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November 29, 2010

Montgomery County Council


100 Maryland Avenue
Rockville, MD 20850

Re: Requested response to Montgomery County Council regarding possible sale of MCPS property

Montgomery County Council,

Per Councilmember Berliner’s request, I respectfully wish to respond in writing, regarding the proposed sale of
Peary High School and its relationship to the sale of Belt Junior High School as well as other similar
transactions involving publicly owned Montgomery County School properties. I would have provided this
information live at the November 23rd hearing, but after being asked to produce information on this subject, I
was silenced by County Council President, Nancy Floreen.

Before I begin, I would again wish to state that the Melvin J. Berman Hebrew Academy is, by all accounts, an
upstanding educational institution and a good neighbor in the Aspen Hill community. I am not aware of any
wrong doing on the part of the Academy, but am very concerned with the process that has bought the
Montgomery County Council to point of selling off county this school property. I am very supportive of the
Melvin J. Berman Hebrew Academy leasing Peary High School for the term of the lease (2023) and possibly
decades longer as provided by mutually agreed upon lease extensions.

According to Councilmemeber Leventhal, “…some elected officials and some community members might
confuse the Yeshiva Academy with the Hebrew Academy.” I can assure you that there is no confusion.

My journey on this matter started in 2002, when researching campaign contributions on behalf of the citizen-
based county watchdog group Neighbors for a Better Montgomery. At that time many citizens were concerned
with the possible role of potential developer influence on land use decisions made by the Montgomery County
Council. It was thought that some of this influence might present itself in the form of campaign contributions
from developers and development related interests to county council candidates.

It came as a great shock to Montgomery County citizens, when it was found that in many cases more than half
of many candidates’ political contributions came from development related interests. In some cases, as much as
70% or more came from these sources. Neighbors’ researchers continued to explore the sources of campaign
contributions. As part of that investigation, a seemingly innocent contribution of $4,000 from, of all places,
Guam, made to then County Executive Doug Duncan in 1999, caught our attention. As is well documented in
three articles by the Washington Post, other contributions were discovered, which linked that money and
donations from the Pacific island of Saipan to convicted lobbyist Jack Abramoff (Post-1, Post-2, Post-3). The
Post articles then connected the dots regarding contributions from Abramoff and other Yeshiva board members,
including Dennis Berman and Jeffrey Lee Cohen. According to the Post “The Saipan contributions occurred a
month before Duncan signed a lease -- over community and school system opposition…” The Post articles
delineated the role of then Duncan aid, Jerry Pasternak, in the engineering of the Belt Junior High School deal.

Although there may have been no wrong doing on the part of the Academy, its operatives or sympathetic elected
officials, it appears that many of the same people involved with the Belt Junior High School transaction are now
and have been involved with the Peary transaction. Additionally, many of the same methods and instruments
used to guaranty the purchase of Belt have been employed in the efforts to secure Peary.

Foremost is Mr. Pasternak’s role. The Post was most explicit regarding Pasternak’s role in the Belt Junior High
School sale. Concurrently, Mr. Pasternak vigorously promoted the lease and sale of Peary High School. I
attended an MFP meeting in 2006, where Councilmembers Praisner, Denis and Andrews received lengthy,
enthusiastic support for the sale of Peary High School from Mr. Pasternak. In his presentation, sitting next to a
Berman Academy representative, Mr. Pasternak continued to refer to himself and the Academy as “we,” even
though he was acting as the representative of the Montgomery County Executive and theoretically the citizens of
Montgomery County. The sale was tabled at that time, partly because of prior Planning Board rejection of the
sale, the Belt/Abramoff revelations and the recommendations of the ZHA report, which advised the county not
to sell the property.

Also at issue is Mr. Pasternak’s seemingly unlimited access to the County Executive’s office and close working
relationship with the County Executive’s Assistant Chief Administrative Officer, Diane Schwartz Jones. As a
former county employee, Mr. Pasternak enjoyed numerous meetings and information exchanges with Schwartz
Jones concerning the sale of Peary High School. Additional exchanges may have occurred with Schwartz Jones
and the Academy’s representatives from Garson Claxton, LLC (law firm), Mr. Pasternak’s current employer.

Also keep in mind that the Peary lease predated the Belt Junior High School lease by a little more than two
years. Both leases were approved and signed by then County Executive Doug Duncan, an elected official the
Post cited for taking campaign contributions in return for selling county school land. Both leases are extremely
similar in their language and lease/purchase terms. It has been stated by some that one or both leases were
prepared by Garson Claxton, LLC, the “go to” law firm in the Washington, D.C. metro area regarding leases.
For future county land sales, it may be prudent to start with a county written “boilerplate” lease, making future
leases more taxpayer friendly.

Sale of Montgomery County school property to the aforementioned parties is not limited to Peary High School
and Belt Junior High School. Other properties include, Arcola Elementary School, Town and Country Day
School and Montgomery Hills Middle School. In each of these transactions, many citizens were concerned
with the low sales price and other related costs to the county. The Post documented County costs regarding Belt
Junior High School in a 2006 article “Yeshiva Facility Deals Costly for Montgomery.” It is easy to see why
many might ask if these are “cookie-cutter” deals at the expense of taxpayers.

