Prince George's County Executive Lawrence J. Hogan supported the awarding of a $1.7 million state-backed construction loan to a Bladensburg company represented by Ilona Hogan, his wife and law partner.
The loan to District Moving and Storage Inc. for construction of a warehouse and manufacturing plant was approved yesterday by the Maryland Industrial Development Financing Authority, which sponsors low-interest loans for new development favored by local government.
The loan must still get final approval from the County Council, which gave its initial support June 12 after Hogan supported the loan. Council members said yesterday their approval is now in doubt because of the connection between Hogan's law firm and the company.
The loan also could be blocked if the county attorney's office issues an opinion that the company's representation by the Hogan and Hogan law firm constitutes a conflict of interest on the part of Lawrence Hogan, who retains a half-interest in the law firm. The financing authority's seven-member board asked the county attorney's office for an opinion yesterday.
Hogan denied any wrongdoing in a statement he issued yesterday, and his aides contented there was no conflict of interest involved in his actions. His support for the loan was reported yesterday by the Washington Star.
In order to obtain loans under the financing authority program, business firms in Prince George's must gain the sponsorship of both the county executive and the County Council. The loans, which are issued by private banks, generally carry an interest rate of about 8 percent, four percentage points lower than the market rate.
Hogan endorsed the District Moving loan along with a second financing authority loan to an unrelated company on May 9, according to a memorandum prepared by Ted Llana, a county economic development official. The District Moving project had been recommended for approval by the economic development staff.
Hogan has recently stated that he does not want to encourage the construction of more warehouse-type plants in Prince George's.
It was for that reason, Hogan said, that he rejected a financing authority loan for Garfinckel's department store, which proposed to build a warehouse and office complex in Lanham. A Garfinckel's executive had contended that a county official told him Hogan might approve the loan if the department store chain donated $80,000 to a county-endorsed nonprofit group.
Ilona Hogan confirmed yesterday that the Hogan firm has represented District Moving "for many years" and that she represented the company in a March 30 meeting with financing authority officials in Baltimore.
She said, however, that she withdrew from negotations on the loan after learning that her husband's endorsement was required, and added, "I haven't billed them for that meeting and don't know whether I will at this point."
Financing authority counsel Kenneth Frank said yesterday the possibility of a conflict of interest had come up at the March 30 meeting. He said Ilona Hogan called hime "a week or 10 days later to ask a technical question. That was the last I heard from her."
At a meeting in June, District Moving was represented by Charles A. Dukes, a close friend of the Hogans who is chairman of the county's Economic Development Advisory Committee. Normally, Dukes advises Hogan on financing authority applications as the committee chairman.
Dukes said yesterday he attended one meeting of state officials and District Moving executives at the request of Ilona Hogan, but did not make any recommendation to Lawrence Hogan about the loan.
Hogan's press aide, Jim Threatte, said yesterday that Hogan did not know about his wife's involvement in District Moving's financing authority loan until after he had already decided to support the project.
The company proposed to move its headquarters to the Hampton Industrial Park and build a warehouse and container-manufacturing plant. District Moving handles overseas shipments and storage and transfer of household goods, and does most of its business with the federal government and government employes, according to its loan proposal.
Threatte said Hogan supported the warehouse project because the firm was already in Prince George's and planned to move to Virginia if the application were not approved. He said Hogan considered District Moving preferable to Garfinckel's because District Moving was willing to locate its headquarters in the county, unlike Garfinckel's.
"He sent (the District Moving and Storage application) down because it's a good project, not because he sits around wondering who Ilona's law clients are," Threatte said.
District Moving and Storage executives could not be reached for comment yesterday.
County Council Chairman William B. Amonett said yesterday the loan "Certainly bears some scrutiny." The financing authority "is very important to us," he said, "and I want to make sure that we don't do anything to compromise it. I also don't want to compromise the office of the county executive."
This week Hogan removed himself from the county's consideration of the proposed Cabin Branch interchange on the Capital Beltway because Hogan and Hogan once represented an industrial association that favors the interchange.
Asked why Hogan had not refused similarly to consider District Moving and Storage's loan application, Threatte said, "He probably just didn't think of it. Hogan does not spend all of his time working with these business. This project had gone through all the channels and he simply signed off."