PMDC's own appeals to the Army state "... a sale of the entire property to a single private investor would threaten the redevelopment plan... A private developer would more likely choose not to develop the property at once, to invest in the site's infrastructure to a lesser degree, or to bring in different land uses than those called for by the community. Without public investment in the property, the community would lose much of its ability to influence the transformation of the base."
We therefore believe that an outright sale fails to provide assurance that PMDC's mission of job creation will be accomplished.
Bulk Sale vs. Master Development Agreement?
In our opinion, the sale price of $5 million plus an additional $4 million if 1,400 jobs are not created within five years, is a giveaway. No appraisal was obtained to determine the market value of this property, nor was it ever advertised or subjected to a competitive bid process.
The total sales price is little more than the value of a few buildings on the base. In the worst-case scenario (i.e., not one single job is created), COPT would pay $16.5 million ($9 million plus an additional $7.5 million in infrastructure improvements) and would be released from both the redevelopment plan and a reverter clause, thus allowing them to flip the property to a third party at potentially a substantial profit.
The proposed sale price is "pennies on the dollar" when one considers the amount that taxpayers have invested in this property. In just three years prior to the announced closing of the facility, the Army had spent approximately $20 million on dam renovations, a new commissary, PX and a firehouse.
In addition, the facility contains several historic buildings, open space, a bowling alley, a child-care center, office buildings, hundreds of residential housing units, three stately homes, a social hall (officer's club), two lakes, several barracks buildings, maintenance buildings, hundreds of acres of unharvested timber and many other amenities too numerous to mention. An additional $20 million will have been spent on post-closure and cleanup costs.
Without an appraisal or competitive bid, how would one know its true value? If you were selling your home, wouldn't you want an appraisal before agreeing to a price? Wouldn't you advertise the home for sale to increase the likelihood of potential buyers? None of this was done before signing the agreement. Although one of the conditions of closing is obtaining an "opinion" from an appraiser that, based upon the objectives of PMDC and other relevant factors, the sale of this property is considered "fair and reasonable," having an appraisal prior to agreeing to a purchase price would have been more prudent both as a negotiating tool and as part of the board's fiduciary duty in dealing with the disposition of PMDC's only asset, as PMDC's attorney had originally recommended.
One of the conditions in the agreement requires COPT to spend, over a five-year period, $7.5 million on development of infrastructures and systems, potential open spaces, recreational areas and other public improvements, or proposed new and/or renovated buildings. Once this is accomplished, the redevelopment plan is deemed satisfied.
Without a redevelopment plan or a reverter clause, which is a commonly accepted mechanism for assuring that the required development is completed, nothing prevents COPT from selling off residential lots, recovering their investment and leaving portions of the base unimproved.