Council panel decries sale of lots below appraisals

BDC criticized for deal with indebted developer

September 13, 2005|By John Fritze | John Fritze,SUN STAFF

A City Council panel criticized Baltimore development officials yesterday for a decision to sell city-owned property at less than the appraised value and for striking a deal with a developer who owed the city back taxes and rent.

Councilman Robert W. Curran, chairman of the judiciary and legislative investigations committee, also argued that Baltimore Development Corp. officials should demand up-to-date appraisals - made within six months of a sale - given the city's recent real-estate boom.

The sale of several city-owned lots has come under fire in recent months. One property, on the northeast corner of Greene Street and Washington Boulevard, was sold for $609,000 despite an appraisal in 2002 that set a $1.29 million value.

A group that includes Next Realty Mid-Atlantic of Alexandria, Va., and Duane Taylor, a Baltimore developer, bought the land in January. The sales price was based on a second appraisal, conducted in 2003, that valued the parcel at $500,000.

The group plans an eight-story, 126-room hotel on the site that development officials said yesterday could break ground in the next few months.

"It appears that the second appraisal was done on behalf of the developer," Curran said. "Why are we doing things on behalf of the developer when we should be doing things on behalf of the citizens?"

BDC President M.J. "Jay" Brodie and city Comptroller Joan M. Pratt said the original appraisal was preliminary and did not consider how the lot's odd shape and underground utilities could affect the cost of development.

Brodie also said appraisals are only one factor considered when city-owned land is sold. Officials also look at the number of jobs created, for example.

"When we look at the sale of city land, we look at appraisals," he said. "But we also have a broader view."

Councilman James B. Kraft said the city should have been able to squeeze more money out of the developer because, as a current lessee of the property, he owed nearly $150,000 in back taxes, rent and penalties.

Taylor has been leasing the property since December 1999 with an option to purchase, using the site as a parking lot.

Brodie said the city decided to work with Taylor, despite what he owed, rather than forbidding him from exercising the purchase option. The city required that the back taxes and rent be paid before selling the property.

Curran also raised questions yesterday about a decision to sell a closed portion of Johnson Street near Wells Street. A 2004 appraisal set the land value at $29,000, but the South Baltimore property near Riverside Park was sold for $15,000 this year.

Mayor Martin O'Malley has defended the practice of selling some city parcels at lower values, arguing that, in some cases, those values were set many years ago and agreed to by both the city and developers.

Going back on those agreements, several officials said yesterday, would be dishonorable.

Still, after the hearing, Curran said it was unclear who is ultimately responsible for enforcing leases on city-owned property and ensuring that tenants pay their taxes and rent and secure insurance.

At the hearing, Pratt said it is the responsibility of the BDC, the city's quasi-public economic development arm. The BDC's Brodie said the Department of Finance is in charge of collecting rent.

Curran said he plans to issue a report on the issue to the full council in a month. "I'm not satisfied with the answers. I'm not completely satisfied with the answers," Curran said. "This shouldn't be the process."

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