Maryland Stadium Authority now fields critical audits

The Baltimore Sun

When a new downtown football stadium opened nine years ago, the latest project of the Maryland Stadium Authority was widely praised.

In just more than a decade of existence, the quasi-public agency had built an acclaimed baseball park and a new convention center for downtown Baltimore, attracted the NFL back to the city after a 12-year absence and erected a new home for that team.

The agency took on some of the state's biggest projects and delivered results on time, on budget and generally to rave reviews.

But its reputation in recent years has been more mixed. The authority continues to build public facilities around the state and to receive positive reviews for the results. But legislative audits in 2004 and 2007 raised questions about the agency's control over its spending, and the second invited concerns from Gov. Martin O'Malley's office about the agency's direction. The authority has also fallen into several squabbles with one of its chief tenants, the Orioles.

A Sun review of thousands of pages of meeting minutes and other documents found that the agency has taken steps to document its business practices more fully and to bid most purchases competitively. A new chairman, Fred Puddester, will take over today with goals of earning a better audit next time, clarifying some management practices and improving relations with other government offices. He is one of many who see a bright future for the authority as an agency that can build anything the legislature wants.

Authority leaders say they've addressed most of the concerns. "We take exception to anybody's perception that this place needs reform," outgoing chairman Robert L. McKinney said.

But that has not prevented O'Malley from talking about change.

"The audit gives us an opportunity to stir things up on the stadium authority and put in new leadership," O'Malley said in February. "I can tell you we're aware that there are problems at the stadium authority, which is why I put someone of Fred Puddester's caliber and ability there."

Puddester, who was a longtime state budget official before he became executive director of budget and financial planning for Johns Hopkins, will take over as chairman. He said no one has given him a mandate to reform the agency.

"[The governor] asked me to go in and, as I would anyhow, assess the situation and make the necessary changes," Puddester said.

The authority, with $38 million in expenses in 2006, has faced criticism from legislators and auditors for:

Operating without defined procedures for awarding building contracts.

Paying $42,000 for less than an hour of work from a former director who left under an ethics cloud.

Handing a $104,000 severance package to an executive with only 15 months of service time.

Paying more than $100,000 for Baltimore attorney William H. Murphy to look into a lawsuit against Major League Baseball instead of using the attorney general's office.

The agency is also headed for arbitration with the Orioles over the purchase of a new video board at Camden Yards.

Authority leaders say they've tightened operations in recent years and add that they did nothing illegal or unethical in awarding the severances or hiring Murphy.

"We feel we've been unfairly beaten about the ears," McKinney said. "We think this is a well-managed agency and that there have been a lot of unfair characterizations. I think most lawmakers understand what we've done and why we've done it."

In a vote of confidence, the board awarded executive director Alison Asti a $15,000 bonus a month after the second critical audit emerged in February. That came on top of a $225,000 salary that makes her one of the highest-paid state employees in Maryland.

"Keep in mind that we hired Alison at a very critical juncture for the agency," McKinney said. "We had just received an audit, and we had experienced the parting of ways with our director. She did a sensational job of keeping morale up, keeping the organization moving."

The state's auditor, Bruce A. Myers, said that the 2007 audit found that only one of the 14 findings in the 2004 audit was not fixed, which demonstrates improvement. And none of the audit findings was enough for Myers to brand the authority "unsatisfactory," a designation that triggers an automatic six month follow-up and a hearing before the joint audit committee.

But critics say the overall picture suggests a need for reform.

Possible changes

O'Malley's chief of staff, Michael Enright, said the two audits, especially the second one, have caused concern within the governor's administration.

"One audit with some negative findings - you can cope with that," said Enright, a former board member at the stadium authority. "But when you have a second audit that comes out with similar stuff - that's worrisome."

Some legislators were also upset by embarrassing management issues in the two audits, said Del. John L. Bohanan Jr., a St. Mary's County Democrat who chairs the appropriations subcommittee that oversees the authority.

"It makes you wonder why that is," Bohanan said. "Didn't they learn anything?"

Some critics have focused their displeasure on Asti, considering her high salary and long history with the agency.

"There could be changes at the top. That sometimes happens," Bohanan said. "This is an agency that has, over time, performed well and we've been pleased with them. You don't want to throw the baby out with the bath water."

