Proposed building purchase questioned Some say county use not best choice for AlliedSignal site

September 19, 1997|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Howard County's proposed purchase of the AlliedSignal headquarters for $7.5 million might have a downside -- the real estate could be too valuable for its intended use.

Little space is available in the county for commercial use, and designating the former AlliedSignal property -- a 200,000-square-foot building on 29 acres -- for Howard government office and warehouse needs would remove a large, valuable piece of industrial land from the market, some real estate brokers say.

"Howard County is a growing, vibrant market with interesting needs," said Dennis Lane of Noel-Lane Commercial Real Estate Advisors in Columbia.

Lane said he agreed that the county should purchase the property, but he added, "The best thing would be to keep it on the commercial market."

County Executive Charles I. Ecker disagreed, saying the land is not too valuable to be used by the county.

"It's a prime piece of real estate, but the county needs space, too," Ecker said. "We would not purchase this building if we did not need it."

The County Council is scheduled to vote in two weeks on authorizing money for the purchase.

In an effort to prevent AlliedSignal from moving to a county closer to Washington, Ecker has offered to buy the company's aging headquarters on Bendix Road for $7.5 million, which is less than $40 a square foot and less than $260,000 an acre.

It has a taxable value of $8.5 million, according to state assessment records.

AlliedSignal is negotiating with developers to build a $15 million office tower in Columbia.

The deal could keep about 500 jobs in the county, but it is unclear how many of those jobs are filled by residents who pay taxes in Howard County.

"This building, if purchased by the county, will be taken off of the tax rolls," said Richard W. Story, executive director of the county's Economic Development Authority.

"But [AlliedSignal's] new building will put twice as much value on the tax rolls. It seems to me that's a good trade."

Frederick W. Glassberg, president of Crystal Hill Advisors, a Columbia real estate and financial advising company, said Howard County has a record of good real estate purchases.

About five years ago, the developer of the Gateway Building in Columbia -- which was intended to be a speculative venture -- went out of business, and Howard County bought the unfinished building for about $4 million and finished it for about $2 million more.

"It was the deal of a lifetime," said James M. Irvin, director of the county Department of Public Works. County agencies such as )) the Economic Development Authority and some housing offices are there.

"County government has an excellent sense for real estate purchases," Glassberg said. "They can use the [AlliedSignal] facility for themselves or use it to attract employers. They have that luxury."

Patrick Dougal of Dougal and Associates Inc., a real estate brokerage in Elkridge, said he sees both sides of the issue.

"The market is tight for [commercial and industrial] space. I see the problem with having this sucked off the market instead of having a great block of land ready for another company," Dougal said.

"But I would rather have a new business build something new in the county than have government build."

Some county agencies and the school system spend more than $1 million a year renting office and warehouse space.

The county rents a 25,000-square-foot warehouse in Ellicott City to store records and a 34,000-square-foot facility to house parts of the Housing Department, said Irvin.

County officials had intended to buy those buildings but will apply that money toward the AlliedSignal purchase.

County officials seem to have no choice but to use the property for a public purpose such as government offices. That is required under the terms of the tax-exempt bonds the county would use to finance most of the AlliedSignal purchase.

But county officials say there is some flexibility.

"If corporate America shows up and needed a 29-acre site, we would reconsider," Irvin said. "But we haven't heard of anyone who's interested. No one's beating down our door."

Raymond S. Wacks, the county's budget office administrator, said a corporation that expressed interest in the site probably could be accommodated.

"We would have to consult our tax lawyers, but I'm sure it could be done as long as we didn't purchase the building with the automatic intent of selling it to a private entity," he said.

Some details of the proposed purchase have been kept secret. Even a public hearing this week shed little light on it. The county and the company say they are not at liberty to discuss the negotiations, despite the impending County Council vote.

The county has declined to release its appraisal of the property or to discuss how the proposed deal with AlliedSignal came about.

Riaz H. Rana of Clarksville, a retired executive of a high-technology company, attended Monday's public hearing and said he got no new information.

"I'd like to know the economic analysis of this deal," Rana said. "This deal begs the question of why this company wants to sell to the county instead of putting it on the open market. It could be a great real estate deal, but it doesn't meet the common-sense test."

Rana wrote to the County Council office Tuesday. Council NTC Chairman Dennis R. Schrader called Rana but said he didn't have a lot of answers.

"I told him we will make sure this is a good real estate transaction," Schrader said. "We're hoping to find that out from our analysis as we continue to probe."

Pub Date: 9/19/97

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