State
How Will Maryland Resolve its Fiscal Woes?
The upcoming 2010 Session of the Maryland General Assembly will be dominated by the hard choices confronting legislators and Governor Martin O’Malley regarding the State’s fiscal future. During a Special Session in 2007, the legislature passed a record tax hike package intended to eliminate the structural deficit. However, with the continued economic downturn and a failure to make permanent cuts, the Governor has had to continue making adjustments to achieve the balanced budget mandated by law: since adjourning the 2009 Session, he has made three rounds of cuts to the State budget, with still no permanent relief in sight. The 2010 Session will begin with a $1.8 billion shortfall, in an election year for all statewide elected officials-- not the best time to seek even deeper cuts, or to increase taxes and fees. Legislators, meantime, have indicated that they will look at three areas for additional revenue: 1) closing corporate tax loopholes (e.g., enacting combined reporting), 2) extending the “millionaires tax,” and 3) expanding the sales and use tax to additional services. None of these ideas have uniform support, and all have been attempted in the past without success.
Green for Greening
$5.6 Million for Energy Improvements Loans Available
The Maryland Energy Administration (MEA) is now offering low-interest loans, through the EmPOWER Commercial and Industrial Energy Efficiency Loan Fund (EELF), to help Maryland business improve the energy performance of their facilities. The EELF is funded through the American Recovery and Reinvestment Act of 2009 and the State of Maryland Strategic Energy Investment Fund. Proposed funding for the EELF is approximately $5.6 million through the end of FY 2011.
Maryland businesses can now qualify for up to $500,000 for electric efficiency projects, and up to $750,000 for combined electric and gas/fuel oil efficiency projects, with a minimum $35,000 for energy efficiency projects. Eligible energy efficiency projects may include, but are not limited to, building weatherization, lighting technology upgrades, HVAC replacements or upgrades, and commercial refrigeration equipment upgrades.
Businesses interested in the program are encouraged to download a project loan application at: www.energy.Maryland.gov/incentives/business, and to contact Jesse Fulton, the energy efficiency manager for this program, at: jfulton@energy.state.md.us; or by phone at 410-260-7184. Applications will be reviewed and awarded on a first come-first served basis. Applicants are encouraged to take advantage of other financial incentives offered to commercial and industrial businesses through their utility’s EmPOWER energy efficiency programs. Funding is available through 2011.
New Maryland Environmental Reporting Law
By James B. Witkin and Kathleen J. Trinward
A new Maryland law requiring property owners to disclose to the state information about the environmental condition of their properties will soon go into effect. Under proposed regulations recently published by the Maryland Department of the Environment (MDE), property owners whose soil or groundwater is contaminated with extremely low levels of certain chemicals (in some cases less than limits allowed in drinking water) would have to file a report with the MDE within 48 hours of learning of the contamination. If businesses or property owners have reports on properties they own in their files — no matter how old — concerning historic contamination, they would have to notify the State immediately, once the regulations become final.
This new law was influenced, in part, by the publicity generated by the story of Swann Park in South Baltimore. The park, with its popular ball fields, was located on the site of a former Allied Chemical pesticide factory which closed in 1976. Years later, Allied’s successor, Honeywell International, turned over documents dating back to the 1970s that showed high levels of arsenic at the park. The Baltimore Sun covered the story in depth, and the Baltimore Health Department closed the park in April 2007. Honeywell has been performing remediation at the park since then. The 2008 General Assembly enacted HB 977 in an effort to compel parties with reports similar to Honeywell’s to disclose the information.
The law imposes this reporting requirement on any “responsible person” who possesses sample results indicating the release of a hazardous substance into the environment above levels established by MDE. A responsible person includes, among other parties, the current property owner and the owner at the time the substances were released. A contract purchaser of property, however, would not fall under the new law, as long as it does not take title to the property.
It is unclear what the MDE will do with the reports it receives under the new law, which will become public record documents. It is not certain whether the agency will be able to pass judgment quickly on which properties actually need to be remediated. If MDE cannot, properties may sit in limbo, marked with an environmental stigma.
