Developers owe state millions Highway agency held lax on contracts


State transportation officials revealed late yesterday that they are investigating why the State Highway Administration failed to collect $12 million allegedly owed to the agency, principally by private developers.

Preliminary results of a legislative audit revealed the extent of the unpaid money Wednesday, according to SHA Administrator Hal Kassoff.

At the center of the inquiry are 18 contracts, called public-private partnerships, that the state agency has entered into since 1985.

Under these agreements, the SHA agrees to certain terms -- the extension of a state road into a new subdivision or selling a developer a right of way, for instance -- in return for a negotiated amount of money.

The audit claims that the agency has failed to collect $12 million it is owed from the contracts, which had a total value to the SHA of "$30 million to $35 million," Mr. Kassoff said.

"We need to find out why some of these weren't aggressively pursued," he said. "There are some that should have been collected and weren't. That's unfortunate. That's inexcusable."

Mr. Kassoff declined to specify which developers are involved in the agreements. He said the contracts can involve local governments and utilities, in addition to developers.

William S. Ratchford II, director of the General Assembly's Department of Fiscal Services, which conducted the audit, declined to discuss its findings.

He said that the documents in the hands of the SHA are "discussion notes," and that the audit is not expected to be completed for "two or three months."

"We can't talk about it -- period," Mr. Ratchford said. "It's preliminary."

Mr. Kassoff said an audit conducted for his agency earlier this year pointed to a possible shortfall from the contracts but did not specify how much money was involved.

"We found that while we were collecting from these contracts, we weren't collecting everything we should be collecting," he said.

He said some of the money allegedly owed to the SHA is in dispute and it could be that the total is "something less than $12 million."

Some developers have differing ideas about whether they owe the agency money, Mr. Kassoff said.

O. James Lighthizer, secretary of the Maryland Department of Transportation, said that the audit's criticisms should be put in the context of a state agency that "spends $600 million a year."

"We're going to go after the money, but in the scheme of things it's relatively small," Mr. Lighthizer said. "Remember, these contracts are complicated and they are subject to interpretation."

Mr. Lighthizer said SHA officials have told him that they blame a former finance employee who was not sufficiently aggressive in her interpretation of contracts for at least part of the shortfall.

"My guess is that these [legislative] auditors are at least partially right and that we should have been more hard-nosed," he said.

Mr. Lighthizer said he does not believe that there was any criminal wrongdoing involved in the episode. "This is not a case of misfeasance," he said.

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