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Firm says sale price for Ritchie is 'fair' one

October 24, 2004|by TARA REILLY

tarar@herald-mail.com

CASCADE - The sale price of the former Fort Ritchie U.S. Army base is a "fair and reasonable" price, according to a Columbia, Md., firm hired by the PenMar Development Corp., even though the firm acknowledges it didn't appraise the property.

Lipman Frizzell & Mitchell LLC made the determination in a "fairness opinion," which is to be discussed at Monday's PenMar meeting.

The PenMar board chose to have the fairness opinion instead of an appraisal on a recommendation from its lawyer, Timothy Chriss, PenMar officials said last week. That decision has drawn some criticism from PenMar officials and Cascade-area residents, who wanted to know how much the base is worth before it's sold.

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In July, PenMar agreed to sell the base to Corporate Office Properties Trust (COPT) of Columbia, Md., for $9 million. That price will drop to $5 million if COPT creates 1,400 jobs over several years.

COPT also must contribute at least $7.5 million toward base upgrades, such as improving the roads and sewer system.

The report from Lipman Frizzell & Mitchell states that the fairness opinion is not an appraisal of value of the base. The firm states that a fairness opinion is designed to examine the fairness of a proposed transaction.

The fairness opinion took into account the property's characteristics, including "location and condition of the property; purchase price, timing and other terms" and "the experience, status and motivation of the buyer to convert the property to an income-producing investment," while deciding that the price and overall sale is fair and reasonable.

The opinion states that Lipman Frizzell & Mitchell found that the sale price of Fort Ritchie is in the range of other similar sales.

"For a transaction to be fair, it only needs to fall in a range of fair market value, which may mean that the price that a seller may receive may not be the highest price," the opinion states.

PenMar also is expected to discuss COPT's plan to revitalize the base by turning into a residential, community and commercial center Monday at its 7:30 a.m. meeting at Lakeside Hall at the base.

Most of that discussion is expected to take place in closed session, PenMar board Chairman George Griffin said Friday.

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