The O'Malley administration has struck a deal to buy a Kent County farm for $2.8 million and then lease it for $1 a year to a company controlled by an organic farmer and Democratic campaign donor.
The proposal has drawn criticism from businesses that worry about unfair competition.
The agreement is expected to be presented Wednesday before the state Board of Public Works, which deferred action on it last month after Comptroller Peter Franchot raised questions about the terms.
Also in the pipeline — but not on the agenda Wednesday — is a deal in which the same company would receive $500,000 in state bond money toward the cost of establishing a $2.3 million "food hub" in Easton to process and distribute organic and sustainably produced food.
The beneficiary of both deals is the nonprofit Eastern Shore Food Hub Corp., a company led by Cleo Braver, an environmental lawyer-turned-organic farmer who is a critic of the prevailing agricultural practices on the Eastern Shore. Braver advocates for "green" farming techniques as part of the local food movement.
Franchot spokesman Andrew Friedson described the deal as a "highly irregular transaction." He said the comptroller "has serious concerns about the appropriateness of this type of state investment, especially considering the millions of taxpayer dollars at stake."
The nominal lease price and the grant also have stoked the ire of businessmen such as Ed Bush, general manager of Teddy Bear Fresh, an Easton-based produce distributor. He sees the proposed hub as a potential competitor receiving a state subsidy.
"She would have a substantial advantage over the regular tax-paying Joe who — if we want to build our business — we have to pay for it in cash," Bush said. "I don't think it's fair that she has exclusive rights to that property that's being bought with taxpayers' money."
The proposed deal would use $2.8 million in Program Open Space funds to purchase the 255-acre farm owned by Frederick and Mary Wick near the town of Millington, just north of the Chester River. The program, financed with the real estate transfer tax, is used to preserve land for environmental and recreational purposes.
Braver declined to speak with a reporter Tuesday. Members of the hub's advisory board defended her vision.
"Having local food is going to be more and more important as time goes by," said Holly Budd, chairwoman of the Maryland Organic Food and Farming Association. She expressed hope that the food hub would eventually make locally grown food more affordable.
"I don't think healthy food should be an elitist thing. I think everybody should be able to eat healthy," she said.
State Natural Resources Secretary Joseph P. Gill told the Board of Public Works last month that the department had been seeking a suitable property for the nonprofit's planned farm for some time, and the Kent County property met the criteria.
"This is one of those neat little Program Open Space projects that rings all the bells — social, environmental and economic," Gill told the board.
Emily Wilson, director of land acquisition for the Department of Natural Resources, said Braver approached state officials with a detailed proposal for the hub as a way of addressing food deserts — neighborhoods in which there is a dearth of healthy, affordable food.
Wilson said the state leases about 13,000 acres to farmers across the state for agricultural operations. Generally, she said, the land is leased at market rates after a competitive bidding process. Wilson said the state accepted a nominal rate for the 25-year lease in this case because the hub is a nonprofit.
Braver has donated more than $40,000 to Democratic campaign committees over the past decade, including those of Gov. Martin O'Malley and Lt. Gov. Anthony G. Brown.
She donated $6,000 toward Brown's losing campaign for governor. She also served on a "business advisory council" formed by the Brown campaign.
Jennifer Bevan-Dangel, executive director of Common Cause Maryland, said looking for land to lease to a specific group "definitely raises a red flag" — especially when its top official has donated to a politician involved in the decision-making process.
"We always are concerned that campaign donations create relationships. They open doors," she said. "It's so hard to cut through the noise that surrounds elected officials and pitch your idea."
Bevan-Dangel said $40,000 over a decade doesn't put a donor near the top in Maryland politics, but it is "sizable."
The 58-year-old Braver also gave $750 to Franchot, who questioned the lease and contracts when the board first considered them last month.
"This is a lot of money," Franchot said at the time. "It's unconventional. I've been here for eight years and voted on $75 billion in contracts. In 15,000 contracts I've never voted to buy a farm and give it to a group."
Gill, the Natural Resources secretary, said Tuesday that he did not know how the idea was brought to the department's attention. He said it was unusual only in its quick turnaround time.
"The concept of using public lands in cooperation with nonprofits to achieve public objectives is not new," he said.
Braver, in statements to the board and in testimony to the General Assembly committees that approved the use of bond funds for the Easton food hub, outlined an ambitious plan to establish a new distribution system for small farms on the Shore and other nearby areas.
Food hubs are part of a growing movement in U.S. food distribution. According to Braver, about 300 have sprung up around the country.
In her vision, the Easton hub would be a retail and wholesale center for processing and marketing healthy, affordable, locally grown food that is produced in an environmentally sustainable manner.
Appearing before the board last month to answer members' questions, she said organic farming would not be required, but the hub would help farmers who wanted to start organic operations.
In addition to the fruits and vegetables purchased from existing farms, the hub would provide a market for the food produced at the Kent County farm.
Braver said the hub company would employ a "low-profit limited liability company" called Real Food Productions, which she also controls, to hire farmers to live there and produce food.
Among the goals of the hub, Braver told legislators earlier this year, was to "increase the percentage of the food dollar that goes to the grower" by forgoing the usual profit margin taken by the distributor.
Bush, of Teddy Bear Fresh, finds that troubling. He said prices should be set by the market. He noted that Braver and her husband are co-owners of Cottington Farm, the only certified organic operation in Talbot County.
"Her farm is going to be able to sell her goods to this food hub," he said. "She's able to buy her own goods from her own farm and pay herself what she thinks is fair value."
Tracy Ward, executive director of the private Easton Economic Development Corp. and a member of the hub board, denied that the hub would compete with Teddy Bear Fresh. She said that company buys most of its produce from California, while the hub would purchase locally.
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Ward said boosting farmers' earnings is an important goal of the hub.
"Fifty percent of our small farmers are making $20,000 or less," she said.
Paul Spies, whose family owns Meadowridge Farms in Cordova in Talbot County, said he doesn't see the need for the hub. He said there are plenty of produce distributors on the Shore and that he gets good prices for his hydroponic cucumbers.
"The people we grow for and sell to would like us to double our production," he said. "We're getting a very fine price, especially because it's a local product and they're selling it in the stores as a local product."
Spies said the state would likely find many farmers willing to lease the Wick Farm at market rates.
"Good land in Kent County would probably easily be over $10,000 an acre," he said.