McKinney fiercely defended Asti's performance and compensation.

He noted that the director must deal with construction, legal, financial, administrative and political issues and maintain working relationships with its high-profile tenants, the Orioles and Ravens.

Enright sent a letter March 24 to both chambers of the Maryland General Assembly encouraging legislators to tighten the reins on the stadium authority's ability to hire outside lawyers. He wrote that the attorney general's office "should be the primary source for the [stadium] authority's legal services and the gatekeeper for decisions on outside counsel."

O'Malley chose Puddester to help the agency get "back to basics," Enright said. He said he expects Puddester to help the authority get a grip on its fiscal condition and remedy the audit findings.

Puddester said he wants to improve the agency's relationships with the governor and the attorney general's office.

"I think that's something I'm pretty good at, working with other agencies," he said, referring to his long history of balancing competing agendas as a budget writer.

Puddester also wants to earn a cleaner audit the next time around. He believes the authority can achieve that by creating clear processes (he mentioned severances as one target area) and following them.

A little history

Quasi-public agencies are common tools for municipalities looking to build and manage stadiums. The Maryland version, created in 1986, is unusual only for the range of projects it has taken on, from the Baltimore Convention Center to the Hippodrome to current work on athletic facilities at Coppin State.

Maryland officials envisioned a lean agency that would have the power to raise public funds but would not have to operate under the complex rules that often slow government action.

That became a problem when former construction executive Richard Slosson took over the agency as executive director. Slosson resigned in 2004 after a legislative audit found that he'd been given a $15,000 bonus on top of his $250,000 salary that was documented by backdated memos.

In the months after Slosson resigned, the authority paid him $42,000 for less than an hour of consulting work. That action raised questions in the next legislative audit, released earlier this year.

McKinney and Asti said the agency needed to keep Slosson on retainer because at the time he resigned more than 100 purchase orders he had negotiated were incomplete.

In reaction to the 2004 audit, the authority, led by Asti, passed a new policy that required extensive bidding for each purchase over $50,000 and hired a procurement officer at a salary of $85,752 to oversee the process. The board also agreed to review and approve the agency's budget quarterly instead of annually.

"We've accomplished a great many things to make the agency more efficient and more accountable," Asti said.

With Asti serving as director and also remaining as general counsel, the agency hired Greg Smith to supervise daily operations and improve the agency's marketing.

In June 2005, Smith received a $5,000 bonus for his efforts to attract new business to Camden Yards. Nine months later, he was gone. Under the five-year contract he had negotiated with then-chairman Carl A.J. Wright, Smith received six months' salary, or $104,000, as a buyout.

Puddester was troubled by the severance given to Smith, even though the authority had to pay it under his contract. He said a clearer severance policy will help prevent such situations.

More scrutiny

The authority found itself under fire again in 2005, after it hired Murphy. Major League Baseball was contemplating moving the Montreal Expos to Washington, and authority officials believed that could drain revenue from Camden Yards. They wanted to know their legal rights and believed the attorney general's office was too busy to provide counsel.

Asti and McKinney said they don't regret giving the no-bid contract to Murphy, a former Democratic mayoral candidate who became an ardent Ehrlich supporter.

"We felt we got excellent advice from the firm," McKinney said. "And we still maintain the option of taking legal recourse based on what they found."

Asti noted that the authority spent $725,000 to hire attorneys from Hogan & Hartson to prepare for arbitration proceedings with the Orioles in 1998 and 2001-2002. So the Murphy hiring was hardly out of context with past practices, she said.

Less than a year after the Murphy stir, the agency began a public bout with the Orioles over the video screen. The parties are set to go to arbitration in late summer or early fall to decide who should pay for a new board. The Orioles have accused the authority of trying to save money by purchasing a board that will be outdated the day it goes up.

Quick response

In February, the authority faced tough questions from legislators after another audit that took the agency to task for the consulting fees given to Slosson and the severances handed to Smith and others.

Several of those legislators said recently that they were satisfied with the agency's responses and leadership.

"The MSA has ... the confidence of the General Assembly for bringing projects in on time and on budget," said Sen. P.J. Hogan, a Montgomery County Democrat and vice chairman of the state's Budget and Taxation Committee. "It's hard to ask for more than that."

