Comptroller Votes No on College Insider Land Deal for Trustee

By Kenneth C. Rossignol

ST. MARY’S TODAY

ST. MARY’S CITY (April 30, 2008) --- A proposal to have the St. Mary’s College spend $800,000 to buy land from a member of the college’s board of trustees was approved by the Board of Public Works, at a meeting in the Legislative Services hearing room in Annapolis on Wednesday with Comptroller Peter Franchot voting no.

Michael P. O’Brien, not a stranger to sweetheart deals on public property, is the current chairman of the building committee of the college’s board of trustees and was appointed to the college trustee board by then-Governor Ehrlich. 

Prior to being appointed to the Board of Trustees, O’Brien was a longtime member of the St. Mary’s College Foundation, which raises money for the college to support it’s many activities and construction programs including the controversial boathouse and adjacent yacht club built in the past year on the river’s edge.

This committee and in turn the board of trustees, has developed a policy to expand the college’s boundaries in recent years and that very policy is being carried out in having the State of Maryland purchase the land now owned by O’Brien.
In his role as chairman of the building committee, O’Brien appeared at a legislative hearing last fall defending the construction of the boathouse and the yacht club buildings.

O’Brien owns O’Brien Realty, a five-office real estate brokerage in Southern Maryland, which like other major real estate firms is being devastated by the real estate and construction fueled recession.

 A Washington Post interview with the owner of Long and Foster Realtors this past Sunday quoted Wes Foster as saying that this is the worst market ever in the nation and he is laying off employees and closing offices in order to try to survive.

With the State of Maryland bailing out Mike O’Brien, for the purchase of building lots just north of the college, along a wooded area already developed with homes, the appearance is that the purchase is a bailout of a politically connected friend of former Governor Bob Ehrlich with tax money, perhaps saving his business.

A review of the last three years of real estate transactions on the Southern Maryland Realtors data base, shows that O’Brien Realty’s sales have dropped a dramatic 63% from 2005 levels and projected through this year. Just by the end of 2007, the firm’s activity had dropped 43.4 percent with the first four months of this declining even sharper.

O’Brien purchased the two parcels of land he is selling to the college in 2005, at the height of the real estate boom, for $170,000.  He bought a second parcel for $75,000. 

While real estate values have declined dramatically and foreclosures skyrocket, with virtually no sales taking place for undeveloped land, O’Brien’s land was appraised by Prince Frederick appraiser Phil Goldstein, son of the late Comptroller Louis Goldstein, for $860,000 and the Appraisal Shoppe Inc. put a value of $1,106,000 on the land. 
Developers who planned to buy the tract of land at the main gate of the Naval Air Station in the center of Lexington Park have recently backed out due to the distressed market.

Both appraisals of the O’Brien property fly in the face of trends in the market with the value being paid only three years after the 2005 purchase more than doubling the purchase price.
Only St. Mary’s College of Maryland would be foolish enough to pay more for land in a market when everyone else is paying less, but they are paying the money to the one person who has more to do with planning the future construction and land purchases than any other member of the Board of Trustees.
O’Brien is presently in court, litigating against another Realtor, asserting his right to charge a real estate commission for property which was purchased by the college. O’Brien contends that he had a broker buyer agreement with the college, which would be in violation of state law regarding trustees profiting from inside deals.

Sweetheart deals for O’Brien Realty are nothing new.

O’Brien was given free rent from the State of Maryland and St. Mary’s County for an office building located next to the north entrance of the Patuxent River Naval Air Station after the county forced the previous owner out of the building, saying that it was imperative that the county have immediate access following the purchase of the building for construction of the new Naval Air Test Museum.  

After the former owner vacated the building at the county’s instructions, ending leases which brought in $10,000 per month with the tenants paying their own utilities, St. Mary’s County then allowed O’Brien Realty to move into the building rent-free on the condition that they pay their utilities.
Following the disclosure of the sweetheart deal in ST. MARY’S TODAY, St. Mary’s County began charging O’Brien Realty rent. After O’Brien moved to a new office building, the offices at the museum were torn down to make room for a new parking lot and a new museum building.

O’Brien has long been a business associate of G. Thomas Daugherty, a fellow member of the Board of Trustees of the college and Daugherty is president of Maryland Bank & Trust Company.
The museum building which was given free of charge to O’Brien was purchased from Daugherty and Irene Parrish.

O’Brien is a regular guest at local political fundraisers and contributor to campaigns of former Governor Ehrlich, former St. Mary’s Commissioner Tommy McKay and former Commissioner Julie Randall.

After questions about the propriety of the purchase of the land were raised two weeks ago, the issue was deferred from April 16^th’s meeting of the Board of Public Works to the meeting planned for tomorrow.

The Board of Public Works consists of State Treasurer Nancy Kopp, appointed by the General Assembly, Governor Martin O’Malley and Comptroller Peter Franchot.

The Comptroller said on Tuesday that he would view the deal with a hard look.

"Comptroller Franchot strongly believes in giving each item brought before the Board of Public Works the necessary due diligence it deserves.  He is currently reviewing this proposal and will vote based on the merits of whether it is ultimately in the best interest of the taxpayers of this state,” Warren Hansen, press secretary to the Comptroller told ST. MARY’S TODAY.

Howard Freelander, Deputy Treasurer for External Affairs, told ST. MARY’S TODAY that the Treasurer would listening carefully to the presentation of the proposal before making a decision.
A request for a comment from Governor O’Malley noted that the Governor will be missing this week's Board of Public Works meeting which will be chaired by Lt. Gov. Anthony Brown, that the issue will be reviewed.

Not surprisingly, the Maryland State Ethics Commission, which in Maryland is always an oxymoron, approved the transfer. The Governor's office will be forwarding a copy of the ethics ruling on the matter.

Michael O'Brien was called for comment on this story and his views on this transaction will be provided in an update.