Maryland’s state government will pay $58.5 million to settle a lawsuit with a developer that planned to redevelop the aging State Center office complex in Baltimore, freeing up the state to give the land and buildings over to the city government.

It’s the latest step in a nearly two-decade political, logistical and legal saga over the fate of the complex that houses thousands of state government workers. The campus of dull and outdated office buildings has been flagged as a potential site for needed economic development by multiple gubernatorial administrations, but the vision for redevelopment has continued to hit snags.

“For now nearly two decades, the future of State Center, and the entire State Center complex, and frankly communities that have been all around that 28-acre campus, has been completely clouded,” Gov. Wes Moore, a Democrat, said Wednesday.

State Center redevelopment plans were first floated in 2005 under Republican Gov. Robert L. Ehrlich Jr., and Democratic Gov. Martin O’Malley led a process in 2009 to pick a private company to redevelop the site with new state offices, along with housing and shops.

A lawsuit from opponents followed, and that wasn’t resolved until 2014. By then, economic and real estate conditions had changed and the chosen developer, Baltimore-based Ekistics, operating as State Center LLC, hadn’t moved forward.

In 2016, the state under then-Gov. Larry Hogan, a Republican, canceled the $1.5 billion deal with State Center LLC — leading to another round of litigation. As legal fights continued, other plans were considered and Hogan ultimately announced his intention in 2022 to turn over the property to the city government.

Doing so required the litigation to be resolved, which led to a unanimous vote Wednesday by the Maryland Board of Public Works to pay State Center LLC $58.5 million to settle the lawsuit.

Lawyers with the Baltimore firm Kramon & Graham who represent State Center LLC could not immediately be reached for comment following Wednesday’s vote.

The State Center campus is many steps from redevelopment. Once the details of the legal settlement are tied up, the state would go through another process to declare the land surplus and transfer it to the city.

City officials said it’s too early to discuss next steps for the property. Though the state has gradually moved workers to other locations, there are thousands who remain at State Center.

Marvin James, chief of staff to Mayor Brandon Scott, thanked the three members of the Board of Public Works for settling the lawsuit and moving State Center one step closer to a new future.

“Today is simply just not about the legal matter. Today is about your commitment to investing in Baltimore,” James said, noting the harm done to neighborhoods and businesses as State Center has languished without investment or improvement.

“We drove all the way down here to say thank you for keeping that commitment that you made since Day One to the city of Baltimore,” he said.

The Democratic mayor, who was out of town Wednesday, said in a statement that the legal settlement represents “a critical first step” in moving forward at State Center.

“For 20 years, the promise and frustration that has accompanied the State Center project has left Baltimoreans eager to see this development move forward in the lurch,” Scott said.

Attorney General Anthony Brown, a Democrat whose lawyers have been representing the state in court, said the government could have been on the hook for hundreds of millions of dollars if it lost the case at trial, which was set for March. He said the settlement is in the best interest of Maryland taxpayers.

“Recent rulings in the case have also significantly increased the potential exposure of the state,” Brown told the Board of Public Works via video. “This matter has also utilized substantial state resources for many years, and will continue to do so, if this agreement is not approved.”

Treasurer Dereck Davis, who often questions the strategy of settling lawsuits, said this one makes sense.

“The state’s exposure would be extraordinary in a very difficult fiscal period for the state,” said Davis, a Democrat. The state is facing a long-term budget gap, with revenues coming in billions of dollars short of planned expenses.

State Center is located north and west of downtown and is seen as a gateway to West Baltimore. It sits on the Baltimore Metro subway line and is blocks from the light rail line, making it attractive for potential transit-oriented and mixed-use development.

Comptroller Brooke Lierman noted the site’s potential, calling it “prime real estate.” She said the importance of the property “has been lost in the back and forth over the past umpteen years.”

“All of Maryland really benefits and will benefit as Baltimore grows more prosperous and thriving, and that just can’t happen with a State Center that is not redeveloped,” said Lierman, a Democrat.

Moore also touted the possibilities that are open with the litigation resolved.

“We’re finally now in a position to move forward and move on to a new chapter that is actually about how we’re focusing on developing this property into a transformative economic project and actually benefit Baltimoreans and Marylanders to come,” Moore said, “and not just simply something that, frankly, has gotten to the point of being a continued hazard without a long-term solution.”

Baltimore Banner reporter Emily Opilo contributed to this article.