Developer and racetrack owner Mark R. Vogel, struggling to stay afloat financially after his guilty plea on a cocaine possession charge, does not plan to fight a foreclosure sale on his prized Bowie office headquarters, sources said yesterday.
The auction of the five-story flagship building of the Bowie New Town Center is slated for today, and comes after Vogel defaulted on an $11.2 million loan from the Massachusetts Mutual Life Insurance Co.
The foreclosure is the most tangible sign yet of the deteriorating finances of the flamboyant Prince George's County developer, who amassed an estimated $1 billion in holdings during the real estate boom of the 1980s. His properties, which include Maryland's two harness racing tracks, a Virginia shopping mall and hundreds of acres of commercial land, stretch from rural Virginia to Maryland's Eastern Shore.
"This is the first thing I built, and I hate losing it. But, as I said before, you have to swallow your pride and take your lumps," said Vogel, whose corporate offices served as the anchor of the half-occupied, 100,000-square-foot building on Northview Drive. Vogel said he is trying to arrange to remain in the building as a tenant.
Since his arrest in September on a cocaine possession charge, Vogel has defaulted on a series of loans on major projects and has been unable to arrange new financing to salvage his rapidly tumbling empire.
Vogel has been especially hard hit in the real estate decline because much of his property is undeveloped land, which produces no income and incurs increasing debt and real estate taxes. He owns at least 5,000 residential lots, the sales of which have come to a virtual stop as builders have curtailed new construction.
"Most everything I had was in land. Our bread and butter was selling lots to builders. When the builders stopped buying lots, everything stopped," Vogel said.
Vogel's loss of the headquarters building also is a symbolic blow to development of the ambitious $400 million New Town Center, a planned 275-acre complex near Routes 301 and 50 that was supposed to transform suburban Bowie into a mecca of luxury shops, residences and office towers. Prince George's County leaders have been anticipating the project, which would be comparable in size to Tysons Corner, since the 1970s.
Bowie officials say Vogel's default may delay indefinitely construction of other office buildings on the huge and largely undeveloped site. But they remain hopeful that a shopping mall, scheduled for completion in 1993, will proceed as planned.
"This project was to be the very heart of this city," said state Sen. Leo Green (D-Prince George's). "We'd already gone through two other developers before Mark Vogel came on the scene. His foreclosure is not only a human tragedy, but a city tragedy. We can only hope that when the bricks start falling, the wall doesn't come tumbling down."
Vogel decided not to challenge the foreclosure by filing for protection from creditors under Chapter 11 of federal bankruptcy laws because the building is worth substantially less than the loan in today's deflated real estate market, sources familiar with the deal said.
Paul Mark Sandler, Vogel's attorney, attributed much of his client's financial trouble to the publicity surrounding his Sept. 13 arrest. "He was on the verge of some very interesting and intriguing business deals, but unfortunately, the adverse publicity . . . smothered any efforts undertaken to bring new money into his ventures," Sandler said.
Vogel acknowledged that his cocaine possession charge hampered his ability to find new financing. But he cast his financial problems as no different from those that have plunged greater real estate moguls, Donald Trump among them, into bankruptcy.
"I think we're facing what everybody else is facing: the realization that we're not going to be selling any ground," Vogel said. "If Donald Trump has no money, it's not surprising that I don't. I'm not even embarrassed."
Since 1988, Vogel has been the driving force behind development of the New Town project, working closely with city officials to bring in residential and commercial builders and to recruit DeBartolo Inc. to construct a major shopping mall on the site.
Originally based in Washington, he moved the headquarters of Mark Vogel Cos. from the Watergate to New Town Center in 1988, the first tenant in the sleek, five-story office building whose sophisticated architecture was to set the tone for future development.
"It's very evident that his foreclosure is not good for the development and the plans that all the people in this city have put into it for many, many years," said Bowie Mayor Richard Logue. "It's not good for confidence in the project as a whole."
Marie Izzo Cartwright, a spokeswoman for DeBartolo in Youngstown, Ohio, said yesterday that the company plans to move ahead with construction of a regional shopping mall on the New Town Center site it bought from Vogel last year. She said talks are underway with five department stores interested in locating in the mall.
Vogel remains optimistic that he can rescue some troubled projects through the sale of his racetracks, Rosecroft Raceway in Oxon Hill and Delmarva Downs near Ocean City, which he is trying to sell for between $20 million and $25 million. Vogel bought the properties for $11 million in 1987.
But racing industry sources said yesterday that although Vogel has had discussions with several potential buyers, none is willing to pay his asking price.
He also is under mounting pressure to sell the tracks from First National Bank of Maryland, which holds $11 million in mortgages on track improvements, the sources said. Bank officials have told Vogel he must refinance the loans with another bank unless he quickly disposes of the properties, the sources said. Bank officials would not comment on their discussions with Vogel.
Members of the State Racing Commission, who forced Vogel to remove himself from the tracks' day-to-day operations this fall, also are pressuring him to sell the tracks before his operating license comes up for renewal in mid-January, according to commission sources.
"There is universal feeling that we do not want to relicense Mark Vogel," said one member, who asked that his name not be used. The commission has the authority to strip the operating license of any track owner convicted of a felony.
But commission members said they have been reluctant to act because of legal questions surrounding Vogel's plea arrangement. If he does not violate his probation within a year, his criminal record will be expunged.
The pace of Vogel's financial tailspin has accelerated since his arrest, although signs of impending financial woes had been building for months.
In September, the Jefferson Bank and Trust Co. in Greenbelt filed a judgment against the developer after he defaulted on a $724,446 loan.
Two weeks after his arrest, a partnership controlled by Vogel filed for protection from creditors under Chapter 11 of the federal bankruptcy laws to prevent foreclosure on the Villages of Belmont, a 1,200-acre parcel of undeveloped land slated for luxurious homes near Upper Marlboro.
Since then, Vogel has run into problems on at least a half-dozen other projects.
He has defaulted on a $350,000 note on the 450-acre Four Winds property in Caroline County, Va..
Dominion Bank of Richmond has filed suit against a Vogel partnership for failing to pay $445,778.69 in principal and interest penalties on a loan for a 1,116-acre project in Stafford County.
Citizens National Bank, which lent money for the purchase of a corporate helicopter, recently filed a $335,000 judgment against Vogel for nonpayment on that note.
The helicopter is in the custody of federal agents who allege that small amounts of cocaine were transported on it for use by Vogel and others in Atlantic City.
Vogel said that he did not transport cocaine on the helicopter and that he intends to fight the seizure.