Pr. George's Audit Cites Lax Land-Deal Protocol

By Cheryl W. Thompson and Mary Pat Flaherty
Washington Post Staff Writers
Saturday, August 30, 2008

Prince George's County officials have transferred millions of dollars worth of surplus land to developers without proper records or oversight, often failing to require competitive bids, good-faith deposits or accurate land appraisals, according to a report by the county auditor.

The county's Redevelopment Authority also has lost or failed to deposit some checks from developers, County Auditor David Van Dyke said in his report. "Breakdowns in key internal control activities can leave the authority vulnerable to fraudulent, abusive or questionable real estate activity," he wrote.

The audit began after inquiries from The Washington Post to the county about surplus-land contracts. Last month, The Post detailed how county officials gave land deals to friends, business partners and campaign contributors of County Executive Jack B. Johnson (D), often passing up experienced developers. Johnson intervened in at least two of the transactions and several recipients acquired the land at cut-rate prices or got no-bid contracts, county and other records show.

The audited development deals often involved public property close to Metro sites and in neighborhoods targeted for economic growth. Developers promised to build such projects as single-family homes, townhouses and condominiums, but most of the sites remain vacant.

Johnson has denied involvement in the awarding of the deals and said the Redevelopment Authority operates independently. Yesterday, Johnson and his spokesman, James Keary, declined to discuss the audit's findings. Keary said in a statement that "the County Council and the County Executive have no role in those transactions or the decisions made by the Redevelopment Authority Board of Directors."

Thomas M. Thompson, who as director of Housing and Community Development oversaw the Redevelopment Authority, said he was aware of the audit but was fired June 27 by Johnson before he could meet with the auditors. "They wouldn't let me look at it or respond to it," Thompson said of the report.

In the past, Thompson defended his agency's procedures, saying, "I'm pretty proud of what we've done and the proposals we selected."

The report criticizes the authority for not providing adequate records to show that it enforced conditions in contracts and for continuing deals with developers who had not met contract terms. County officials also could not provide evidence that they evaluated the proposals before awarding contracts.

Auditors examined 25 contracts totaling 65 properties. Five of those contracts involved 17 properties, including three that went to people with ties to Johnson.

Fifty-seven percent of the properties reviewed were sold without a competitive bid process and 11 percent were under contract or sold without the approval of the authority's board, the audit found. County officials disputed that finding but failed to provide auditors with "satisfactory proof" of board approval.

The audit found "inadequate documentation" for how the developers' proposals were evaluated. The lack of proper records "reduces the amount of public transparency, making it difficult for the agency to maintain the respect, trust and confidence of potential developers as well as county citizens," the report says.

The authority also should seek competitive bids "to ensure the County is receiving the best value for the property," it advises.

Jacqueline Brown, whom Johnson named as acting executive director of the Redevelopment Authority, declined to comment on the audit yesterday. She also serves as Johnson's chief administrative officer.

Steve Paul, the authority's associate director, said he was "not allowed" to comment. "I can't say anything about it," Paul said.

The chairman of the Redevelopment Authority, Charles Samuel, also declined to comment.

One contract discussed in the audit report, involving property at 210 Maryland Park Dr. in Capitol Heights, was signed in 2006 with Mirza Baig, a Laurel doctor and a former business partner of Johnson's who has held political fundraisers for him. The authority told auditors that the deal had been terminated but could provide no documentation.

In that instance, county officials said they "misplaced" a deposit check, which records show should have been for $52,000. They also could not produce proof of a deposit on another property in Riverdale Hills. "Occasionally," the authority said in its written response to auditors, its staff "could not find a bank statement."

Despite such missteps, the authority told auditors that its system for keeping records of transactions is adequate. But auditors said the document provided to support that response was insufficient. Auditors added that "we do not know when this information was put together" because it was submitted months after they had sought existing records.

In its reply to the audit, the authority also said it was drafting procedures on how to buy and sell property.

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