Prince George's County Executive Parris N. Glendening authorized the 1987 purchase of a $3 million office building from a partnership that included a high-ranking county official and a major fund-raiser for the state Democratic Party.
James R. Novak, the county's $82,000-a-year director of public works and transportation, and Irving L. Kidwell, a College Park builder and longtime Glendening supporter, were business partners when Glendening asked the County Council for "immediate approval" of the purchase of the four-story office building in Upper Marlboro.
To complete the transaction, Glendening set up a special Industrial Revenue Authority, which bought the Gabriel Duvall Building as its first order of business. The arrangement allowed the county to speedily acquire the building without a public referendum.
The authority did not conduct appraisals of the property before issuing bonds to cover the purchase. Robert A. Manzi, a zoning lawyer who serves as the authority's legal counsel, said the group did not question the sales price negotiated between the county and the building's owners, a price that a county negotiator said could have been less.
Glendening could not be reached for comment over two days. He was "traveling in the county and could not be reached" yesterday, according to his press secretary, Rebecca Reid. Answering questions on his behalf, Reid said Glendening played no role in the building's price negotiations, which were conducted by his senior aides, but "was briefed on the transaction and he approved it."
She said Glendening believed the county "got a good deal and a fair price. It was the only available office space in a prime location."
Reid said Kidwell's longstanding political support of Glendening played "absolutely no role" in the county's decision to buy the building. And she said Glendening felt that Novak's involvement in the project did not pose a conflict of interest. Novak obtained a ruling from the county Board of Ethics three years before the sale, allowing his participation in the partnership that owned the building.
Deputy County Administrator Robert Duncan, who helped negotiate the purchase, said the county paid the full asking price because of an "urgent need" for more office space in the building, most of which was under lease to the county at the time of the sale.
"It's conceivable that we could have gotten the building for $150,000 or so less than we ended up paying for it. But given the urgency of our space needs at the time and faced with those same circumstances, I would make the same decision again," Duncan said.
At the time of the purchase, county tax assessors placed the market value of the property at $2 million. In an assessment this year, tax rolls place the building's value at $2.2 million. Although sales are often higher than assessed value, the county tries to assess property at 100 percent of market value.
Novak called the transaction a "private matter" yesterday and said there was "absolutely no conflict of interest" in his involvement in the partnership. "There was no hard money profit" from the sale, he said. "I didn't get rich."
Novak reported in his 1987 financial disclosure form that he held a 10 percent interest in a partnership that sold the building to the county. He did not respond to questions on the form asking how he acquired the interest or its fair market value.
Council Chairman Jo Ann T. Bell said she was aware of Novak's interest in the property when the council approved the transaction. She said she was not concerned about a possible conflict of interest because Novak's participation in the partnership had been cleared by the county's Board of Ethics in 1984.
Council member Anthony J. Cicoria was the lone dissenter when the purchase came before the council for a vote. Cicoria, who is awaiting trial on state theft charges, said yesterday he opposed the project because it was "overpriced and an outrageous waste of taxpayer money."
Kidwell said Novak, a former president of his construction company, was given a 10 percent interest in the joint venture as part of an incentive plan for corporate officers. He said Novak played no role in managing the building, negotiating the transaction or setting the building's price.
Kidwell called the purchase "a heck of a good buy" for the county and declined to discuss profits made from the sale. "This land alone was worth what the county paid," he said.
Kidwell, a major financier of Democratic Party campaigns for several decades, has been a regular contributor to Glendening's campaigns through his two principal companies, College Park Contracting Inc. and K&W Realty. The Marlboro Joint Venture, the partnership that owned the building, also is listed among Glendening's campaign contributors, including a $1,000 contribution made in October 1987, one month after the Duvall Building sale was completed.
Land transactions involving the Prince George's county government have come under scrutiny in recent weeks. U.S. Attorney Breckenridge L. Willcox is reviewing complaints made about land sales at the county-owned Collington Center and a swap of property that the county negotiated with a developer.
A Prince George's grand jury also investigated several land transactions. Although it issued no indictments, the grand jury criticized the county in March for negotiating land transactions that give an appearance of impropriety.
Glendening recently issued legislative proposals designed to address concerns about the county's methods of negotiating land purchases. Included was a proposal to further restrict the county from doing business with employees or their relatives and to require more complete public disclosure of such transactions.
Kidwell said he built the Duvall Building realizing that the county government would eventually need the space. The 31,042-square-foot brick building, at 14701 Gov. Oden Bowie Dr., is steps away from the administration building and a block from the county courthouse.
When the building was constructed, the county leased more than half its space. It served as offices for the state's attorney, the county Board of Elections, various child support and enforcement offices and a number of private tenants, including a branch of Sovran Bank and the Prince George's bureau of The Washington Post.
In 1984, Novak returned to county government as head of the Department of Public Works and Transportation, a job that entails handling an $18 million annual budget for county road projects and $42 million in mass transit funds.
Duncan said that in late 1986, Kidwell's daughter, Cathy, approached the county about buying the building and wanted a prompt decision. "We tried to prevail upon the Kidwells to give us time to put the financing together," he said.
He said the county faced a problem financing the project. Under the county charter, voters must approve the issuance of general obligation bonds to finance capital projects. Duncan said the Kidwells approached the county just after the 1986 election. The county "would have had to wait 2 1/2 years" to put the question to voters in a referendum, he said.
Glendening asked the County Council in March 1987 to create a five-member Industrial Revenue Authority, which could issue lease revenue bonds to finance public building projects. The bonds are not part of the county's general obligation debt, and the workings of the authority are not subject to review by county auditors. Reid said Glendening considered the approach "creative financing" to address a pressing need.
In May 1987, the authority, headed by developer Kenneth H. Michael, approved the purchase of the Duvall Building through a $3.5 million bond issue, which covered the cost of the building and related fees.
Staff writer Joe Kirby contributed to this report.