Builder Must Pay For School Even If Homes Aren't Built

November 04, 1990|By Peter Hermann | Peter Hermann,Staff writer

The builder of the Seven Oaks development in Odenton will have to continue paying for a new elementary school, regardless of whether the 4,700-unit housing project is ever completed.

A Circuit Court judge ruled Friday that the county can cash a $2 million letter of credit against the Halle Cos. for defaulting on the second installment of the school payment.

Halle had sought an injunction to prevent the county from using the letter.

Sovran Bank of Maryland, which guaranteed Halle's payment, will have to pay the county. Halle would then owe the bank $2 million.

Deputy County Attorney Steve LeGendre said the county will send in the letter of credit Monday.

The ruling also permits the county to revoke Seven Oaks' building and occupancy permits, halting all construction and preventing people from moving into their new homes.

However, LeGendre said the county would not revoke occupancy permits, because that would hurt innocent people. He left open the possibility that further construction could be banned.

Stephen N. Fleischman, vice president of Halle, had a terse response to the ruling. "Don't trust Anne Arundel County. Put that in writing."

The Silver Spring-based developer purposely defaulted on a $2.1 million school payment July 1, saying the county reneged on an agreement to expand the Patuxent Waste Water Treatment Plant.

Halle says that without the expansion, it can build only 2,900 homes, making a new school unnecessary.

Judge Eugene Lerner chastised Halle for relying on tentative agreements with county officials and then not following through by getting those agreements in writing.

"If I had to rule from my heart, I would rule one way," the judge said.

"But I have to rule from my head and from the law. I can't deny I feel sorry for (Halle) in this case."

Halle signed an agreement with the county to make three payments totaling $4.7 million to build the school. The company made good on the first $500,000 payment last year.

The developer claims the school agreement was tied to negotiations with the county over expanding the sewage plant, even though the signed agreements explicitly said they were not linked.

"The number of units is central to the number of dollars," said Walter Childs, Halle's attorney. "It cannot be argued that the school agreement was created in a vacuum. No intelligent person would commit millions of dollars on a number deemed not reliable."

In testimony, Fleischman said the company received assurances from county officials that the treatment plant expansion was a sure thing, even though it needed County Council approval.

Shepard Tullier, a county planner, testified Friday that he told council members in April that officials supported plant expansion. He did not remember who ordered the change in policy.

The council voted unanimously for the master plan on wastewater treatment facilities, which did not include the expansion plans.

Adrian Teel, chief administrative officer for the county, said, "The votes weren't there" to support plant expansion.

Teel denied misleading any Halle official into believing treatment plant expansion was a sure thing and said there was never any intention of making the school payments contingent on the sewer plant expansion.

But Childs said the county went as far as referring other developers to Halle to join a consortium for paying for the expansion.

He also said the county hired an engineer and sent around final drafts for the expansion plans.

But Lerner said Halle should have known better. "When I was in the county, I don't know what planning and zoning officers told others," the judge said. "You couldn't rely on them. You should have put it in writing."

"We tried," Childs said. "The county said it was a piece of cake to get this thing."

"You and I know better than that," the judge answered. "You think you can rely on Congress? The president said, 'Read my lips.' Can you rely on that?"

"But that's the way people must deal with Anne Arundel County," Childs said. "If every deal had to be in writing, you would get nothing built in this county."

"Then the county would suffer, and they would change the government," Lerner replied. "You have to look after yourself."

Halle is suing the county for $18 million, asking for the return of some money it has already paid toward road improvement and recreation areas.

The developer wanted the injunction to prevent the county from sending in the letter of credit until the lawsuit could be heard.

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