Harford County Executive David Craig wants the County Council to approve a purchase of waterfront properties in Havre de Grace adjacent to public parks, offering links to existing land and water trails. What about this $3.5 million purchase has members of the County Council sparing with the Craig Administration and with each other, and calling on the county ethics board as referee? Among the reasons: The cleanup, the price and the players.
The two properties totaling 4 ½ acres on Water Street in Havre de Grace are known to be contaminated with petroleum, at least. Abatement will be necessary before the county can develop the land as planned for a recreational facility.
Former uses of the properties include storage of fuel and pesticides, according to an Opinion of Probable Cost commissioned by the Craig Administration from Geo-Technology, Inc. (GTA). The company in May estimated the cleanup cost to range from $336,000 to $1.65 million, depending on how much of the land has to be remediated. The estimate also assumes that no other contaminants requiring abatement, aside from petroleum, will be found. The current plan involves removing and replacing two feet of surface soil.
Advocating on behalf of the Craig Administration at an October 8th public hearing on the proposed purchase, Erin Schafer, chief of property management in the County Department of Procurement, said under questioning from Councilman Chad Shrodes that the property contains gasoline, diesel fuel, and some metals. “It’s not a bad picture,” she said, later adding that the county had cleaned up and built on similarly contaminated property before. However she said that more testing and a development plan were needed before final costs would be known.
As an offset, the sellers agreed to escrow $250,000 for abatement. However, the sellers would not reduce the sale price to reflect the high-end of the estimated cleanup cost. “The deal would be off the table”, Schafer said. In response to a question from Councilman Dion Guthrie, Schafer said she couldn’t “speak to why” the sellers didn’t clean up the property prior to sale.
The larger of the two properties – 649 Water Street – is owned by MTBR Yacht Club, LLC, which, according to an October 11th memorandum from Schafer, boils down to trusts for various family members of Baltimore developer John Paterakis. Local developer Clark Turner is currently a 1% owner, but is in the process of being “redeemed” by Paterakis, according to the memo. The property was once planned by the current owners for condominiums and a marina, Schafer said.
The smaller piece – 627 Water Street – is reportedly in foreclosure, and being sold by Stonebridge Bank.
Softening the blow on the cost of cleanup, County Executive Craig also brokered an agreement last week wherein the City of Havre de Grace would contribute $100,000 in environmental engineering design money for the remediation. According to the MOU signed by Craig and Havre de Grace Mayor Wayne Dougherty, the city and county also agreed to apply for federal and state remediation grants of up to $400,000 each, and to split any remaining cost should the $800,000 be insufficient for cleanup.
The purchases negotiated by the Craig Administration are priced at the high end of the appraised values for each of the two properties, giving pause to some council members.
The larger piece – 3.7 acres at 649 Water Street, owned by Paterakis – was appraised in February 2012 by two independent appraisers at $1.85 million and $2.7 million, respectively. Both figures assume no contamination on the site, according to the appraisals by Everett, Benfield LLC, and Page Appraisal Company, both of Bel Air. The Craig administration proposes to buy the property for $2.7 million.
For 627 Water Street, the two appraisals came in at $694,000 and $770,000, assuming no contamination. The county wants to buy that piece for $770,000.
Under questioning from council members at the public hearing, Schafer justified the prices for the properties even with the estimated worst-case cost of cleanup, citing figures for comparable sales in the area. She said the county had been studying the properties for over two years and had done its due diligence. “The county still feels like this is a good purchase and it’s a justifiable purchase when you break out all the numbers.”
Council members appear to agree in principle on the merits. “I think everybody on this Council agrees this is a great project,” Council President Billy Boniface said at a legislative session Tuesday where a vote on the purchase was planned. However, he said he could not support the purchase given the cost and the way the deal was structured.
The purchase prices are based on appraisals that were updates on more thorough analyses performed in 2010, Boniface said, and “huge” cleanup costs could tack on millions more. “Quite frankly, I don’t think the county has done its due diligence in this area”, he said. Two new appraisals should be done for each of the two properties, and the sellers should be solely responsible for cleanup, he said.
In an interview following the meeting, Boniface said he also didn’t think the county should pay for the lion’s share of the purchase given the financial outlook, “Times are tough right now,” he said, adding that the city of Havre de Grace should share more of the cost.
In a final twist, the real estate broker on the $2.7 million sale of 649 Water Street – owned by Paterakis – is also the president of an organization that both employs Councilwoman Mary Ann Lisanti and supports the establishment of public recreation trails.
The Lower Susquehanna Heritage Greenway (LSHG) is a non-profit organization whose mission includes creating continuous public recreation trails connecting Harford and Cecil counties along the Susquehanna River. Lisanti is LSHG’s paid executive director.
Councilwoman Lisanti said at the public hearing on October 8th that LSHG had “no direct knowledge or participation in the acquisition of this property.” However, she has also been an avid supporter of the purchase, calling it “probably the most significant land acquisition that the county has made in its history.” She cited the opportunity to connect three national trails, furthering state and local programs to create a public greenway along the Susquehanna River, which includes connecting the Conowingo Dam and Havre de Grace on the Harford County side. Having added her name to the legislation as a co-sponsor, she also countered objections from her fellow councilmembers about the cleanup and the price, saying the county had purchased contaminated land before and highlighting the economic boon to the county from the tourism and hospitality industries.
Prior to the council meeting Tuesday, Council President Boniface contacted Lisanti about the potential conflict of interest, encouraging her to request an opinion from the County Board of Ethics before voting. Lisanti addressed Boniface publicly at the meeting, saying she found it “shocking” that her position with LSHG, whose mission dovetailed with the county on other projects, would be an issue in this case, as her long standing employment had been disclosed. She also said she had nothing to gain personally from the purchase and no relationship to the sellers.
Nonetheless, Lisanti said on Tuesday that she had sought advice from the ethics board and asked for the vote to be delayed until she received their guidance: “If you take this to a vote tonight, I would have no other option than to feel backed into a corner and feel I would have to abstain…”
Boniface said his concerns, and those of other council members, went beyond Lisanti’s employment to include the real estate commission to be gained by her employer.
BCH Real Estate Specialists of Havre de Grace lists the 649 Water Street property for sale at $3 million, with Allen Fair as the agent. Fair is also the president of the LSHG.
“The ethics code is very specific that you can’t vote on it, “Boniface told Lisanti, “I asked [Council Attorney] Lambert’s opinion and she concurred with me. I was only, out of respect, offering you an opportunity to abstain…” later adding, “I was only trying to protect you, Ms. Lisanti.
Listanti pushed back, saying the purchase contract called for the county to pay the seller and not Mr. Fair. She then made a formal motion to delay the vote until the next council meeting. The motion passed, 4 to 3.
Boniface said in an interview following the meeting that he believed Lisanti had already crossed the line: “This enhances her profession which I feel is a conflict of interest.” But he said he wanted to emphasize that he wasn’t accusing anyone involved of doing anything illegal, “I just disagree with the way this thing has been structured and how it’s been handled as far as the procurement process.”
Lisanti could not be reached for further comment.
The next council meeting is set for November 5, where a final vote is expected on the waterfront purchase.