Blending on Compromise St.

Homes: A developer perseveres through a bureaucratic maze to build an expensive complex in the Annapolis historic district.

October 17, 1999|By Ron Snyder | Ron Snyder,SPECIAL TO THE SUN

Historic Annapolis is a place that does not deal easily with change.

The streets, with some basic modernizations, are still much like they were in Colonial times. The housing and commercial establishments maintain a rustic feel.

"I can count the number of times development occurs here each year on one hand," said Donna Hole, chief of the city's Historic Preservation Commission.

So when John Pilli, owner of the Annapolis-based Pilli Development Co., decided to build a pair of three-story, semidetached luxury homes at Compromise and St. Mary's streets, some people were concerned that the new wouldn't blend well with the old.

"I had driven by the area for many years, and I thought some homes, built right, could work in this area," Pilli said.

Today, five years after he started his project, four homes -- all spoken for -- stand on the corner. They have underground parking and square footage ranging from 3,200 to 3,900. Their values are estimated from $750,000 to almost $1.2 million, making them some of the most expensive nonwaterfront properties in Annapolis.

It was a triumph of will for Pilli.

But before the units could get off the drawing board, Pilli endured a long and sometimes tedious bureaucratic journey.

"John Pilli had to go through every type of review possible in the city. I have never seen one person go through so much for such a small project," said Tom Smith, the planning chief who handled many of the project's zoning inspections.

There was the challenge of getting the city planning commission to approve the subdivision; getting a special exemption from the city council to begin construction; and having his architectural design approved by the city's Historic Preservation Commission.

"While there weren't major problems with Mr. Pilli's plan, there was a lot we had to look at and approve," Hole said. "We needed to make sure the mass scale of the two buildings didn't overwhelm the community, as well as making sure the materials he used were compatible with the historic district."

Pilli wasn't granted a building permit until May 1998 and didn't start construction until July of that year -- 1,338 days after he began to outline the project.

"Many people would have thought all of this regulation was too much and [instead would] just build a single-family house," Smith said.

"But Mr. Pilli envisioned something different. While everyone has a different opinion, I have only heard good things."

Hole said she was also pleased with how the project turned out.

`A good sign'

"I think a good sign is that I haven't heard anything negative about it," she said. "The design is not too overwhelming, and I think it has slowly become part of the landscape of historic Annapolis."

Said Pilli: "There was a lot of risk in the project, and local banks weren't sure a project like this could work in downtown Annapolis. While that turned out not to be the case in the end, it was very stressful to work with this project at times."

According to David Wright, a Realtor with O'Conor, Piper & Flynn ERA in Annapolis Circle and the selling agent for the Compromise project, First Mariner Mortgage Corp. wouldn't release construction funds until Pilli could get an initial sale. Once that was secured, and construction began, Pilli soon had contracts for the other three units.

One contract price

As the project evolved it became evident that Pilli's original plans needed to change. The carrying costs of the units were becoming excessive. He needed an alternative plan to sell them and get his investment back.

Pilli decided to sell only the lot and exterior shell of the units.

There would be one contract price for the lot and shell, linked to a second contract that would provide the buyers with approximately $200,000 in a builder's allowance toward the final interior design. The only thing that the buyers couldn't change was the position of the doors, windows and fireplaces. And if they wanted to go beyond the $200,000, they were more than welcome.

It was a marketing ploy that played out to both Pilli's and the buyers' advantage.

"The advantage of a home like this is that a builder can settle quicker and pay some of his costs off, while the buyer will pay a lower transfer tax since the price only includes the lot and shell," Wright said.

The sales price for the lot and shell for the units ranged from $470,000 to about $650,000. The total state and county transfer tax is 1.5 percent, meaning that instead of paying $11,250 in taxes on a finished $750,000 house, buyers paid from $6,900 to $9,750 in taxes on the lot and shell at closing.

There were additional savings in the documentary stamps that were charged on the lot and shell price, saving buyers another roughly $1,500 at settlement.

Help from architect

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