Ethics panel clears hotel deal

January 20, 1995|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

The State Ethics Commission raised a number of serious concerns about a high-level port official's role as an investor in an Inner Harbor hotel-restaurant, though the panel cautiously OK'd his involvement in the deal.

K? In a written opinion regarding the Maryland Port Administra

tion's deputy director, G. Gregory Russell, the commission cited the state agency's pivotal role in generating business for the port -- a role, it said, that bolsters many businesses along the waterfront, including restaurants and hotels.

The hotel that Mr. Russell hopes to buy with four Baltimore businessmen is southeast of the National Aquarium, just blocks from the site where the Maryland Port Administration wants to build a cruise ship terminal.

"In our view, the potential for concern here is substantial, given the location of the restaurant in the Inner Harbor and the significance of the activities of the Port for the city and its economic interests," the commission said in a four-page opinion it provided The Sun yesterday.

"This could particularly be the case if the Port develops a cruise terminal," the commission said.

Mr. Russell is an investor in a newly formed company, known as Pure Five Inc., that recently won exclusive negotiating rights from the city to acquire the 71-room Harrison's Pier 5 Hotel and restaurant. The group hopes to purchase the hotel for $5.5 million by spring.

While he was putting together a proposal to buy the hotel, Mr. Russell was leading the MPA's negotiations on its $3 million purchase of a 3.1-acre site from AlliedSignal Inc. for a passenger ship terminal that would lure tourists to the area.

In an interview last week, Mr. Russell denied that his simultaneous involvement in the two deals was a conflict of interest. Top state transportation officials have backed Mr. Russell, while some other state leaders have said the deal raised concerns.

Mr. Russell, the second-highest official at the MPA, sought an opinion from the ethics commission about his dual role, though it is not clear when. Mr. Russell could not be reached for comment yesterday.

In a ruling dated Jan. 11, the commission concluded that Mr. Russell's involvement in the hotel deal was not prohibited by the State Ethics Law's employment and interest section. That provision specifically prohibits an employee of a state agency from being employed or having a financial interest in an entity that contracts with, or is subject to, the authority of the agency.

But the commission added: "We are not without some reservations regarding this activity, given that the requestor is a high level, very visible official at the port which is a major economic force in the city."

Specifically, the commission warned that Mr. Russell needed to avoid any dealings as a private businessman with Inner Harbor property owners or city officials with whom he interacts as an MPA official.

Mr. Russell should "be certain to avoid any possible overlapping of his private and official roles, . . . " the panel said.

Yet both deals -- the passenger terminal and the Inner Harbor hotel -- involved the Baltimore Development Corp., a quasi-public economic development agency for the city.

In negotiating to buy the terminal site, the MPA secured a commitment from the BDC that the city would spend $8.8 million on road and street improvements in neighboring Fells Point. Mr. Russell led the MPA's talks on the AlliedSignal agreement. Last week, they resulted in the state's signing a conditional agreement to purchase the land.

Separately, the five-man investor group, including Mr. Russell, was one of 14 bidders vying to purchase the Harrison's Pier 5 hotel. The BDC, which led the city's efforts to select the winning bidder, awarded exclusive negotiating rights to the Pure Five group in late December.

It was not clear from the Ethics Commission's opinion whether the panel was aware that Mr. Russell was directly involved in negotiating the cruise ship agreement for the MPA. In an interview last week, Mr. Russell refused to comment on whether he had told commission about his role in those talks.

State and city officials have long contended that the terminal, expected to cost $40 million to $50 million, would help attract tourists to hotels, restaurants and other businesses in the Fells Point and Inner Harbor areas.

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