The state's highest court is to take up the question today of whether Anne Arundel County can waive some requirements for new developments in exchange for money and land.
Two lower courts have rejected claims by Halle Development Inc. and Arundel Homes Inc. that the county should refund money the companies say was illegally collected from them - as well as millions it took in from other individuals and builders over more than a decade.
The case before the Court of Appeals focuses on waiver contracts. In exchange for money and land that the county said would be used for schools, roads and other public facilities, the county exempted recipients from laws that tied approval of new developments to adequate school and road capacity.
There is no deadline for the court to make a ruling.
School waivers, the most common, were such a volatile issue a few years ago that approvals by the administration of County Executive John G. Gary weighed heavily in his 1998 defeat by Janet S. Owens, who vowed not to sign off on more waivers where schools were overcrowded.
"What [county officials] have done is develop a process that is tantamount to extortion," said John R. Greiber Jr., lawyer for the developers.
In legal briefs, he contends that the waiver charges were illegal taxes, and that state law requires a county to get approval from the General Assembly to levy new taxes. The lower court rulings, he argues, give a green light to other local governments to levy new taxes by labeling them differently to get around the General Assembly.
In the largest contract at issue, Anne Arundel County and companies controlled by Warren B. "Cookie" Halle agreed in 1989 that in exchange for permission to build the Seven Oaks community in Odenton, Halle would pay about $4.7 million to the county and provide 16 acres for a school site.
But Halle, who has often sued the county, defaulted on payments. The agreement became the subject of a legal settlement that the county contends Halle cannot undo with this lawsuit.
Greiber said that although the county took the money to improve the public facilities, a generation of Seven Oaks children has gone without the elementary school that his clients' money was supposed to fund.
The Seven Oaks Elementary School is tentatively planned to open in 2005.
Too late, county says
In their court filings, lawyers for the county contend that the developers got what they asked for in contracts that they entered into voluntarily.
This lawsuit, they wrote, is over developers wanting to make money with new subdivisions and now that the developments are built, trying to go back on contracts aimed at helping the county defray costs of making schools and roads adequate to meet their needs.
In effect, the county argues, if the developers win, they will have circumvented the adequate facilities laws.
The county argues that it is too late for the developers to try to undo their agreements.
The developers "wanted the projects to go forward as quickly as possible because they expected to reap substantial profits," Senior Assistant County Attorney Hamilton F. Tyler wrote in legal briefs.
If they were dissatisfied with the waiver contracts, they should have taken their gripe to the county Board of Appeals immediately, the county contends.
But then the developers could not have started construction until the case was over - which could have taken years if a Board of Appeals decision had been challenged in Circuit Court.
The lawsuit, filed in 2000, more than three years after Halle signed his agreements and more than a year after Arundel Homes signed its pact, comes too late to be considered, the county is arguing.
Tyler said the waiver contracts were not taxes but fees that the county can collect without permission from the state lawmakers.