Condo owners irate over Hensley settlementThe 7-month-old...

COMMERCIAL REAL ESTATE

January 20, 1993|By Timothy J. Mullaney

Condo owners irate over Hensley settlement

The 7-month-old settlement of the tangled legacy of time-share developer H. Lloyd Hensley is being challenged by the condominium association at a resort built by the jailed entrepreneur.

The association at Ocean High in Worcester County is upset about a settlement provision that would allow time-share owners to get out of paying some condo fees, as compensation for Hensley's pattern of consumer fraud.

The state attorney general announced the $4.5 million settlement last June, two years after Hensley's right to do business in Maryland was revoked by the state Real Estate Commission. He was later sentenced to 20 years in prison for criminal fraud.

Hensley's conviction was based on the fact that time-share buyers often did not receive a clear title, because he failed to pay lenders who held liens on the units.

The attorney general's civil charges are based on marketing practices, including misleading brochures and false promises in verbal sales pitches.

The association challenged the settlement, and a judge ordered the consumer protection division of the attorney general's office to review it. The division opened hearings on the matter last Thursday.

The Ocean High association contends in part that the attorney general's office lacked authority over Hensley's case because of the Real Estate Commission's action.

The settlement would unfairly make the association forgive more than $115,000 in money it is due, Ocean High said in papers filed by its attorney, Thomas Kimmel.

Assistant Attorney General Julia Davis disputed the assocation's claim that evidence of consumer fraud at Ocean High was lacking. "We've shown it in the original hearing, and we've shown it subsequently."

Ms. Davis said no schedule has been set for a ruling on the settlement challenge.

Rockville Center set for planners' review

Next month, Rockville planning officials will get a detailed look at plans for Rockville Center, the proposed $300 million project to demolish the Rockville Mall and use the land for a mix of movie theaters, condominiums, office buildings and stores.

The project does not need rezoning to go forward, said Larry Shulman, an attorney for the developer, Rockville Center Inc. At the Feb. 23 hearing, city officials will review the plan to make sure it meets existing zoning.

After 20 years of Rockville Mall's failures and foreclosures, a consortium of the banks that held defaulted loans on the property plans to tear it down.

"We're considering contacting Hollywood to enlist them to blow up the whole thing for the next Mel Gibson movie," spokesman Charles Maier said in a tongue-in-cheek note in an information package about the project.

The biggest potential hitch: The developers want $18 million in public money to help pay for $80 million of streets and other infrastructure for the project.

They want the city of Rockville, Montgomery County and the state to pay $6 million each.

So far, only Rockville has committed to its share.

Region called bullish on construction . . .

From the "We Knew You Could Tell" department: A new study by the CIT Group of Livingston, N. J., says the region that includes Maryland is the most optimistic about the outlook for commercial construction.

"Our forecast for 1993 is a year in which a modest recovery will continue, with spurts of growth in certain parts of the country (most notably the South Atlantic and Mountain regions), and with a significant resurgence in residential construction," the CIT report said. The study was based on more than 900 interviews with construction executives.

CIT said 51 percent of South Atlantic contractors expect business to pick up this year, with 41 percent saying it will stay the same. Only 8 percent expect less business.

Victor Cyran, executive director of the Baltimore chapter of Associated Builders and Contractors, a trade group, thinks the South Atlantic figures were probably boosted by stronger bullishness farther south. Florida construction has been buoyed by Hurricane Andrew, he said, and states like North Carolina have suffered less than Maryland from the recession.

"I wouldn't put us on top of the nation in terms of being optimistic. 'Cautiously optimistic' may be a better word," he said. "We're still hurting tremendously."

He added, "Really, we're looking to 1995 before we're fully recovered from the recession." That's because vacancy rates are still so high that no one is building office buildings.

. . . But office space glut persists, study finds

Salomon Bros. Inc. offers some clues to how long Mr. Cyran and his construction brethren could be waiting for the office space glut to clear up. A new report by real estate analysts Bedford H. Lydon III and S. Michael Giliberto says empty office space in the United States represents a 13-year supply.

The authors say it's not quite as bad as it sounds, because demand for office space won't stay in its holding pattern forever. But Salomon sees weak job growth stifling any quick recovery.

One saving grace: Virtually no one is building new space, which will help markets work off the existing glut.

"The amount of construction in the pipeline today is less than 10 percent of what it was in 1989," the report says.

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