Blending on Compromise St.; Homes: A developer perseveres through a bureaucratic maze to build an expensive complex in the Annapolis historic district.


Historic Annapolis is a place that does not deal easily with change.

The streets, with some basic modernizations, are still much like they were in Colonial times. The housing and commercial establishments maintain a rustic feel.

"I can count the number of times development occurs here each year on one hand," said Donna Hole, chief of the city's Historic Preservation Commission.

So when John Pilli, owner of the Annapolis-based Pilli Development Co., decided to build a pair of three-story, semidetached luxury homes at Compromise and St. Mary's streets, some people were concerned that the new wouldn't blend well with the old.

"I had driven by the area for many years, and I thought some homes, built right, could work in this area," Pilli said.

Today, five years after he started his project, four homes -- all spoken for -- stand on the corner. They have underground parking and square footage ranging from 3,200 to 3,900. Their values are estimated from $750,000 to almost $1.2 million, making them some of the most expensive nonwaterfront properties in Annapolis.

It was a triumph of will for Pilli.

But before the units could get off the drawing board, Pilli endured a long and sometimes tedious bureaucratic journey.

"John Pilli had to go through every type of review possible in the city. I have never seen one person go through so much for such a small project," said Tom Smith, the planning chief who handled many of the project's zoning inspections.

There was the challenge of getting the city planning commission to approve the subdivision; getting a special exemption from the city council to begin construction; and having his architectural design approved by the city's Historic Preservation Commission.

"While there weren't major problems with Mr. Pilli's plan, there was a lot we had to look at and approve," Hole said. "We needed to make sure the mass scale of the two buildings didn't overwhelm the community, as well as making sure the materials he used were compatible with the historic district."

Pilli wasn't granted a building permit until May 1998 and didn't start construction until July of that year -- 1,338 days after he began to outline the project.

"Many people would have thought all of this regulation was too much and [instead would] just build a single-family house," Smith said.

"But Mr. Pilli envisioned something different. While everyone has a different opinion, I have only heard good things."

Hole said she was also pleased with how the project turned out.

'A good sign'

"I think a good sign is that I haven't heard anything negative about it," she said. "The design is not too overwhelming, and I think it has slowly become part of the landscape of historic Annapolis."

Said Pilli: "There was a lot of risk in the project, and local banks weren't sure a project like this could work in downtown Annapolis. While that turned out not to be the case in the end, it was very stressful to work with this project at times."

According to David Wright, a Realtor with O'Conor, Piper & Flynn ERA in Annapolis Circle and the selling agent for the Compromise project, First Mariner Mortgage Corp. wouldn't release construction funds until Pilli could get an initial sale. Once that was secured, and construction began, Pilli soon had contracts for the other three units.

One contract price

As the project evolved it became evident that Pilli's original plans needed to change. The carrying costs of the units were becoming excessive. He needed an alternative plan to sell them and get his investment back.

Pilli decided to sell only the lot and exterior shell of the units.

There would be one contract price for the lot and shell, linked to a second contract that would provide the buyers with approximately $200,000 in a builder's allowance toward the final interior design. The only thing that the buyers couldn't change was the position of the doors, windows and fireplaces. And if they wanted to go beyond the $200,000, they were more than welcome.

It was a marketing ploy that played out to both Pilli's and the buyers' advantage.

"The advantage of a home like this is that a builder can settle quicker and pay some of his costs off, while the buyer will pay a lower transfer tax since the price only includes the lot and shell," Wright said.

The sales price for the lot and shell for the units ranged from $470,000 to about $650,000. The total state and county transfer tax is 1.5 percent, meaning that instead of paying $11,250 in taxes on a finished $750,000 house, buyers paid from $6,900 to $9,750 in taxes on the lot and shell at closing.

There were additional savings in the documentary stamps that were charged on the lot and shell price, saving buyers another roughly $1,500 at settlement.

Help from architect

One of the people who helped Pilli through the development process was Gary Schwerzler, an architect with the Annapolis-based Fourth Street Design Studio Inc. An Annapolis resident for 30 years, Schwerzler said he knew when to be flexible and when to be firm with the city during the development process.

"I've been through this process many times, and I know it can be difficult," he said. "There were many hurdles in the way of this project, and it seemed like there were razor blades on top of those hurdles."

One obstacle came from a 75-foot, 57-year-old sycamore tree and a 50-foot, 30-year-old silver maple. The city considered the trees landmarks and wanted Pilli to build around them. Pilli had to purchase an "air shovel" that, using high-speed compressed air, would excavate around the trees while preserving their root systems.

"The city and Mr. Pilli worked really hard to make sure all of the requirements were met," Smith said. "Mr. Pilli was very creative and innovative and did a great job saving the trees."

All the homes, opposite the Annapolis Marriott Waterfront Hotel and Annapolis Yacht Club, have brick fronts with copper roofs and gutters that added $40,000 to their cost. Pilli also used custom mahogany doors.

"While the design of the homes isn't very historical, we needed to use top-quality supplies to allow the homes to blend in with the community," Pilli said. "I think we have done a good job making it seem like these homes have been here for a long time."

Underground parking

The homes have many modern conveniencies, including state-of-the-art security systems that include remote access to the homes, an alarm system and video surveillance. There are also options for satellite dishes and wiring for computer networks.

In addition, the homes are equipped with elevators that lead from the underground parking lot that all the owners share.

So popular was the concept that one of the homes already has been resold. The original owners, who never moved in, spent $650,000 on the lot and shell and added another $350,000 to finish the interior.

The new owner seized the opportunity.

"I originally bought a home in Eastport earlier this year, but soon after I bought it, I heard this house was up for sale. So I decided to scoop it up while I had the chance," said Georgie Clark, who bought the home for $1.165 million.

Another buyer on Compromise Street is Charles P. "Buzz" McCormick, retired president of the McCormick Spice Co.

McCormick and his wife, Jimi, spend most of their time in Florida. However, the avid boaters return in summer and spend much of their time in Annapolis, but have never lived in the area.

That changed after a chance encounter four years ago. The McCormicks were walking along Compromise Street and saw Pilli's project -- at that time a hole in the ground.

"We have always liked the area, and when my wife saw the homes being built, she thought it would be a good idea to move there," said McCormick, who wasn't looking to move at the time.

House close to boat

"The house is right across from our boat, which is great when we come here from Florida in the summer."

The McCormicks, who purchased the 3,200-square-foot home -- the smallest of the four units -- settled on their house in May and in August moved in. The couple, who spent $200,000 to complete the inside of their house, decided to give their home an old-fashioned feel.

They designed their kitchen with exposed brick and lined the ceiling with chestnut beams from a barn in West Virginia.

"It took a little more time than we thought to have everything finished, but the home looks like it has been around for a long time," said McCormick, who still plans to live in Florida during the winter.

Contemporary style

While the McCormicks' home rings with elements of the past, Clark's is more contemporary, with a limestone floor in the entrance way.

"I absolutely love it here," Clark said. "When I tell people I live on Compromise Street, their eyes light up when they realize how beautiful the house is. There are many people that just walk by and stare at it."

While Pilli is pleased with the results of the project, he doesn't plan a similar one soon.

"There was a lot of work that needed to go into a project like this, and I just plan on taking a break from this for a while," Pilli said.

"However, if the opportunity presents itself in the future, I would like to do it again."

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