January 17, 2011

State puts housing department’s Crownsville headquarters for sale

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By Barbara Pash
Barbara@MarylandReporter.com

The sale of the Department of Housing and Community Development’s Crownsville headquarters is being advertised online, and the deadline has been set for developers to voice their interest in building a new main office for the department near a Prince George’s County transit station to create more transit-oriented development.

Bids are due Feb. 1 to purchase the current housing department headquarters at 100 Community Place, Crownsville. The same deadline applies to the requests for information to build a replacement headquarters in Prince George’s County.

Although the two items are running simultaneously, they are independent of each other, said Michael Gaines, the General Services department’s assistant secretary for real estate. “You don’t have to buy the [housing department] building to make a proposal” for a Prince George’s site.

Current headquarters for the Housing and Community Development Department

The Crownsville headquarters for the Housing and Community Development Department

The department’s move is part of an initiative from Gov. Martin O’Malley to encourage transit-oriented development.  Last June, O’Malley designated14 transit stations in Maryland for transit-oriented development, and said the state would fulfill his 2006 campaign pledge to relocate the housing department from Anne Arundel County to a then-undetermined station in Prince George’s County.

The four stations designated in Prince George’s County are the Laurel MARC station, Branch Avenue Metro station, Naylor Road Metro Station and New Carrollton Metro, MARC and Amtrak station.

Gaines said that the project will be a mixed-use development with an office component of about 200,000 square feet in size. “We’ve received a diversity of concepts,” he said. Besides size, there are a few other general requirements for the headquarters, including 500 parking spots, several large and small conference rooms, on-site cafeteria and sufficient storage and computer space.

“We gave some specifics in what were are looking for but we wanted to be broad enough to encourage creativity and innovation, with the idea that we are looking for a good economic deal but also, the project has to stimulate overall economic development,” Gaines said.

Selling what’s there

The housing department headquarters is built on former Crownsville State Hospital land. After the hospital closed, the property was subdivided. In 1990, the General Services department acquired about 63 acres from the Health and Mental Hygiene department to build the Housing department headquarters.

The headquarters is listed as a 155,900-square foot office building with 606 parking spaces. Gaines said there are two other uses on the property – a day care center and a Department of General Services maintenance office. These are located in two separate buildings and are not part of the sale of the headquarters.

Gaines declined to speculate on the sale price of the headquarters, saying that an appraisal had not yet been done, although he expected it would go for the “fair market value.”

“We don’t have a specific number for selling the building. We’ve had interest,” he said.

However, there is a complication that may make the sale more difficult than expected. Kevin Greaney, an agent with Cassidy Turley Commercial Realtors in Columbia, said that the land is zoned “rural agriculture,” and potential buyers have to account for that in their offers for the site.

“The state used its power to build ‘by right,’ regardless of zoning, but the zoning will limit the ability of the private sector to build,” Greaney said. In other words, he explained, whoever buys the property will have to get it rezoned for the appropriate use before any other structure can be built on it.

Greaney said there are different options for the property. “A buyer could buy for the income by, for example, leasing [the building] to a government agency. Or, a buyer could buy for speculation — get another tenant for the vacant building and/or build additional buildings on the site,” he said.

Greaney said in that location, a commercial building without a zoning issue typically sells for $150 to $225 per square foot. But given the zoning problem, “It’s hard to put a value” on the property, he said.

The relocation of the housing department has drawn protests from union leaders and from Anne Arundel County Executive John Leopold. Many of the approximately 330 employees at the housing department headquarters live in Anne Arundel County and it would create an economic hardship for them to commute to Prince George’s County, especially given the lack of public transportation between the two locations.

O’Malley was suspected of having a political motive for the move. David Boschert, director of the Maryland Classified Employees Association (MCEA), said at the time that the relocation was “more political” than “a smart business move” In a protest letter to Treasure Nancy Kopp and Comptroller Peter Franchot, Leopold cited a task force that had called the relocation “ill-timed” and a “waste of taxpayer money.”

Sue Esty, assistant director of the American Federation of State, County and Municipal Employees (AFSCME), said the union is attempting to minimize the negative impact of the move on all housing department department’s employees, union members or not.

“We have reached an agreement with management [of the housing department] to negotiate over the impact of the move,” said Esty. “We are viewing concepts like teleworking, where possible.”

Finding a new location

The state has so far received 16 responses to its request from developers, property-owners and brokers for the relocation of the housing department to Prince George’s County, Gaines said.

“It was more than we expected. It lets us know the market is excited about the process,” he said.

Gaines said that the responses were for sites “all over the map” in Prince George’s County. “They were spread out. There wasn’t a particular concentration,” he said, adding that while several responses focused on the four designated stations, not all did, even though that appeared to be the intent of the relocation.

The state is not expecting to pay for the future building’s construction, although there may be some cost for furniture and fixtures. Because of the state’s environmental mandate, the building, even if leased, will have to meet a minimum LEED silver standard.

“We will look for the developer to provide the space on a turnkey basis. In return, the state will negotiate a lease that is economically feasible for the state and the project,” Gaines said of a deal that will require final approval from the Board of Public Works.

After the February 1 proposal deadline, Gaines said he does not have a schedule for the finalizing the deal or for construction. A project of that magnitude usually takes 18 to 24 months to complete, he said.

“Because we asked folks to be creative, to be innovative, we don’t want to nail down a time frame to begin and to end,” Gaines said.