City to sell offices, pay costly lease

Ethics panel clears official who sold site to Baltimore

Miller `not covered' by ban

O'Malley questions deal by a member of parking board

October 14, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The city is preparing to reap a $350,000 profit from the sale of a downtown office building it bought in a controversial deal during the summer, but the gain will be chewed up by a lease that will cost nearly six times that much over the next decade.

The city's real estate department intends to seek permission from the City Council to sell 117 Water St., a building once slated to be razed for a garage, for $2.35 million on Monday.

"The mayor asked me to sell it, and I'm selling it," said Anthony J. Ambridge, the city's real estate officer.

Meanwhile, the city's Board of Ethics has determined that Milton H. "Mickey" Miller Jr., a member of the mayor's Parking Advisory Board (PAB) who sold the city the building for $2 million just two months after purchasing it for $1.1 million, "did not violate city ethics laws" relating to the purchase.

The Board of Ethics also concluded that the 82 percent profit that a Miller group received from the sale of the nine-story building did not represent an "abuse [of] his position on the PAB."

City Councilman and Democratic mayoral candidate Martin O'Malley asked the Board of Ethics in June to investigate Miller's involvement in the 117 Water St. sale while he was a member of the parking board.

The Board of Ethics did note that, as a PAB board member, Miller is "not expressly covered by [the city's] prohibition of certain persons from using for their own economic benefit confidential information acquired by reason of their public position and which is not available to the public," according to its 10-page report.

Ira J. Miller, Mickey Miller's business partner in the commercial real estate firm Miller Corporate Real Estate Services, said the board's report vindicates Miller and the company. The men are not related.

"As the ethics report states, we always worked in a professional manner," Ira Miller said. "Additionally, we have continually enhanced the city of Baltimore, through our various real estate investments and renovations, and we will continue our commitment to the city."

Mickey Miller did not return telephone calls for comment. Miller recused himself from discussions before the PAB about 117 Water St., but after his group was working to acquire the building, minutes of PAB meetings show.

Miller Corporate Real Estate Services, which is representing 117 Water St.'s proposed buyer, also has reason to celebrate the latest transaction: It will receive a $70,500 commission -- paid by the city -- if the sale is approved.

The city is hoping now to sell the 15-year-old building in an attempt to avoid having to replenish parking revenue bonds that it used for the purchase, bonds that are supposed to be used exclusively for constructing garages or buying property for new parking.

City officials acknowledged after The Sun shed light on the sales that they had been unaware of what the Millers had paid for 117 Water St., and that they had based their offering price on an outdated appraisal of the property.

The pending sale to an unnamed community development group isn't without controversy, either. It depends on a lease by the city's Department of Occupational Medicine that will cost $2.06 million through 2010.

The agency, currently housed in a city-owned building at 15 S. Gay St., would occupy 16,500 square feet of space at a lease rate of $12.50 per square foot.

The agency's relocation and lease and related real estate commissions mean that the city will have paid $4.13 million to acquire, sell and lease space in the 48,000-square-foot building. City officials defend the proposed sale and lease, contending that the agency has been interested in the building for more than a year.

"We're getting a pretty good deal. It's where they want to be," Ambridge said of the agency, which intends to use space in 117 Water St. to create a wellness clinic. "They have to go somewhere."

Ambridge said he hopes to reach a definitive sales agreement, which would have to be approved by the city's Board of Estimates, within 10 days. He hopes to finalize the sale in December, he said.

But not everyone is enthralled by the pending sale.

O'Malley is chairman of the City Council's Finance and Taxation Committee, which is in charge of allocating funding for new garages. He said he will revisit the issue after the November mayoral election. In June, O'Malley froze $12 million for a Water Street garage because of the 117 Water St. controversy.

"It sounds like a colossal mess, and I'm hopeful that we'll be able to unravel it after the election and do what's best for the city of Baltimore," O'Malley said. "I'm still not so convinced the garage planned there shouldn't go elsewhere."

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