Judge stops county from renting out Heritage Complex space for 10 days

May 20, 1993|By John Rivera | John Rivera,Staff Writer

An Anne Arundel County Circuit Court judge yesterda granted an injunction that will prevent county officials from renting out space at the Heritage Office Complex for 10 days.

The injunction, signed by Judge Warren B. Duckett Jr., was granted at the request of the Anne Arundel Taxpayers Association and two Parole-area property managers, Joseph Conte and Nicolas J. Roper.

The two men accused the county of luring away their tenants by leasing space at rates $3 per square foot below market value. AATA officials argue that county taxpayers will lose money because the low lease rates will lessen the property values and, thus, the amount of property taxes that can be collected.

The action specifically cites the county's lease with Environmental Resources Management, which it states was signed May 1. ERM was a tenant at a building owned by Mr. Conte and was, at that time, renegotiating its lease.

"Economically, Conte Investment could not offer terms remotely close to the deflated terms of the Heritage Complex lease," the action states.

Yesterday's decision does not prevent the county from advertising the office space, as long as there is no reference to terms or rental rates.

The suit also asks that Judge Duckett invalidate the county's $100,000-per-year contract with the Rouse Office Management Inc. The plaintiffs claim that the contract was not awarded through the required competitive bidding process.

In addition, the developers are asking Judge Duckett to award them compensation for any harm the county's actions may have caused them.

County officials, who intend to sell two of the four buildings they own in the complex, admit that they want to fill the office buildings to make them more attractive to prospective buyers.

But they steadfastly deny that the $15 per square foot they are charging is below market rates.

According to figures provided by the county's Office of Economic Development, most office space in the Parole area leases for $16 to $20 a square foot, with the average about $17 or $18. Approximately 14 percent of the office space in the Annapolis area, which includes Parole, is vacant, compared with a countywide vacancy rate of 18 percent.

The Taxpayers Association argues that, by offering below-market leases, the county will drive down property values in the area, which will lower assessments and ultimately reduce property tax revenue.

"We see the process of lowering property values and competing with private business on the part of government as injurious to the taxpayer," said AATA President Robert Schaeffer.

The county bought two buildings in the office complex for $10.9 million during the administration of O. James Lighthizer and made a commitment to buy two additional buildings for $12.9 million. When County Executive Robert R. Neall took office in 1990, he was inclined to cancel the purchase of the latter two buildings, but went through with it when he learned the county would forfeit a $1 million deposit. Mr. Neall decided to sell the latter two buildings now that county officials have decided to renovate the Circuit Court building in Annapolis, abandoning a plan to use the Arundel Center for court offices and move the rest of county government to the Heritage Center.

The buildings house mostly businesses that pay rent to the county. The few county employees who work there would be transferred to the two remaining Heritage Center buildings.

The Anne Arundel Trade Council is taking no position on the injunction, but President Bert Mason acknowledged that he sympathized with the landlords.

"My sense is the property owners had a very legitimate complaint," Mr. Mason said. "From what I've seen, the county was talking about lease terms that were a bit below market."

And the fact that the property owners "were losing tenants to a property owner that they can't compete with, which is the county, is a legitimate concern," he said.

But, he added, Mr. Neall was very responsive when business leaders complained about the county leases. He agreed to a meeting with them, at which he seemed eager to resolve the dispute.

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