Unknown Caves Valley Contract Extension Exposed
Posted by Ann Costantino on 12th November 2017
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Photo Credit: AFD

 

In the middle of a heated battle over a Towson development project, county administrator, Fred Homan, and Caves Valley Partners’,  Arthur Adler, once again consummated their public-private partnership – without anyone knowing it.

Amending the contract of sale on an 800 York Road property, the pair agreed to extend the closing date to December 31, 2023, amounting to one decade after the county council voted to approve the developer’s $8.3 million bid for the controversial Towson Gateway development project in December of 2013.

Without a word to even the district’s own councilman, David Marks, Adler and Homan made it official, signing the document on July 24 and 26, respectively, just weeks prior to county executive, Kevin Kamenetz’, announcement in which he said he persuaded the developer to negotiate with frustrated community groups.

What the county executive failed to mention to the community, however, was that just 16 days before his August 11 announcement about a “30 day mediation,” the county had quietly locked itself into the extended contract with Caves Valley Partners  – for an additional five years.

Nearly three months after they were supposed to be completed, these negotiations are still underway. A source close to the negotiations said those representing the community were never told about the contract extension and it is unclear how news of its existence will affect discussions.

The amended contract, obtained by The Baltimore Post through a Maryland Public Information Act request, will also tie the hands of Kamenetz’ successor.  The county will have two potentially unpalatable alternatives: accede to whatever Caves Valley wants, or wait several years until this valuable piece of county property can again be put up for bid.

Kamenetz, who announced he was running for governor, has ignored multiple requests for comment on this development issue.  Homan declined several invitations for comment and interview last week.

Upon learning of the extension, stunned District Five Councilman Marks told The Baltimore Post, “No one from the executive branch told me that the contract was extended, particularly during the period of time when the council might have ended the Planned Unit Development (PUD), in its current form.”  (The PUD was to allow for a gas station in an area not zoned for one.  The developer had planned a Royal Farms gas station and convenience store on the property.)

Marks said “I had zero notification that the county executive’s office was going to do this.  Just as I had no notification that the county executive’s office was going to destroy the trees on the property, I had no notification that this contract was going to be extended, particularly when the county council was debating the future of the development,” the councilman said.

Wade Kach, District Three Councilman, said he was “dumbfounded” by the news of the extended contract.

“This project has taken so many twists and turns.  It really has.  And it appears that so much is being done behind the scenes to accommodate one particular developer.  The county needs to focus on what is best for its citizens, not what is best for one special interest.”

The other five council members were not immediately available for comment.

Former Anne Arundel attorney, David Plymyer, told The Baltimore Post that the contract extension appears to be permitted under the provisions of Section 13, found on the Contract of Sale between the developer and the county.  He said, however, “In my opinion, it was institutional malfeasance for the Council to approve a contract for the sale of real property that allowed an administrative official to agree to a five-year extension in the Closing Date for the sale, without submitting that extension to the Council for its ratification.”

The attorney said, “A five-year delay in the closing completely changes the financial merits of the deal.  It delays payment of the purchase price without any adjustment for escalation in the value of the property. Moreover, there is no provision in the extension compensating the County for the loss of the use of the revenue from the sale during that five-year period.”

On April 5, 2013, the county received five bids on the old firehouse property located at the corner of Bosley Avenue and York Road. A procurement committee comprised of five Baltimore County personnel, charged with choosing the winning bid to recommend to the county council, originally selected a $6.2 million bid by developer, Mark Sapperstein.

However, that bid would quickly fall through when, according to email records, the developer could not respond fast enough with a firm letter of commitment from its intended anchor tenant: grocery store chain, Harris Teeter.

A senior purchaser for the county told Sapperstein in a June 28, 2013 email, “This Notice of Award is expressly contingent upon you providing the County, within 30 days of the date of this letter, evidence of a firm written commitment to your project by Harris Teeter.”  The senior purchaser for the county also requested payment from Sapperstein, of the full purchase price.

