Montgomery County’s joint venture with a private developer to create a life sciences town center in its economically stagnant eastern sector may be close to collapse because of clashes over environmental cleanup and legal questions surrounding the developer-owned land.
County officials and developer Percontee have spent more than a year attempting to negotiate an agreement to build Viva White Oak, a 300-acre hub for medical and life-science companies adjacent to the Food and Drug Administration campus near Route 29 and New Hampshire Avenue. A top Percontee executive said this week that the company has set a deadline of April 28 to resolve all outstanding issues.
“If we can’t get to a mutually acceptable agreement by that date, there’s probably a reason why we’ll never get to one,” said Percontee executive vice president Jonathan Genn. Percontee is owned by the Gudelsky family, which has a long history in Washington area real estate.
Each side blames the other for the inability to reach a deal. Genn said the legal document, known as a general development agreement, has been through nearly 20 drafts, scrutinized by a revolving group of county officials. The county asserts that Genn wants an accord that does not hold the company to specific dates or time frames.
Government officials and community leaders envisioned the project, known as LifeSci Village before its rebranding as Viva White Oak last year, as an economic catalyst for a region of the county with few jobs and significant pockets of poverty. Supporters estimate that the medical science town center, combined with the new Washington Adventist Hospital that recently broke ground nearby, could generate as many as 10,000 jobs over the next quarter century.
Montgomery officials declined to speak publicly about the particulars of the dispute, citing ongoing discussions. They did note, however, that the negotiations have extended past multiple deadlines set by Genn. County Executive Isiah Leggett said Wednesday that he remained “optimistic” about prospects for an agreement.
“All parties have an intention of getting this resolved,” said Leggett, who met last month with Percontee president and chief executive John Gudelsky. “But it’s not a cookie-cutter, one-size-fits-all kind of negotiation. I just want to make sure that whatever the county does that the public interest is protected.”
The plan calls for the county to commit $40 million in capital funds for construction of roads and other infrastructure.
Negotiations have unraveled over the terms of a complex land deal in which the county and Percontee — owners of adjacent property at the site — would be partners in development of the life-science center. The 115-acre Montgomery property is a former Washington Suburban Sanitary Commission sewage-composting facility. The 180 acres owned by Percontee is a sand and gravel quarry.
Montgomery has removed industrial contaminants from its land, under requirements set by the Maryland Department of the Environment. Officials said they want a date by which Percontee will complete a similar cleanup. Genn said the company will clean the site when the deal is consummated and construction is ready to begin.
“We had a very clear understanding that it’s not an issue for the purposes of the GDA [general development agreement],” Genn said.
The larger issue involves half-century-old covenants on the Percontee property. Under the 1956 and 1965 agreements, Contee Sand & Gravel (Percontee’s former name) promised surrounding property owners it would limit industrial uses of the land. They included a commitment that the square footage of any construction would take up no more than 40 percent of the site.
The covenants on the Percontee land are significant, officials said, because the county is allowed to build on about 75 percent of its site. The county said the imbalance raises questions about the actual value of Percontee’s land. It also complicates a key element of the plan, which calls for making a piece of the Percontee property available for expansion of the FDA campus.
Officials said county attorneys discovered details of the covenants last year through their own due diligence. Genn said there was no intent to conceal them, but that they are no longer a factor because the land has been rezoned.
Montgomery attorneys disagree, warning that the covenants could leave the county vulnerable to lawsuits from adjacent property owners and residents in surrounding neighborhoods who might want the covenants enforced to limit the size of the project.
The county wants the development agreement to stipulate that the company will resolve the issue by the end of the year.
White Oak community leaders, who spent years organizing and lobbying to bring the FDA to the east county, and who view the life-science development as the crucial next step, expressed alarm.
Betsy Bretz, head of LabQuest, the umbrella community group, said she holds the county responsible for not acting with sufficient urgency or interest.
“The county wants to blame everyone but themselves,” she said.
County Council member Tom Hucker (D-Eastern County), who represents the White Oak area, also expressed dismay, but he added that if the venture with Percontee falls through, the county-owned land is still a viable site for redevelopment on its own.
“If this falls apart, it’s not the end of the world,” Hucker said. “I don’t think we should take on a bad deal that puts taxpayers at risk.”