Mayor defends sales of land

2 properties were sold well below market value

Councilman plans hearings

O'Malley points to need to increase city tax rolls

July 14, 2005|By Doug Donovan | Doug Donovan,SUN STAFF

Mayor Martin O'Malley said yesterday that selling city-owned real estate for less than appraised market values is a common way to jump-start economic development, especially in a downtown Baltimore that was struggling for investment only a few years ago.

"We do it all of the time," O'Malley said.

O'Malley was responding to concerns raised this week by Baltimore City Councilman Robert W. Curran about two city-owned downtown properties that, together, sold for almost $2 million less than their appraised values.

Curran has said the council should be told when the city decides to sell property for less than appraised value so that council members can fully question such deals.

He said his judiciary and legislative investigations committee will hold a hearing Sept. 12 to demand answers from Baltimore Development Corp., which brokered the deals as the city's quasi-public economic development arm, and Comptroller Joan M. Pratt, who oversees the city-owned properties.

O'Malley said the deals had been under negotiation or completed when investment interest in downtown real estate was not booming the way it is today.

"How quickly we forget" that there was "not a boom three to four years ago," O'Malley added.

In January the city agreed to sell one-third of an acre at the northeast corner of Greene Street and Washington Boulevard for $609,000 to a group that includes Next Realty Mid-Atlantic of Alexandria, Va., and Duane Taylor, a Baltimore developer. The group plans an eight-story, 126-room hotel called the Inn at Camden Yards directly across from the Orioles' stadium.

The city's appraisal, completed in March 2002, valued the property at $1.29 million.

The second property, a 23,015-square-foot lot at the southwest corner of Pratt and Paca streets, was sold in December 2003 for $750,000 to a development team of Brian D. Morris and Dean S. Harrison. The group is building a luxury high-rise condominium called The Zenith.

The city's appraisal for the project, completed Sept. 14, 2001, said the property was worth $1.96 million based on financial data compiled more than two years before the sale.

The mayor reiterated the arguments of economic development officials, who said the city's goal is to expedite deals to more quickly get new properties onto tax rolls. O'Malley said that is also the aim of his Project 5000, an initiative to take title to 5,000 vacant and abandoned properties. The city sells the properties either in bundled groups or individually to developers at below market values, he said.

Still, critics of the two downtown deals say they are most concerned that the city did not base the sales on updated appraisals.

"You can't base your assessment of value on an opinion from a couple of years ago - the market changes," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors and a former councilman from Curran's Northeast Baltimore district. "That's the whole reason for making it more competitive and having a process that is more timely - so you don't have negotiations that stretch out for a year or two."

Pratt and BDC President M.J. "Jay" Brodie have said the two deals in question were properly conducted. They said several difficulties with developing the two sites led to prices that were far less than the values determined by appraisers.

Taylor's property, which he has been operating as a parking lot since 1999, is awkwardly configured, and city utilities running beneath a portion of the land will restrict his ability to develop it. The sales price difference on The Zenith coincided with a forced reduction in size of the condo tower by state officials, who said it would block helicopters from nearby Maryland Shock Trauma Center, according to city officials.

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