Builders' past raises questions

Project: Anne Arundel Medical Center says when it picked Madison Homes to redevelop its site, it was largely unaware of the key players' track record.

January 25, 2001|By Amanda J. Crawford and Andrea F. Siegel | By Amanda J. Crawford and Andrea F. Siegel,SUN STAFF

In the basement cafeteria of Anne Arundel Medical Center last week, Milton Schneiderman showed Annapolis residents colorful sketches of the upscale 130-home community he wants to bring to the heart of the state capital.

Called a "once-in-a-century opportunity" by city residents and officials, the Acton's Landing complex of condominium apartments, townhouses and single-family homes -- some to be priced at more than $500,000 -- would replace the hospital when it relocates this fall. It will be the first major residential development in the historic district in decades.

As residents questioned Schneiderman about a proposed park, environmental protections and parking, he reassured them: "There is no question in my mind that we are going to satisfy our most ardent opponents."

FOR THE RECORD - The spelling of C. William Struever has been corrected for the archive database. See microfilm for original story.

What was never discussed at that community meeting -- or at other public meetings in the 16 months since the hospital chose Virginia-based Madison Homes to redevelop the site -- is the background of the project's key players: Schneiderman and the company's president, Russell S. Rosenberger Jr. Over the past 10 years, their residential construction record has been marred by financial problems, multimillion-dollar lawsuits and disrupted lives.

According to public records, court documents and interviews:

Their former development company and Schneiderman himself were hit with a $6.7 million judgment in 1994 in a Maryland lawsuit after condominium owners at Bentley Place in Rockville complained of poor construction.

At their company's Cedar Lakes development in Fairfax County, Va., mold growing in the walls forced residents to abandon some units. A $1 million lawsuit first filed in 1997 by the condominium association is pending.

The company faced multimillion-dollar lawsuits brought in the early '90s by condominium owners alleging extensive construction flaws at Bridgeport in Laurel and The Vineyards in Silver Spring.

Schneiderman is ridding himself of $39 million in debt from previous business deals through a 1999 personal bankruptcy filing in Washington. Under the settlement, to be paid out this year, creditors will get less than a penny on the dollar.

Rosenberger surrendered his law license during a 1983 investigation by the Virginia State Bar. In an unrelated civil action, a judge said in 1985 that he committed fraud in an Alexandria, Va., condominium deal.

Rosenberger and Schneiderman say they have learned from their mistakes and call past problems "irrelevant" because a different corporate entity, the Milton Co., was involved.

"We know we don't want to repeat those mistakes," Rosenberger says.

"We are older; we are wiser," says Schneiderman. "Madison Homes has a very good reputation. It has a reputation of a quality builder, a builder that does what they say they are going to do and gets the work accomplished in good order."

The developers hold up two new Northern Virginia communities, Portner's Landing and McLean Village, as examples of the quality of Madison's work. Hospital and Annapolis officials toured those developments.

Schneiderman and Rosenberger blame the Milton Co.'s problems on the recession of the early 1990s and too little supervision of subcontractors. Madison Homes has more secure financial underpinnings, plans more thorough inspections and demands performance bonds from subcontractors to meet lender requirements, Schneiderman says.

Hospital officials who chose Madison Homes from among a dozen applicants say they were largely unaware of Rosenberger's and Schneiderman's past until questioned recently by The Sun.

"I'm concerned any time any company that the hospital is associated with is involved in any litigation," says Dennis Curl, the hospital's vice president for property development. "But the important point to us was that the project that they proposed was the best project for this community."

Curl, who says it was his responsibility to research Madison Homes, says the hospital knew nothing of the developers' previous company when they were chosen for the 4.5-acre Annapolis site. He has heard rumblings in recent months about a suit against their previous company, but he remains impressed by their Madison Homes projects.

"What we are comfortable with is that the lessons that were learned back then have been applied to making them a better quality developer and someone that is going to deliver what we want to see left behind," Curl says. "We will stand in support of Madison Homes."

Law license revoked

Schneiderman and Rosenberger met more than 20 years ago. Schneiderman founded the Milton Co. in 1976, and Rosenberger, a partner in a Virginia law firm, handled legal work for the Northern Virginia homebuilder.

They have been building together since 1983, the year Rosenberger surrendered his law license amid what he describes as "disputes with my old law firm."

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