Recent audits have helped the agency fix problems, Hogan and others said. "I believe they worked to clear up and correct those situations," said Sen. Ulysses Currie, a Prince George's County Democrat and chairman of the Budget and Taxation Committee. "In light of the fact they're bringing Mr. Puddester in, I'm comfortable with their direction."

Del. Norman Conway, a Democrat representing Worcester and Wicomico counties and chairman of the House Appropriations Committee, said Asti also has the faith of legislators. "She's done her best to make the organization better," he said.

Asti carries more institutional knowledge than anyone at the authority. She began working with the agency as a private lawyer in 1987 and signed on as general counsel in 1990. The Anne Arundel County native is also the new president of the Maryland State Bar Association.

Puddester said Asti is hardworking, loyal to her employees and an excellent attorney. But when asked if she would stay in her position, he declined to answer. "The people who work for me have no doubt where they stand," he said. "But that's between me and the person."

Asked if she fears for her job security, Asti said: "I am concerned that there could be a misperception that the recent audits are attributable to me, when, in fact, I brought the problems referenced in the audits to the attention of the proper parties before the audits began. I was made executive director to address those problems, which I did. Based upon my recent performance evaluations, I would expect to continue as executive director. But if the board determines to replace me as executive director, I would expect to continue in my position as general counsel and director of development in accordance with my contract for the remainder of its term."

With his background in state budgeting, Puddester is likely to play a far more active role than former chairmen, Hogan said.

"I don't envision a major shake-up," he said. "With Mr. Puddester as the new chairman ... I have great expectations for the stadium authority."

The future

Beyond questions of management loom those about what the authority will build in coming years.

Asti and McKinney said the authority stands ready to execute the legislature's will, whether that means working on a new arena, a downtown horse track near Camden Yards or neither.

A study commissioned by the authority on behalf of the legislature said that the city needs a new arena to replace outdated 1st Mariner Arena. The authority and city are awaiting proposals.

Wright, the former chairman, often touted the idea of a "super track" downtown. But the idea has yet to gain support among lawmakers.

The authority has recently focused on attracting events such as the NCAA men's lacrosse final four, the Dew Action Sports Tour and the Army-Navy football game to the Camden Yards complex.

Puddester said the agency is busy with its work at Coppin, the construction of a minor league stadium in southern Maryland and management of the Baltimore stadiums. He said he'd like to develop a comprehensive plan for long-term maintenance at Camden Yards so problems can be corrected before they become apparent to fans.

"I think you'll see the authority continue to be a valuable tool," Puddester said. "On hand to do the sort of unique projects that it's been very successful with in the past."

childs.walker@baltsun.com

doug.donovan@baltsun.com

msa timeline

1986 - Legislature creates authority with goals of building a new baseball stadium and attracting an NFL team. Baltimore attorney Herbert J. Belgrad serves as the first chairman.

1992 - The agency's first project, Camden Yards, opens to universal acclaim from players, fans and architecture critics.

1995 - Cleveland Browns owner Art Modell announces he'll move his team to Baltimore after negotiations with authority chairman John Moag.

1996 - Work is completed on the Baltimore Convention Center, a major nonsports project that was awarded to the authority after its success with Camden Yards.

1998 -The new home of the Ravens opens, again to positive reviews.

2000 - The Orioles take the authority to arbitration, claiming the Ravens received a better stadium deal. Ultimately, a panel awards the Orioles $10 million and the naming rights to Camden Yards.

2004 -A legislative audit criticizes the authority's spending oversight. Director Richard Slosson resigns under an ethics cloud.

2004 - The Hippodrome, another nonsports project awarded to the authority, re-opens after a major restoration.

January 2007 - The agency faces another audit, this one criticizing consulting fees given to Slosson and a large severance package given to a 15-month employee.

July 2007 - Johns Hopkins budget chief Frederick Puddester takes over as chairman.

A caption in yesterday's Sports section incorrectly said that new Maryland Stadium Authority Chairman Fred Puddester will be leaving his position at the Johns Hopkins University. Puddester will remain as a budget official at Hopkins.The Sun regrets the error.
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