City chides developer for listing campaign contributions as project cost
By By Luke Broadwater and The Baltimore Sun
Jun 11, 2014 at 9:04 PM
Baltimore officials approved a $3.4 million deal Wednesday to sell a Fells Point pier for development of a luxury hotel after chiding a developer for trying to include campaign contributions to local politicians as part of the project's costs.
Recreation Pier Developers listed contributions to City Councilman James B. Kraft and Del. Peter A. Hammen as part of the more than $3 million it has spent on the project, including the $2 million purchase of the Recreational Pier on Thames Street from the city in 2010.
The group now plans to sell the pier to a team backed by Under Armour CEO Kevin Plank, who wants to build a 128-room hotel with a restaurant and a pool. The sale required city approval.
Under terms of the original purchase from city, Recreation Pier Developers was not allowed to profit if it sold to another developer. The group listed the campaign contributions in a document detailing the project's expenses to justify a $3.4 million selling price to Plank's team.
But the inclusion of the contributions led to protests from members of the city's Board of Estimates as they considered the transfer.
"That is not appropriate," said Comptroller Joan M. Pratt.
Mayor Stephanie Rawlings-Blake agreed.
"The comptroller was surprised that was included. The [council] president was concerned. I was concerned," she said. "All of us were concerned that this was considered an appropriate extra cost."
City officials directed the development group to remove the contributions — $250 to Kraft, $500 to Hammen — along with about $3,500 in other costs they deemed inappropriate. They included a $1,000 donation to the Baltimore Development Corp., the city's development agency; a $1,100 donation to Sail Baltimore, a nonprofit that brings tall ships to the city; and a $500 donation to the Fells Point Residents Association.
"While the dollar amount is not large, the principle of legitimate costs is important here," Peter F. Engel, a deputy housing commissioner, said in a letter to board members.
Jennifer Bevan-Dangel, the director of the watchdog group Common Cause Maryland, said she was surprised to see a developer so openly describing campaign contributions as a cost on a project.
"The developers believe campaign contributions buys access and helps build a relationship," she said. "They're laying the foundation for a relationship, and clearly there's a hope it will pay off."
Top officials of the development group — which city officials say is made up of J. Joseph Clarke and H&S Development Properties — later denied any knowledge of who in their firms might have put the contributions in the list.
"I didn't know anything about them. I did not see any of that paperwork," said Clarke, who is married to City Councilwoman Mary Pat Clarke. "It's highly unusual. If I make campaign contributions, I don't list them as a development cost."
Clarke said he believed someone from the team of H&S Development co-founder Michael S. Beatty submitted the costs. But Marco Greenberg, Beatty's vice president, denied that when asked by The Baltimore Sun.
"We are not involved and have no knowledge of this," Greenberg said.
The Recreation Pier, which was built in 1914, originally stored port cargo. The building was once used as a community center and as a set for the television series "Homicide: Life on the Street," but closed after the show went off the air in the late 1990s.
With the campaign and other contributions removed, the Board of Estimates agreed Wednesday to approve the plan for the hotel to be sold to Plank's group, which includes Chevy Chase developer Marc Weller. The agreement allows the hotel to proceed without a public promenade around the property.
The new development team — called Sagamore Development Co. — is required to make improvements to Thames Street, from Ann Street to South Broadway and in front of the pier.
The group has neighborhood support for a plan and the backing of the Maryland Historic Trust. Company officials have said the project is expected to cost about $60 million and open in late 2016.
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Kraft later said it appeared the development team included any and every expense they made in an attempt to get the selling price of the property higher.
"Any dollar they've spent they are including," he said. He said the contribution did not affect his stance in the project in any way.
"There have been a lot of people involved in that project over the years and I'm sure more than one has donated to my campaign," Kraft said. "Money means nothing to how I vote. Everyone down here knows that."
Hammen didn't respond to a request for comment. John Paterakis Sr., president of H&S Bakery, also didn't respond to a request for comment.