For parties to real estate transactions, the law will require a new type of analysis. Typically, sellers will ask potential purchasers for copies of their due diligence materials, if the purchaser walks from the deal. Given the new reporting requirements, sellers will think twice about whether they want to “possess” a study that may impose an immediate reporting requirement. Purchasers may balk at purchasing properties for which such reports have been filed, or for which new testing has revealed conditions that will require reporting. Lenders, who abhor uncertainty, may postpone making loans until the State makes a decision whether it will take action against a given property.
James B. Witkin is a partner at Linowes and Blocher LLP, a Maryland law firm and AOBA member. He can be reached at (301) 961-5189 and jwitkin@linowes-law.com. Kathleen J. Trinward is an associate at Linowes and Blocher LLP. She can be reached at (301) 961-5169 and ktrinward@linowes-law.com.
Montgomery County
Fire Code Enforcement
In 2005, the Montgomery County Fire and Rescue Services (MCFRS) were restructured. As a result of the restructuring, several new Executive Regulations were enacted which required the MCFRS to implement and enforce existing fire safety inspections and code requirements. This change in structure has subsequently created confusion and frustration among building owners/managers, particularly regarding applicable code standards, conduct of inspections, and code enforcement actions.
AOBA members voiced their growing concerns and frustrations about these matters to County Executive Ike Leggett. The Executive ordered the formation of an executive staff-level steering committee that would include the Director of Business and Economic Development, AOBA and other affected industry representatives, to investigate and initiate a coherent and coordinated fire code enforcement program. The goal will be to provide maximum safety to the tenants and residents and the fire fighters of the County, while allowing buildings to be operated efficiently and cost effectively.
A preliminary group of County officials and stake holders was convened by MCFRS Chief Richard Bowers on November 25; in addition to AOBA, the interested groups included representatives from several local Chambers of Commerce, the Realtors, and the local Community Associations Institute chapter. The official list of representatives for the steering committee, which is anticipated to meet quarterly, should be completed by the end of December.
During the initial meeting, Chief Bowers acknowledged that the Department’s increased enforcement efforts were creating major challenges for its entire customer base, and that AOBA members represent a large portion of that base. In hindsight, he agreed that the Department should have led with education about code requirements,and not with enforcement; he assured those present that moving forward with education will be first and foremost goal of MCFRS, and that it will focus on a performance-based outcome model rather than a prescriptive one.
To demonstrate this commitment to working closely with the business community, the Chief has set up a “Partners in Business Safety Program.” This program includes a new position of “Customer Advocate,” who will serve as a neutral agent to facilitate communication and help resolve problems that businesses encounter with MCFRS. This position will be filled by retired Chief John Best, who has a long and proven history of working with AOBA. He has demonstrated his understanding and ability to balance the need for safety with legitimate business concerns, both financial and physical. He can be reached at 240-773-4739 or by email: fire.customeradvocate@montgomerycountymd.gov.
AOBA is extremely encouraged and appreciative that the County Executive and Chief Bowers are commited to building a focused relationship with the business community aimed at resolving code enforcement issues while enhancing safety.
In the meantime, Division Chief Mike Donohue and Fire Marshal Mike Love invited key MCFRS members and AOBA members to begin meeting, on a monthly basis, for the purpose of beginning a dialog on the issues AOBA has raised, as well as those that MCFRS may feel exist. The first meeting was held on October 15 and a second meeting was held on December 2.
Property owners/managers brought two immediate concerns to the table: 1) there must be a clear and mutual understanding on exactly which “model” codes and standards, and with what lawfully adopted local variations, the County is enforcing; and 2) there must be a consistent set of inspection standards and procedures that MCFRS will follow and which are made well known to the public. The Department, along with the County Attorney’s Office, is preparing a chart that will identify the various codes enforced by the County since 1956.
In the interim, while the Department is working on clarification of the applicable codes and standards, any AOBA member receiving a notice of violation (NOV) should immediately contact the Fire Code Enforcement Manager, Michael Hamilton, at 240-773-8910 or by email: michael.hamilton@montgomerycountymd.gov. All NOVs will be held in abeyance until a determination has been reached by the Department on the applicable code standards. All parties retain the right to challenge any decision regarding an alleged code violation, regardless of the position taken by the Department.
The next meeting with AOBA members is January 6, 2010 at 1:30 pm in the fire code enforcement conference room located at 255 Rockville Pike, Rockville, MD. Anyone wishing to participate should contact Lesa Hoover, lhoover@aoba-metro.org.
