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Ruling says PenMar didn't need appraisal before sale

August 20, 2005|By TARA REILLY

tarar@herald-mail.com

CASCADE - When established by the Maryland legislature in 1997, the PenMar Development Corp. was charged with creating jobs at the soon-to-be closed Fort Ritchie U.S. Army base and expanding the state's economy and tax base.

It's objective wasn't to sell the base for the highest possible price.

As a result, PenMar wasn't required to have the 638-acre property appraised before agreeing to sell it to a Columbia, Md., developer for $9 million, the Maryland State's Attorney General's Office said in a letter Friday.

In addition, the sale agreement between PenMar and developer Corporate Office Properties Trust (COPT) never required that an appraisal be completed, according to the attorney general's office.

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The 20-page letter to PenMar board Chairman George G.B. Griffin was in response to requests by U.S. Sens. Barbara Mikulski and Paul Sarbanes, both D-Md., to review the sale. The senators said they made the request because they were contacted by numerous people who had concerns about the sale and sale price.

One of the people seeking the senators' assistance was PenMar board member William J. Wivell, who also is vice president of the Washington County Commissioners.

"Our constituents are concerned that the former Fort Ritchie (base) has been sold below its fair market value and are requesting an investigation into this matter," the senators wrote in the April request to the attorney general. "As this is not a Federal matter, we ask that your office review the attached correspondence and the concerns of our constituents."

The response by the attorney general's office, however, didn't indicate whether PenMar should have had the base appraised, but it did offer a recommendation.

The office recommended that PenMar have the base appraised or sell it through a competitive bid process should the sale with COPT fall through "in order to assure that any monetary price is a fair reflection of the value of the property and of the development benefits offered by the purchaser."

PenMar agreed to sell the base to COPT in July 2004. The sale price will drop by $4 million if COPT creates 1,400 jobs over nine years.

"Armed with reliable information as to the market value of the property, an entity like PenMar is better informed in bargaining over the terms of a contract with a developer/purchaser," the letter states.

The COPT purchase is on hold because PenMar does not yet own the property. A federal court injunction bars the Army from transferring the land to PenMar.

The Army closed the base in 1998.

Also in the letter, the attorney general's office said it was concerned that some of the discussions PenMar held in closed session might have been more appropriate in open session.

While PenMar isn't subject to the Open Meetings Act, PenMar's bylaws state its board is to comply with the act.

"The Board may wish to consider whether there may be benefits in terms of gaining community trust, quelling suspicion of improper actions and motives, and eliminating misinformation about the Board's activities if it elected to hold a greater portion of its meetings in open session," the attorney general's office said.

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