Money talks for developers to push projects Some call incentives to communities a form of bribery, blackmail


Developers are doing more than promising to plant pine trees, build sidewalks and install road signs to gain neighborhoods' support for projects these days.

Increasingly, they're offering to write checks, even as much as $1 million.

As the Baltimore region builds at a dizzying pace, developers are forced to appease people who live near their proposed projects. Like other builders nationwide, they are encountering better-organized neighborhood groups with costly demands.

With several developers offering cash and other inducements -- and some communities extracting pricey concessions unrelated to projects -- some land-use experts argue that the public good isn't being served by what they call a legal form of bribery or blackmail.

In a recent example, the developer of a huge housing and commercial project in southeastern Howard County offered to create a $100,000 fund for two nearby community associations.

Residents rejected the proposal from Stewart J. Greenebaum, president of Greenebaum & Rose Associates, seeking other concessions. A breakdown in negotiations has delayed county action on the proposal to build 1,168 homes in Fulton on what is known locally as the Iager farm.

In other examples:

A Jessup homeowners group last year accepted a donation of at least $50,000 annually and a community center from parking lot magnate Kingdon Gould Jr., who gained county approval for a rock quarry.

The Middle River Racing Association offered to build eight public ball fields and a skateboard park to mollify several western Anne Arundel County community groups opposed to a controversial 54,800-seat racetrack this year. The groups rejected the deal and the developer is now pitching the track to residents in Pasadena with a vague offer of "assistance" to a local elementary school.

Determined to retain open space, an Annapolis civic group last year turned down a $1 million offer from U.S. Home Corp. meant to win support for a 72-home development on 28 acres in Heritage Harbour. Since county officials said permission to develop was based on the group's endorsement, the firm has put the project on hold, says Philip Barber, division president for U.S. Home.

Financial sense

Paying community groups makes financial sense for many developers. Time-consuming zoning disputes cost hundreds of thousands of dollars in legal fees, land costs and wasted opportunities.

Developers have long offered to scale back designs, pay for landscaping and designate more open space. Now cash payments and favors are gaining acceptance as deal-closers when routine concessions aren't enough, some land-use attorneys say.

"The developers want to get in, they want to move very fast, and it makes economic sense to settle with these groups," says Dwight H. Merriam, a Hartford, Conn., attorney who advises his commercial developer clients to do "everything" reasonable to satisfy neighbors of a project.

Merriam figures 10 percent to 20 percent of his deals with residents involve cash payments -- others include favors unrelated to a project. He said one client pushing a shopping mall expansion a couple of years ago paid more than $3 million to improve a nearby brook that had flooding problems -- even though the expansion would have no impact on flooding.

"If you can make a half-million dollars a year on a location," Merriam says, "why would you spend a half-million dollars [in legal fees] and take a year or two or three to fight it out with the neighbors, when if you just paid them a certain amount of money you could be up and operating?"

Merriam has given presentations to other attorneys from around the nation, advising them to learn the relatively new science of courting neighborhoods before moving in with a project: Poll residents, conduct focus groups, hire public relations consultants and, above all, show a willingness to work with the community.

The alternative, says Anne Arundel County Councilman George F. Bachman, is "developers who come in and do not work with the community and they run into a brick wall."

Concern over methods

Some preservationists and land-use experts worry that this businesslike calculus in zoning disputes could pervert the development process. Although cash payments to a few key neighborhood groups may help secure big projects, an entire county may feel the ripple effects -- more students in schools, more cars on the roads -- long afterward.

"You have different communities holding out for more and more and more until it really doesn't become a discussion of the plan and how the plan would affect a community," says Robert S. Lynch, a Bel Air attorney and former planning director for Harford County who usually represents developers. "It's just who gets money."

Some developers and community groups defend such cash payments as fair compensation for the effects new projects can have on a neighborhood, akin to impact fees required by local officials.

