State and local officials have agreed to pay $5 million to buy an Eastern Shore farm from a member of Gov. Martin O'Malley's transition team - a price nearly $1 million higher than appraisals suggest the land is worth.
The 270-acre property in Grasonville is part of a larger parcel owned by U.S. Land Alliance, a for-profit land-conservation company. David Sutherland, who served on O'Malley's Transition Work Group on Environment and Natural Resources, is the company's founder and president.
The three-member state Board of Public Works decided unanimously last week to buy the property, despite reservations expressed by Comptroller Peter Franchot. Franchot, who ultimately voted for the deal, questioned why the purchase price was more than the value listed on two state-approved appraisals - one for $3.6 million and one for $4.6 million. The state often settles on the average of two appraisals, which would be $4.1 million.
Several officials in Queen Anne's County, which ultimately will take title to the property and use it for recreation, said they shared Franchot's concern that the price was too high. But they said they wanted to preserve the land as open space, and Sutherland was unwilling to lower the price.
"The sellers would not sell the property for anything less," said County Commissioner Gene Ransom III, a Democrat. "I think all of us ended up in the same place, where we said, 'We're really concerned about [the cost], but at the end of the day, you've got to vote for it.'"
The Board of Public Works is made up of the governor, the comptroller and state treasurer. O'Malley did not attend last week's board meeting; Lt. Gov. Anthony G. Brown voted instead.
O'Malley spokesman Rick Abbruzzese declined to discuss specifics, referring questions to the state agency that reviewed the assessments. But he said the deal illustrates the tough position the state finds itself in as it competes for large tracts of land with deep-pockets developers.
"Each piece of property has to be looked at separately, but the governor is committed to preserve open space, and we have to keep in mind the race going on between the state trying to preserve open space and the developers," Abbruzzese said. "You're talking about a significant piece of land that's going to be preserved."
OK'd despite concerns
Treasurer Nancy K. Kopp's representative to the board, Howard Freedlander, said he had concerns about the deal but ultimately endorsed it because the property was in a fast-developing area and the county wanted it badly enough to put in its own money.
"We would always prefer for the state to pay the lowest appraisal price, but we also understand that is not always possible," Freedlander said. "We felt comfortable about this because it's in an area already burdened with development and it has a nice tie-in to other preserved property."
Franchot declined to be interviewed about why he decided to support the deal despite questioning whether the purchase was a good deal for the state.
"Protecting the environment and promoting the preservation of our natural resources is one of my top priorities," Franchot said in a written statement. "I take this responsibility seriously and will continue to ask tough questions at the Board of Public Works in order to ensure that we act in the best financial interests of the state."
Sutherland, who is well known in state environmental circles, is a former vice president at the Conservation Fund, a Virginia-based nonprofit that has often worked with Maryland officials on land-preservation deals. He left the fund about two years ago to launch his company. He was represented at the Board of Public Works meeting by Torrey Brown, a former state secretary of natural resources whom Sutherland described as a consultant to U.S. Land Alliance.
A bumpy road
In an interview, Sutherland said his company received no special treatment on the land deal. If anything, he said, reaching the agreement took longer than he expected. And most of his negotiations were with Queen Anne's officials, not the state.
"It hasn't been a very smooth road," Sutherland said. "We have had to go back and rejigger almost every month."
The state is paying $4.6 million toward the land purchase, using Program Open Space funds, and Queen Anne's County $400,000. Sutherland said he knew that the highest appraisal was $4.6 million and that the state doesn't pay more than the appraised value. He said he also knew that Queen Anne's County planned to contribute $400,000, and that he used that information in the negotiations.
But he said taxpayers are getting a good deal.
'A unique property'
"This is really a unique property," Sutherland said. "I wanted to see this transaction come to fruition. We worked more than two years on this thing."
The 270 acres are part of a tract known locally as the Kudner Farm, which features sweeping waterfront views, lush forests and cornfields. Sutherland is not selling the waterfront portion of the property, which sits along Prospect Bay.
The state is negotiating with Sutherland to purchase easements that effectively would preserve much of the rest of the land. If the parties cannot reach a deal on the easements, county officials say, then they won't close on the 270 acres. The deal is expected to close in mid-July.
The $5 million price means that the county and the state together are paying about $18,500 an acre for the land, which is zoned for about 13 houses. The state's first appraisal - conducted by the national real estate firm Colliers Pinkard - suggested that the land is worth about $3.6 million. The other appraisal - by the Salisbury firm Lefort Consulting - put the value at about $4.6 million.
The Colliers Pinkard report noted that the property is not connected to a public water or sewer system. The Salisbury firm justified the higher price by saying that the tract could be linked to public water and sewer, though the county has no current plans to do that.
Nelson Reichart, an assistant state secretary of general services, said his staff supported the higher appraisal because it "presented a more thorough analysis of sales" in the area.
When the Department of General Services is working on a deal and the appraisals are that far apart, Reichart said, the department will often try to agree on a price in the middle. But he said this deal was largely arranged by Queen Anne's County.
"Had this been negotiated in our shop, my direction was not to exceed $4.6 million," Reichart said. "For whatever reason, it became a local acquisition."