By JULIE E. GREENE
11:00 AM EDT, July 24, 2012
Corporate Office Properties Trust returned ownership of the former Fort Ritchie U.S. Army base to PenMar Development Corp. on Tuesday, according to Dori Nipps, PenMar’s executive director.
Columbia, Md.-based Corporate Office Properties Trust (COPT) paid PenMar $2 million of the $4 million owed on the property and, with PenMar receiving the deed to the property, PenMar forgave the remaining $2 million, Nipps said.
Nipps said PenMar officials believe the move will lead to the dismissal of a 2005 lawsuit that has held up major development of the property. It also will avoid a scenario that Nipps said COPT officials were contemplating that could have led to residents on the property being evicted.
The “alternative to us taking it back was not an attractive one because COPT was contemplating shutting the property down,” Nipps said in a phone interview.
In addition to affecting residents on the property, such a move would have prevented community members from using the grounds and lakes, except for the Fort Ritchie Community Center, Nipps said.
COPT spokeswoman Stephanie Krewson said COPT officials would not comment about the land transfer that PenMar announced Tuesday. She said officials also would not comment on related issues, such as Nipps’ description of what could have happened had the transfer not taken place, because it was too close to the release of the company’s second-quarter earnings. That release is expected Thursday morning.
Approximately 200 people rent duplexes or townhouses on the former Army base property, Nipps said.
With PenMar taking over ownership of the 591-acre property, those residents no longer need to worry about the possibility of being evicted, she said. PenMar will hold a meeting July 31 at 7 p.m. at the community center for those residents so they can meet with PenMar officials and ask questions, she said.
The former Army base was closed in 1998. PenMar transferred the land to COPT in 2006 immediately after the Army transferred the land to PenMar.
COPT paid PenMar $5 million up front and was to pay up to $4 million more to PenMar by 2016. Incentives would have allowed COPT to reduce the amount owed based on how many jobs were created by 2016.
But COPT has not been allowed to develop the land because it has been tied up in litigation.
A federal judge ordered an environmental review in November 2009 in response to a lawsuit filed in 2005 by area property owners Jim Lemon and Robin Biser.
Lemon and Biser alleged in the lawsuit filed in U.S. District Court that COPT’s redevelopment plan called for more development than the scenarios the Army evaluated in its 1998 Environmental Impact Statement. They also claimed the plan introduced historical and water-related impacts not evaluated in the 1998 statement.
“We believe that since the lawsuit was based on COPT’s redevelopment plan and PenMar does not have a desire to move forward with that redevelopment plan that COPT has for the property, that the lawsuit would be dismissed,” Nipps said.
“COPT tried the best they could,” Nipps said. “The lawsuit just really tied their hands as to what they could do.”
“They really did try. The lawsuit went on longer than any one of us ever imagined,” she said.
Early this year, PenMar and COPT officials began talking about PenMar taking back the land, Nipps said.
PenMar’s board of directors voted in February to enter a 90-day study period to evaluate the status of the former Army base’s land and utilities, to make sure it was feasible for PenMar to take over ownership of the land, Nipps said.
At the end of that period, in May, the board voted to move forward with the property transfer, Nipps said. PenMar officials have been working out legal matters for the past three months, she said.
Washington County, state and congressional representatives have been kept up to date on the situation since the talks began about the possibility the land would be transferred to PenMar, Nipps said.
Asked Tuesday about the land transfer, Washington County Commissioner Ruth Anne Callaham, who is on the PenMar Development Corp. board, said two main priorities are what will create jobs and what will enrich the area.
Commissioners Terry L. Baker and Jeffrey A. Cline said they were just learning the specifics and couldn’t comment yet.
“It’s all in the details,” Cline said.
PenMar officials will set up two meetings with the community to inform local residents of the property’s status and to hear ideas about what to do with the property, Nipps said.
PenMar officials have met with several marketing firms to create a strategy for the immediate use as well as long-term redevelopment of the property, a PenMar news release states.
“Based on professional guidance and community input, the group anticipates that such a strategy will evolve in the next six months,” the PenMar news release states.
While PenMar officials want to redevelop the property, the idea is not to do anything as intense as what COPT had planned, Nipps said.
COPT had planned a development to include 1.7 million square feet of office space, and 673 homes and apartments.
COPT had notified its investors that the company did not expect to recover its $28 million investment in the former Fort Ritchie and, in the first quarter of 2011, wrote its value down to zero.
That decision was based on a re-evaluation of the property’s development prospects after the Army disclosed in February 2011 that tactical herbicides, including Agent Orange, were tested at Fort Ritchie in 1963. A May 2011 report on the testing of Agent Orange and other herbicides at Fort Ritchie found it was unlikely that any harmful chemicals remain at the site.
Representatives of businesses that might be interested in leasing space at the former Army base will visit the property in the next several weeks, Nipps said.
PenMar officials had received “some nibbles” from interested parties within the last several weeks as rumor spread the land would be transferred back to PenMar, Nipps said.
Redeveloping the property will be “a challenge, but it is a good project,” Nipps said.
And, she said, “If we can make this redevelopment happen, it will be a good boost for the Cascade community.”
“I do believe, at least I hope, there will be support from the community, knowing that the alternative for the property would have been a very difficult one,” Nipps said.
PenMar has invested a lot of money in the local community, including $1.1 million for renovations at Cascade Elementary School, as well as donations to local fire and ambulance companies to buy emergency vehicles, Nipps said.
PenMar will take over employment of the four maintenance workers and the property manager that COPT had for the former Army base, Nipps said.
Nipps said PenMar will continue to subsidize the community center as the agency works to help the center stand on its own financially. PenMar provides $170,000 annually to the center, though the center accepted one fewer payment of $14,000 this year.
PenMar is a nonprofit, independent agency of the state of Maryland, she said. Its revenue comes from the sale of the property to COPT and rent from residential and commercial tenants, Nipps said. PenMar does not receive any revenue from the government, she said.
Staff Writer Andrew Schotz contributed to this story.
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