Questions raised over parking deal

Conflict?A $2 million city building purchase is referred to Baltimore's ethics commission after a parking board member turns a huge profit.

June 29, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Less than two months after purchasing a downtown office building for $1.1 million, a member of the mayor's Parking Advisory Board sold it to the city for $2 million for conversion to a parking garage.

The transaction -- between parking board member Milton H. "Mickey" Miller Jr. and the Baltimore Development Corp. -- took place May 12, 56 days after Miller and a partner bought the property at 117 Water St.

Andrew Frank, the BDC executive vice president who handled the purchase, said he did not know how much Miller paid for the nine-story building, but he believes the city got a fair deal, even considering Miller's 81.8 percent profit.

"I don't think we overpaid, given the building's location and its cash flow," Frank said.

That's not the way City Councilman Martin O'Malley and city real estate officer Anthony J. Ambridge see it, though. And Mayor Kurt L. Schmoke, who ordered that the purchase proceed when it looked as if the BDC might hold it up, now has questions.

Among O'Malley's concerns is that the BDC purchased the 15-year-old building without knowing for sure that it would be used for parking and before the City Council had authorized funding. In fact, it is still uncertain whether a garage will be built on the site. The 3rd District councilman also is troubled because BDC financed the deal with bonds that are supposed to be used exclusively to construct garages.

"I'm concerned with the way people seem to be playing fast and loose with parking revenue bonds as if they are Monopoly money, and whether a $900,000 profit made in a short period of time by someone who sits on the board that is determining where new garages will go was proper," said O'Malley, whose Finance & Taxation Committee is in charge of allocating funding for new garages.

O'Malley has referred the matter to the city's ethics commission, and on June 14 blocked authorization of $12 million that was to fund a garage near Redwood and Calvert streets.

Ambridge believes the transaction raises numerous questions.

"I think we did pay more than we had to, considering the most recent transaction there," he said. "I can't tell you why we went ahead."

Schmoke said he supports O'Malley's decision to refer the matter to the ethics panel. "I've asked Jay [Brodie, president of BDC] to look into it a little more, too," he said.

Partners defend sale

Miller defends the sale and profit, as well as his role on the Parking Advisory Board. He said 117 Water St. had not been discussed before the board until late in February, and that when it was, he informed the head of the panel and recused himself from conversations about the building to avoid a conflict of interest.

"That site had never been talked about," he said. "I didn't know anything about it. Our plan was not to buy and flip this building to the city, but fill it up and make money. We were upset because we didn't want to lose the building."

Miller and his partner, Ira J. Miller, who are not related, said they were simply "trying to be cooperative" with the city when they sold the building, rather than force BDC to go through a lengthy process of condemnation.

The men, partners in the commercial real estate firm Miller Corporate Real Estate Services LLC, also said they had been trying to buy 117 Water St. since October 1996, long before the city showed an interest in the property.

The Millers point out that they have been buying and renovating buildings around 117 Water St., including the five-building Water Street Mews, home to Peter's Pour House and Winchester's Comedy Club, for three years.

Chronology of a deal

What is not in dispute is the series of events that led to Miller's March 17 purchase and subsequent sale of the 48,000-square-foot building to the city.

Miller was appointed in October to the Parking Advisory Board, formed by Schmoke to study ways to reduce a reported 3,600-slot-per-day deficit in parking spaces downtown.

At its first meeting, on Nov. 18, the board began studying numerous sites for new parking downtown, including one in the area of Redwood and Calvert streets. The building at 117 Water St. is in the middle of that site. The group also pledged to work closely with BDC, minutes from the meeting show.

On Jan. 7, the city rejected an idea by a Laurel real estate developer to tear down two abandoned office buildings at Redwood and Calvert streets that had once been the headquarters of insurer USF&G Corp. and build a garage. The city hired Desman Associates, a consultant, to study alternative sites in the area. Milton Miller attended that meeting, minutes show.

One of the parcels studied included 117 Water St., according to a report submitted by the consultant to BDC on Jan. 27.

On Feb. 4, BDC mailed letters to tenants and owners of six properties -- including Principal Mutual Life Insurance Co., the owner of 117 Water St. -- notifying them that the city "will be acquiring" the properties for a new garage.

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