Buying a costly pig in a poke

July 22, 1993

Maryland taxpayers have good reason for outrage at the State Highway Administration's paying almost $6 million for Cecil County land to build a new truck weigh station along Interstate 95 -- next to the already clogged toll plaza of the Tydings Memorial Bridge.

The list of questionable judgments in this case is lengthy, involving not only the SHA site selection, but the state's delay in reaching an equitable settlement, and seemingly spurious land appraisals by the Washington office of the accounting firm Arthur Andersen.

The state filed in 1991 for a hasty "quick take" acquisition of the 17 acres, using an outdated 1988 appraisal that ignored the land's rezoning and annexation by Perryville, and its development for the Chesapeake Village factory-outlet mall. Under the law, Maryland immediately got the land and left it to the courts to determine the ultimate price.

When the state and landowner, MG Perryville Ltd. Partnership, got to court this spring, the expert Andersen appraisal for SHA valued the land at $690,000. That was less than the 1988 appraisal, little more than the partnership paid for the raw land -- and $9 million less than the landowner's independent appraisal. The state's appraisal erroneously classified much of the disputed property as unusable wetlands, an assertion it later withdrew.

In light of what some are comparing to dubious appraisals that fed the nationwide savings-and-loan debacle, the state says it is seriously considering suing the Arthur Andersen firm for malpractice. The state assistant attorney general said she could not defend the firm's low appraisals, before settling with MG Perryville out of court this month.

The landowners say that the state could have gotten the land for less than $6 million if it had not tried to drag out the issue and ignored important financial facts, such as its mall expansion plans.

Why the highway administration insisted on this particular land, instead of other sites along I-95, is not clear. The SHA says it tries to locate weighing and inspection stations next to toll facilities for better control of trucks.

That makes sense by the Bay Bridge or the Fort McHenry Tunnel, where space is scarce, but not on the long highway it controls. A different site would have been cheaper, reduced a major traffic bottleneck, and avoided the protracted appraisal fiasco.

The case points out how quick-take condemnations can backfire if state agencies don't do their homework. The state may grab the land, but taxpayers remain liable for a unknown future price, one that doesn't carry a factory-outlet discount.

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