"If I have to wait an extra five minutes to get out of my driveway because of all these cars from some new subdivision at the end of my road," says Ray Smallwood, who chairs the Maryland City Civic Association in Anne Arundel, "I think I should be compensated."

Community groups didn't always wield such clout, but more projects are butting up against established communities, as encouraged by Maryland's Smart Growth initiative.

"As community groups become more sophisticated in fighting, they become more aware of what they can ask for," says J. Carroll Holzer, a Towson attorney who represents community groups.

Holzer says his clients have asked developers to pay attorneys' fees, but their requests are usually more conventional -- road signs, recreational facilities and landscaping. Some lawyers, though, say they've encountered residents who asked for money, not changes related to a project.

"All they wanted was cash," says Howard L. Alderman Jr., a Towson attorney who represents developers. "It's blood money, pure and simple."

Alderman said he's had three Baltimore County residential projects -- two last year and one in the late 1980s -- in which community groups demanded cash for their silence. Alderman's clients paid up, though in two cases the payments were each less than $9,000. "Very often it's cheaper to meet the community's demands," he says, though as with many such settlements, nondisclosure clauses prevent him from giving details of his cases.

Often, it is developers who put money on the table. In 1991, southern Anne Arundel County residents accepted a landfill in a rural area after developer Preston S. Taylor proposed donating between 18 cents and a quarter for every ton of rubble shipped to the fill. To date, the donations have accounted for roughly $500,000 in grants distributed to nonprofit groups throughout the area -- among others, a Boy Scout troop and a family recreation center.

Recently, some southern Howard County community leaders were intrigued when Greenebaum offered $100,000 to help win support for his residential and commercial project on the Iager farm in Fulton. (Greenebaum now says the money could only have been used to sue him if he broke his agreements with the community -- an account residents dispute.)

"I thought it could be put to some extremely good uses," says Peter J. Oswald, former president of the Greater Beaufort Park Citizens Association.

But several developers, land-use lawyers and residents groups question whether neighborhood leaders who accept payments are truly representing communities.

"Some community groups just form, sprout like a mushroom overnight just to oppose a project," Holzer says. "Well, if they get paid off they may just split it up and go their merry way."

Holzer and others worry for those residents who still oppose a project after a deal is struck.

When Gould made the $50,000-per-year deal last year with members of the Ridgelys Run Community Association to win their support for his Jessup rock quarry, other civic activists, rejecting Gould's offer to buy their houses, unsuccessfully fought the quarry.

"He was giving us nothing," recalls Leah Woodbury, a fierce opponent who still bristles at the developer's offers. "All he was giving us was a headache."

Building on merits

Such headaches can better be avoided, many planners and land-use experts say, when project disputes are resolved on the merits. Most residents groups, they stress, care far more about issues such as traffic, noise, pollution and crime than about money.

Sometimes, though, such concessions seem to have little to do with a project itself, but with appeasing a community. One Anne Arundel community leader, Jeanne Mignon, likened the racetrack developer's offer of eight public ball fields and a skateboard park to a "bribe."

And Mills Corp., backers of the proposed Arundel Mills outlet mall near Baltimore-Washington International Airport, agreed in talks with civic leaders to pay $250,000 to improve an intersection three miles from the mall site and to designate two nearby parcels for community shopping.

After those talks, Mills Corp. continued courting the community, inviting 50 civic leaders to a lavish "thank you" buffet dinner at a local hotel July 21.

For four hours, diners feasted on steak and salmon, enjoyed an open bar and were asked to show their support for the project by wearing complimentary T-shirts emblazoned with the mall logo. The Anne Arundel County Council will consider on Aug. 17 an amendment to zoning law that would permit the large commercial mall.

But Katharina DeHaas, a member of the Greater Odenton Improvement Association, says the developer's largess won't soften her opposition to changing the law. "The steak tastes good, but it's not buying my vote," DeHaas says. "People don't want to be bought off."

Pub Date: 8/05/98

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