Prince George’s County
AOBA’s MPIA Lawsuit Against Prince George’s: Vindication is Sweet
Just in time for the holidays, Prince George’s Circuit Court Judge Albert W. Northrop has once again ruled firmly against Prince George’s County in what, hopefully, will prove to be our last court appearance in this principled, almost five-year battle.
In early 2005, County Executive Jack Johnson took to the airwaves, claiming that crime statistics showed 22 apartment buildings were responsible for 19,000 calls for police service and disproportionately burdening County public safety resources. Up for reelection and facing a crime problem that had undeniably worsened on his watch, Johnson loudly alleged that the properties on his “Action List” were “breeding grounds for violent crime” and warned that the owners had to make substantial improvements or “we will shut you down.”
AOBA thought Johnson’s assertions were a dubious attempt to scapegoat the apartment communities for the crime problem he could not get his arms around, and we doubted that he had the goods to prove them. In July 2005, we filed a detailed Maryland Public Information Act (MPIA) request for the County records and documents that would back up his claims. Some of the questions we had were:
- Did the County police, in fact, actually respond to every single call being cited in the County Executive’s information?
- How long did it take for County police to respond to each call?
- How many of the calls actually related to alleged violent crimes?
- How many were multiple calls about the same occurrence because of slow police response?
- How many of the calls came from tenants?
- How many of the calls came from housing providers?
After the County had stonewalled for a year, AOBA engaged the services of Linowes and Blocher and filed suit in September 2006. Another year of mostly stonewalling followed; as the December 2007 trial date in the case approached, the County grudgingly produced a few records-- and those documents offered little persuasive evidence of the County Executive’s earlier claims.
At trial, the judge found that the County had “acted in egregious bad faith” in delaying and failing to produce the documents AOBA sought. He ordered the County to pay all of AOBA’s legal fees and produce the requested documents, and also prospectively levied a substantial fine on the County, should it fail to do so by a time certain.
The County, however, appealed and, in order to protect our trial court victory, the AOBA Board authorized our legal counsel, L & B’s Jerry Heller, to defend the judgment in the Maryland Court of Special Appeals. That Court of Special Appeals also resoundingly found for AOBA, on all but one issue, and remanded the case back to the trial court for a determination of fees to be awarded. Regarding the prospective fine Judge Northrop had imposed on the County, the Special Appeals Court said it couldn’t be applied because it was not a sanction provided for by the MPIA. Tellingly, however, the Appeals Court noted that there was another remedy provided for in the Act— contempt-- and pointedly further remanded so that Judge Northrop could consider whether the County should be found in contempt.
At a November 12 hearing, Judge Northrop did just that. Over the County’s protests, he again ruled that AOBA was entitled to attorneys fees, and then went a step further, holding Derrick Coley, the aide to the County Executive identified as the person responsible for not complying with AOBA’s documents request, in contempt.
Judge Northrop also stated this finding in regard to the actions by County Executive Johnson that ultimately gave rise to the case before him: “I think it was a sham, an absolute sham, from the start by the County, starting with the press conference or whatever it was that tried to identify this…”
AOBA’s members with Prince George’s properties—indeed, all members-- can take pride in the fact that AOBA successfully challenged an inappropriate use of government data and media power by an elected official; defended the reputations of its members and their tenants, and also reinforced the right of access by all Maryland citizens to information about the actions of their governments.
At press time, we await a final order from Judge Northrop prescribing the exact amount of fees to be paid to AOBA. Until he does so, however, and the County actually renders payment, we will continue to incur legal fees, which is why a special assessment for the suit will continue to appear on dues billings sent to AOBA’s Prince George’s County multifamily members. We fully anticipate, however, that AOBA will ultimately receive a substantial refund of fees previously incurred, at which time the AOBA Board will determine the method for and amounts to be returned to members who have paid the assessment in 2010 and prior years.
Donate To PSAP's Annual Food Drive Thru December 14th
Prince George's Public Safety Assistance Program's annual food drive is underway. Donate canned goods by December 14, 2009, or make monetary contributions anytime. Contributions are tax deductible. For collection locations or mailing address, please view the flyer.
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