A deal is a deal, even when it is with the state


Just in case I'm suffering mental blockage -- the heat has a tendency to make me very light-headed -- let's go over this once again. Let's see if I have this straight.

A couple in Anne Arundel County owns 34 acres of forest.

In 1972, they put the land into a state program, managed by the Department of Natural Resources, to conserve woodlands.

The couple agrees not to develop the land. Wonderful.

In return, the state agrees to freeze the tax assessment on the property for the length of the contract. Wonderful, wonderful.

There's a catch: If the couple breaks the conditions of the contract during its life, they will be penalized with back taxes.

Sounds like the best one could hope for. Sounds like a fair deal.

Such a fair deal, in fact, that the couple opts, in 1986, to extend their contract for an additional 20 years.

But something happens.

You know something happens because the state program in question, Maryland's Forest Conservation and Management Program, is not something you hear about every week.

Most of the time, well-meaning people quietly put their lands into this program for the tax breaks and for the satisfaction of knowing they have contributed to the preservation of the Maryland countryside. Most landowners seem to be in this thing for the long haul.

Statewide, more than 1,100 property owners have committed to keeping 148,650 acres in woodland in exchange for frozen tax assessments.

This is one of the most important such programs the state has -- especially since the legislature looted Program Open Space in recent years to balance the budget. That program was a national model.

Conceived in the late 1960s, Program Open Space put aside money, derived from a tiny percentage of property transfer taxes, for the acquisition of land for parks and recreation. It was a smart program, linking the pace of development with public land acquisition.

But partly as a result of the savings and loan crisis of the 1980s and the recession that followed, light-headed legislators looking for cash raided the program, shifting millions of dollars in land-acquisition money.

Some environmentalists and lawmakers think Program Open Space will never be restored to full funding. Call it collateral damage from the S & L crisis.

Now, back to our Anne Arundel couple and their contract with Maryland's Forest Conservation and Management Program.

In 1989, three years into the extension of their contract with the state, they break the agreement. They sell off 1.2 acres of their woodland for $184,078.


But, based on the sweetness of that sale price, the state assesses the couple for back taxes on the parcel they voluntarily pulled out of the contract with the state. That bill is $26,000.

Ouch! The pain!

So painful, in fact, that, the couple hires an attorney and goes to court to get out of paying the heavy taxes.

They claim that, in 1988, the legislature changed the rules for assessing a penalty for early withdrawal from the conservation agreement, and that no one ever told them of the change.

The state, on the other hand, says the premise of charging back taxes as a penalty has always been on the books. The Maryland Tax Court has upheld the law. The Annapolis couple is appealing to a county judge.

My question: What did they expect?

It seems reasonable that the state would keep the threat of back taxes as a hammer behind all these conservation agreements.

It's a simple premise: If you break your contract, you pay what you would have paid each year had the contract with the state never been made.

These people entered into a deal. They got an annual tax break. They must have understood something fundamental: The penalty for breaking the agreement is back taxes.

Makes sense to me.

But I guess it's difficult to swallow if you own waterfront property, and you have the opportunity, as this couple has, to sell off the land in parcels for yet another residential development that could consist of as many as 15 parcels.

I know what my dear mother, the former Rose Popolo, would have said: "I don't wanna hear no bellyaching."

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