But according to earlier emails, the developer had expressed Harris Teeters’ intent to occupy the proposed building. Despite the expression of intent, in an August 28, 2013 email to Sapperstein from the senior County purchaser, the deal would fall through.

“As of this date, no letter of commitment has been provided to the County.  Therefore, Baltimore County will not be able to recommend award to your firm on the above referenced property,” the county’s senior purchaser told Sapperstein.

The developer did not respond to a request for comment.

According to a 2013 press release from the Kamenetz administration, announcing Caves Valley as the ultimate winning bid on the property, the County acknowledged that the evaluation committee originally selected Saperstein’s bid, but said that “when the developer was unable to obtain that commitment after multiple extensions of time, the committee deemed the proposal non-responsive and selected the proposal of CVP-TF, LLC.”

Brenda Bodian, President of BJB Realty Advisors, found it unusual that pressure would be put on a developer to materialize a firm letter of commitment so early in the process and within a two month timeframe. Bodian said, “It is most common in a bid situation, where the developer does not have control of the property yet, to have a letter of intent, rather than a binding lease on the property.  And if a landlord and prospective tenant entered into a lease at that early stage, it would have to have many ways for a tenant to get out of the lease if a lot of factors did not line up that are totally unknown at that early stage.”

“There are too many unknowns,” the 30+ year development advisor said.  “You wouldn’t have your full approved design yet.  You wouldn’t have your permits for construction yet.  You wouldn’t have your construction numbers yet.  The whole market could change in the amount of time it could take to even get through the regular county process,” Bodian said.

Baltimore County officials have not only extended the closing date for Caves Valley Partners, but a recent story by The Baltimore Post has revealed that county administrator, Fred Homan, used county funds to accelerate the sale of the property to the developer by removing trees and razing buildings on a property contracted to be sold “as is.”

During an April 3, 2017 county council meeting, in which Homan was asked to explain why the county chose to remove 30 trees two days before, from a property slated to be purchased by the developer, Homan said “Quite frankly, the County is currently moving to accelerate the settlement on the property so the County can receive the 8 million dollars that it’s currently had to forward finance through the sale of debt.  That keeps the revenue as a receivable, which does not help.  The County needs the cash from the sale of the property.  So the County is trying to accelerate the close of the property.  That’s what going on at this point in time.”

Homan authorized the new five-year closing date extension less than four months after making that statement.

The contract extension also appears to contradict the reason the county gave for ending the Sapperstein bid. Why is the county willing to wait five years to complete a purchase from Caves Valley Partners, while claiming it could not wait more than two months for Sapperstein?

County officials have refused to meet with reporters to discuss their reasoning, a refusal that allows them to avoid a key question: the impact campaign contributions by the developers have had on the decisions made by the Kamenetz administration.

Of the five companies that bid on the Towson Gateway project, Caves Valley Partners, its affiliates and proposed convenience store donated the most money to the campaigns of Baltimore County politicians.  Records show that at least $160,000 has been donated to the county executive, council members and a slate campaign between 2009- 2017. The number grows to close to $180,000 when also considering politicians who were defeated in the last election.

In contrast, Maryland’s campaign database shows that Sapperstein and his affiliate companies donated $19,500 to a handful of county officials over the same period of time.

In a press release, which included the announcement of Caves Valley Partners’ $8.3 million winning bid on the Towson Gateway property, Kamenetz concluded by saying, “I thank everyone in each of these communities who has been very patient as the County’s procurement committee worked through this process.”

“Once again, Baltimore County is determined to operate a government that is innovative, responsible, and efficient,” the county executive said.

Attorney, David Plymyer, sees it differently, telling The Baltimore Post that “approving a contract that yields so much control over a real estate deal to a single administrative official is an abrogation of the Council’s role as part of the checks and balance of County government.  The Baltimore County Council has earned its reputation as a lapdog.”

 

annc@thebaltimorepost.com