Kettler & Scott, a real estate development firm that recently gave up ownership of two giant planned communities in Loudoun and Fairfax counties to its lender, has pulled out of a deal to develop an 850-acre project in southern Prince George's County.
The project, called Marbury, was to include 1,375 single-family houses, 300,000 square feet of retail space, 150,000 square feet of office space and 440 units of senior citizen housing. According to Prince George's County officials, Kettler & Scott had signed a contract with Washington Gas Light Co. to buy the land from the gas company after rezoning approvals were received.
"Basically, we are packing it in and not going to do it," said Robert Kettler, who heads the development firm. He blamed the weak market for residential and commercial real estate, as well as the fact that the project had not received zoning approval before the contract's expiration date.
According to a Washington Gas Light spokeswoman, the contract between Kettler and Washington Gas expired Aug. 23.
While considering whether to proceed with the Prince George's County project, Kettler & Scott has been grappling with the heavy expense of providing the $100 million in improvements that it agreed to provide in Cascades, its showcase planned community along the Potomac River at the Loudoun-Fairfax border. Most of the road improvements are complete at Cascades, and sales of homes have been underway for several months. Kettler also is in the planning stages on Brambleton, a 3,000-acre community in Loudoun County.
While Kettler is expected to be paid a fee for his role at Cascades and Brambleton, his firm was forced to give up ownership of the projects to several corporations headed by officials of its lender, Chevy Chase Federal Savings Bank, after Kettler was unable to make required interest payments.
The Marbury development in the Prince George's project received approval from the county Planning Board last year, but the zoning hearing examiner recently recommended denying approval for the project. It had been scheduled to go before the County Council early next year. Kettler & Scott had agreed to provide almost $20 million in road improvements to the surrounding area, according to county officials, including building an interchange that was expected to cost more than $12 million.
But in recent months, the Prince George's County real estate market, which had been holding up relatively well in comparison to higher-priced parts of the Washington area, has weakened.
Kettler & Scott's pullout came as a surprise to Washington Gas. According to Prince George's County officials, as recently as last week Washington Gas had called the county, seeking information about whether Kettler & Scott had pulled out. A Washington Gas spokeswoman said yesterday that Washington Gas plans to go ahead with the project and is looking for a new partner.
Kettler said the company had lost "a few dollars" on the project because it had purchased the right to buy some land that it has since decided not to buy.