a tax break worth almost $7 million for a politically connected builder, a top
administration official said yesterday.
State Department of General Services Secretary Boyd K. Rutherford told a
panel of lawmakers questioning the deal that an individual he would identify
yesterday only as an unnamed “benefactor” approached him in spring or summer
2003, asking whether the state had preservation land to sell.
“The benefactor came to the Department of General Services, saying, `Are
there properties out there?'” Rutherford said. “I made the introduction to the
Department of Natural Resources, as well as the Nature Conservancy.”
Rutherford said he took the transaction to Ehrlich once the deal began to
take shape: The state would buy 836 acres of forest in St. Mary’s County with
the intention of immediately selling it to the benefactor at the same price.
In exchange, the individual would promise to donate development rights in the
future and give some land to the county for schools.
The governor was briefed on the deal in 2003 and “said it was worth
pursuing,” Rutherford testified before the Senate Budget and Taxation
Committee in Annapolis yesterday.
The Sun has identified the benefactor as Willard J. Hackerman, president
and CEO of Whiting-Turner Contracting Co., the country’s 14th-largest builder,
which has projects such as Harborplace and the National Aquarium in Baltimore
to its credit.
A regular donor to Democrats, Hackerman gave $10,000 to the state
Republican Party last year. He is a close ally of Comptroller William Donald
Schaefer.
Hackerman has not returned repeated calls for comment, including a
telephone message left yesterday.
The sale to Hackerman is under discussion but not yet approved by the state
Board of Public Works. Ehrlich and Schaefer are two of three board members.
Brokering the St. Mary’s County land to create a tax break for Hackerman
was envisioned before the land was purchased, Rutherford said.
If Hackerman had not come forward proposing the transaction, the state
would not have bought the property, Rutherford said, even though the initial
idea for preserving the forest dated to the administration of former Gov.
Parris N. Glendening.
Schaefer was a vocal critic of Glendening’s land-buying programs. The
purchase was delayed for several months because of fiscal concerns.
“I was not going to put it on the [Board of Public Works] agenda unless the
governor told me to,” Rutherford said in an interview after his Senate
testimony. “It was with the governor’s blessing. He voted for the land
purchase.”
Ehrlich is traveling in Asia this week. Spokesmen for him did not
immediately return calls for comment last night.
“It stinks,” said Sen. Patrick J. Hogan, a Montgomery County Democrat and
vice chairman of the Budget and Taxation Committee. “This deal is clearly in
the lap of the governor.”
Others said it might be part of a pattern of the state getting rid of
valuable assets without calculating their true worth.
“I’m told by sources inside the department that there is a long list of
environmentally sensitive properties that are being considered for sale. This
is just the tip of the iceberg,” said Del. Peter Franchot, a Montgomery County
Democrat who attended the hearing. “It’s Program Open Space in reverse.”
Rutherford testified that the state Department of Natural Resources showed
Hackerman “a number of different properties” and allowed him to select the one
he wanted.
“To have the governor approve a sale to an `anonymous benefactor’ who
really is a politically connected land developer is just an incredible error
in judgment,” Franchot said. “Even the Republicans were unable to defend it.
The perception is terrible for the state and for the governor.”
Ehrlich has been criticized by environmentalists for undermining the Smart
Growth programs of Glendening.
Natural Resources Secretary C. Ronald Franks has not answered questions
about the deal; he sent an assistant secretary to yesterday’s hearing who
would not respond to specific queries about how the land came to be declared
surplus.
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Yesterday’s Senate hearing was scheduled amid mounting concern over the
transaction from lawmakers and environmentalists. Lawmakers say they are
troubled that the deal was negotiated in secret and that land would go to a
developer with no immediate guarantee that it would be preserved.
Sen. Edward J. Kasemeyer, a Howard-Baltimore County Democrat, said the
state should have sought public bids from other purchasers instead of entering
into undisclosed negotiations with one developer. “It was a grave mistake on
your part, the administration, to do the deal this way,” Kasemeyer said.
Rutherford said lawmakers’ concerns would not halt the sale. Once Hackerman
buys the property, there is no guarantee that he would not develop it,
Rutherford and other officials conceded in response to questions from
lawmakers.
State officials say Hackerman intends to donate the development rights on
the property, but he must hold it for at least a year to take full advantage
of tax breaks. Conservation restrictions at the time of the purchase would
limit the value of the tax write-off, they say.
An analysis by the state Department of Legislative Services released
yesterday showed just how lucrative the break – based on the difference
between the land’s value for development and its value as a preservation area
– could be.
The break could be worth as little as $730,000 if the property is worth
$3,000 an acre to developers, which is about the purchase price. If it is
worth $20,000 an acre – an estimate that one Southern Maryland lawmaker has
said is the going rate for buildable lots – the tax break is worth $6.8
million to Hackerman, the legislative services analysis shows.
“A lot hinges on what the property is valued at,” said Warren G.
Deschenaux, head of the legislative services Office of Policy Analysis.
The state plans to sell Hackerman the forest at the same $2.5 million price
that taxpayers paid for it, according to documents. General services officials
did not initially plan to get new appraisals, meaning the purchase price would
not reflect fast-rising land values in Southern Maryland.
Rutherford said yesterday that in the wake of criticism about the deal, the
state would now obtain an appraisal from a private company, in addition to the
in-house appraisal announced last week.
The St. Mary’s County land is zoned for one home per 5 acres, state
officials said, but the zoning could be changed once Hackerman purchased it.
Sen. Roy P. Dyson, a Southern Maryland Democrat who is critical of the
deal, said he believes the Republican-controlled Board of County Commissioners
in St. Mary’s County would approve a zoning change allowing more homes if it
were asked, increasing the land’s value.
“It would be so easy,” Dyson said, adding that a real estate professional
has advised him that building sites in the area are worth $70,000 each.
Lawmakers expressed skepticism yesterday that Hackerman was not intending
to either build on some of the land or sell it to another developer, because
new schools would built there on donated parcels.
“Why else would you need a school in an area where there is not going to be
development?” Hogan said.
CLARIFICATION
A headline accompanying a front-page article in Oct. 20 editions of The
Sun, “Ehrlich OK’d deal for land,” may have left readers with the impression
that Gov. Robert L. Ehrlich Jr. had given final approval to a plan for sale of
public lands. The article reported on testimony by Maryland Department of
General Services Secretary Boyd K. Rutherford, in which Rutherford said
Ehrlich was briefed in 2003 and “said it was worth pursuing.” Only the Board
of Public Works, on which the governor serves, can authorize final approval of
any public land sale.