Cheap Rent for Regulators Spurs Concerns

For the racing commission to lease space at Pimlico Race Course "certainly doesn't look right," one state official said. (By Don Wright -- Associated Press)

The state commission that regulates Maryland's horse racing industry just moved its headquarters to bargain-rate office space: The lease calls for $1 a year.

But the new site, it turns out, is the Pimlico Race Course in Baltimore. And the landlord? The Maryland Jockey Club, one of the organizations that the commission is charged with regulating.

The arrangement drew no public attention when it was approved in January at the final meeting of the Board of Public Works chaired by then-Gov. Robert L. Ehrlich Jr. (R).

But yesterday, a lawyer for his successor, Gov. Martin O'Malley (D), said the lease will be terminated after new questions were raised about whether it suggests a too-cozy relationship between racing regulators and the industry.

"A regulatory body should not have its executive offices provided rent-free by the regulated entity," Ralph S. Tyler, O'Malley's chief legal counsel, said in an interview. "I think it was a mistake to enter into in the first place, and we will move to terminate it."

The 10-year lease calls for the Maryland Racing Commission to make annual payments of $1 to the Jockey Club, which owns and operates Pimlico, home of the Preakness Stakes. The Jockey Club is responsible for utilities and custodial costs in the 1,500 square feet of office space, according to a summary of the lease provided to the Board of Public Works, a three-member panel chaired by the governor that approves state contracts.

Attorney General Douglas F. Gansler (D) said officials in his office advised the racing commission last fall to avoid the deal because it created the appearance of a conflict, at a minimum.

"We told them it shouldn't be done, and they did it anyway," Gansler said yesterday. "There are plenty of other places they can be housed."

J. Michael Hopkins, the racing commission's executive director, said in an interview this week that the move was motivated by a desire for more space than was available at the state-owned building in downtown Baltimore where the commission was located until about a month ago. Hopkins did not return calls yesterday to respond to Gansler's comments.

Hopkins also pointed to a state regulation that requires racetracks to make space available to the commission to carry out its duties. But Tyler said that provision does not authorize a permanent move of the commission's office -- a development he said the governor's office learned about only this week after inquiries from The Post.

The state racing commission Web site now lists its office address as the street address of Pimlico.

The nine-member commission and its staff have far-reaching authority over the industry that includes licensing of people working at the tracks and the power to set admission prices and payouts. The commission also may revoke licenses of companies that violate racing laws or commission rules.