Question E prohibiting the "sale, transfer, or franchising" of the system.

A $50,000 contract before the city's spending board Wednesday would have allowed a consultant, FMI Capital Investors, Inc., to determine "best and highest use for" the underground network of ducts.

Baltimore Gas & Electric accounts for about 76% of the wiring in the conduit as part of a state-authorized agreement giving the utility company "a perpetual right to be there," said Hilary Ruley of the Baltimore City Law Department. 

The city cannot raise the rate to use the conduit and ask BGE to pay it because the company is regulated by the Public Service Commission at the state level, and regulators also have to agree to the hike.

About 45 other companies also make use of the ducts, Ruley told the Board of Estimates. But the system is maintained by the Baltimore City Department of Transportation at a $7 million deficit.  

And many telecom companies are moving away from placing cables deep underground in favor of towers and other above-ground installations, Ruley said. Or they use "directional boring," putting cables just below the surface of the street, she added.  

Ruley testified negotiations with BGE on the rate fell apart in the summer. The utility company was willing to go to a rate above $2.20 per foot, but DOT said it needed closer to $3.30 per foot. 

At that point, DOT approached the mayor and City Administrator Christopher Shorter to say the agency is not getting enough money from the conduit system.

Under the terms of the contract, the city would have paid a flat fee to FMI Capital Investors to assess the potential value of the network, and the consultant would have received a percentage of any sale it helped facilitate, Ruley said.

"That operates, really, as an incentive to make sure that this consultant is really bringing us the best that the market has to offer for you to consider," Ruley told the board. "We're not just paying an inflated hourly rate."

Mosby raised issues with that arrangement.

"I just have a huge concern, because there's really only one thing that they're incentivized to do, and that's to tell us to sell it for as much money that they think we can get out of it," he said. 

Former Mayor Bernard C. "Jack" Young protested the contract. In 2020, Young signed a bill putting the charter amendment prohibiting the sale or franchising of the conduit system on the ballot. Scott was one of the bill's sponsors.

Young questioned the timing of the contract appearing before the board just before the election, calling it "problematic."

"I think the citizens have a right to vote up or down, the charter amendment, and if the citizens say 'No,' you go ahead and sell it," he said. "But my question is, 'Who's interested in buying it?' That's the real question. It must be worth something."

Scott's office released a statement about the protest just after the start of the Board of Estimates meeting.

"The Scott Administration understands the significance of the conduit system," the mayor said. "However, the maintenance costs of the conduit significantly outweigh any income derived from the system. We are requesting approval to work with an advisor to properly assess the true value of the conduit and evaluate viable options that best serve the City."

But following the testimony from Young, Mosby said he still had reservations and wanted additional feedback from the City Solicitor's office.

He then deferred the item until Nov. 16, eight days after the general election.