As construction of the $8.4 million New Bloomsbury Square public housing neighborhood continues along College Creek in Annapolis, the state and the city are battling over a $235,800 sewer hook-up fee unaccounted for in the state-funded budget.
It's the latest squabble over the project, which went through months of design negotiations, had its budget expanded by almost $800,000 in October after serious shortfalls and has seen its developer threaten to walk off the job.
A&R; Development Corp. of Baltimore, the developer, and the Housing Authority of the City of Annapolis, which will own the project, both have said they are not responsible for the city fee under the contract.
Now the state is trying to persuade the city to waive the fee - a move that would require city council approval and does not have the support of the mayor or the neighborhood's alderwoman, Louise Hammond. If the city doesn't waive the fee, the state will have to find the money in the already-tight project budget or go before the state Board of Public Works for more money once again.
"The deal all along has been between the state and the Housing Authority," said Mayor Ellen O. Moyer, noting that the Housing Authority is a federal entity. "How did we get pulled into this?"
The mayor said she fears waiving the fee, which the state normally pays and which funds the maintenance of the city sewer system, would set a costly precedent. "I don't think it should be waived," she said.
In correspondence with city officials during the past few weeks, the state has argued that it shouldn't have to pay the fee because it is exempt from many municipal requirements. State officials also have claimed that someone in the city promised previously to waive the fee.
But Moyer points to letters to the developer from the former city public works director dating from April. The letters explain what the fee would be, that neither the director nor the mayor can waive it and that it is due before anyone moves into the project.
According to Michael D. Mallinoff, acting director of the city's Bureau of Inspections and Permits, the fee normally is collected from developers when construction starts on a project. Construction on the New Bloomsbury Square began last summer.
In August, A&R; Development Corp. reported that the project would go $1.6 million over budget, after it incorporated the demands of the city that it follow historic district and state environmental standards. After negotiations between the parties, the shortfall was reduced to $797,000, but that total did not include funding for the city fee.
The state Board of Public Works approved the additional funds in October, despite complaints from Comptroller William Donald Schaefer, who has criticized the plan to build new, waterfront public housing units so the old Bloomsbury Square can be demolished to make way for the expansion of the Lowe House Office Building.
Last fall, a contract was signed by the developer, the Housing Authority and the state departments of General Services and Housing and Community Development. At that time, the developer and the Housing Authority inserted clauses stating they would not pay the fee, said Trudy McFall, chairwoman of the Housing Authority's board of commissioners.
"Each side put this in because they knew it was an unresolved item," McFall said. "It has been an issue that hasn't been attended to or resolved for quite some time."
In a Jan. 24 response to Assistant State Attorney General John Thorton about the hook-up fee, Shaem Spencer, assistant city attorney, argues that the state is not exempt from the fee. The Housing Authority is treated like any other developer in the City Code, and the state paid the fee associated with the construction of the District Court building and Senate office building, Spencer writes.
He also rejects the state's contention that it shouldn't have to pay the fee because the construction of the new development is, in essence, a relocation of the old project.
The state Department of General Services, which is overseeing the Bloomsbury Square project, would say little about the dispute.
"We are evaluating the project budget and are looking at the alternatives should the state have to the pay the fee," said department spokesman Dave Humphrey. "We would like to avoid, if possible, cutting features of the project."
Skeptical of timing
Moyer said she thinks DGS waited until the last minute to put pressure on the city - the first residents are expected to move in this spring - and avoid another showdown with Schaefer.
"They don't want to go back to the Board of Public Works," Moyer said. "Every time they've gone back, they've gotten beat up for this project."