It must also be noted that in addition to contributions to former County Councilmembers and the former County
Executive, Berman Academy interests have donated more than $31,000 to current Montgomery County
Councilmembers as well as the current County Executive since the first proposals were made to convert the
Peary lease to a sale. Most notably are contributions to County Executive Leggett for more than $17,000 and
Councilmember Leventhal for over $9,000 (attached). These donations do not include contributions, which may
be reported in January, 2011.

Troubling, too, in this process, the sponsor to sell Peary comes in the form a lame-duck councilmember, not to
mention that the proposed sale will be voted on by a lame-duck council, immediately after an election.

Many have asked why a majority of the Montgomery County Council would go forward with the sale of school
property for pennies on the dollar in these austere economic times, when the Montgomery County Board of
Education and even your own staff (Montgomery County Council Staff) has strongly recommended against it.

There may not have been wrong doing, but the sale of this valuable and irreplaceable Montgomery County asset
is a textbook example of special interest access and potential manipulation of local government. It is a sad day
indeed in Montgomery County, when concerned citizens come before the County Council to express their
apprehensions about the sale of public school property and are summarily booed, jeered and dismissed with the
tacit approval of councilmembers. Which of you will stand up for taxpayers and ALL the county’s children? ■

Most sincerely,

Drew Powell
attachments
November 23, 2010

Montgomery County Council


100 Maryland Avenue
Rockville, MD 20850

Re: Testimony regarding Possible Sale of MCPS Property

Good evening, my name is Drew Powell, I reside in Rockville and am the former Executive Director of a Montgomery
County watchdog group called Neighbors for a Better Montgomery.

Why is this a bad deal?

It’s a bad deal for county taxpayers, who may see county land, valued at $15M under its current zoning (or significantly
more if zoned residential), given away for less than $2M.

It’s a bad deal for our children, who may suffer in overcrowded classrooms, if this property is no longer available for
MCPS school construction.

It’s a bad deal for citizens, who yearn for fair and honest government and see that more than $30,000 has been contributed
thus far by special interests, who may benefit from the proposed transaction.

According to the ZHA report, an impartial study commissioned by late Councilwoman Marilyn Praisner, concerning the
proposed sale of this property in 2006:

• “The County will be selling the land for well below its value.”
• “The County may forever lose the opportunity to repurchase the Premises for use as a school.”
• “Given these qualitative concerns, the sale and repurchase option does not compare favorably to other alternatives
under the Lease. Unless more favorable terms are offered, the County’s various objectives will more likely be met
by maintaining ownership and control over the site.”

Even though some of details of the revised transaction may have been slightly modified, the impact to the county remains
the same and the warnings in the ZHA report hold true today.

In 2006, then County Executive Doug Duncan forever had his name inexorably linked to corrupt lobbyist Jack Abramoff
in an MCPS school property for campaign contributions scheme. Many of the players in this deal are the same, with the
apparent exception of Mr. Abramoff himself.

Referring to Jerry Pasternak, the same person who engineered this and the previous school deal, one of three 2006, page
A1, Washington Post headlines read: “Duncan Campaign Aide Involved in School Deal.” In a quote in that Post article,
then councilmember Tom Perez, currently serving as US Department of Justice Assistant Attorney General, said of
Pasternak, "The perception is there is some kind of quid pro quo involved." In the same Post article Ed Ferrigno, former
member of the North Woodside Montgomery Hills Civic Association, stated, "But it certainly appears that a political
contribution drove a decision to override sound public policy."

Is the same happening here in this cookie-cutter deal? Please don’t sell our county’s children short. Thank you. ■

Most sincerely,

Drew Powell
Former Mayoral Candidate Draws Boos at Peary Hearing
Powell rebuked for citing Yeshiva deal in testimony on proposed sale to Berman Hebrew Academy
By Sean Sedam, November 27, 2010
The most contentious moment of Tuesday's County Council hearing in Rockville on the proposed sale of the former Robert E. Peary High School came in
response to the testimony of Drew Powell.

Powell was a 2007 candidate for mayor of Rockville who served as executive director of the now-defunct political action committee Neighbors for a Better
Montgomery.

Powell called the proposed $1.9 million sale of the Peary property to its current tenant, the Melvin J. Berman Hebrew Academy, a "bad deal" for three groups:
Taxpayers who he said would see county land "given away." County schoolchildren who he said "may suffer in overcrowded classrooms." And citizens who he
said "yearn for fair and honest government."

In referencing "fair and honest government," Powell quoted a 2006 Washington Post article and drew cries of disapproval from audience members, the majority of
whom wore green stickers in support of the sale.

The article detailed county spending of nearly $10 million to cover renovations to two former county school buildings that housed programs run by the non-profit
Yeshiva of Greater Washington, whose board was at one time led by Jack Abramoff.

"Is this the same thing happening here in this cookie-cutter deal?" Powell asked.
Behnam Dayanim, first vice president of the academy's Board of Directors, diverged for a time from his planned testimony so that he could respond to Powell.

"There has been no implication of any wrongdoing in any of the aspects of the Berman Academy's relationships, conduct or of this transaction. …," he said. "To
tar our school and the hardworking members of Montgomery County, parents and citizens who support the Berman Academy, with wrongdoing by people who
have no relation to anything that we've been involved with here, is entirely unfair."

Councilman Roger Berliner (D-Dist. 1) of Potomac, in comments directed at Powell, said that he had "not seen any indication that the Berman Academy has acted
in a manner that is anything but of the highest ethical standard.

"If you have evidence to the contrary I urge you to bring it forward. If you do not, I suggest that linking these very disparate situations in the manner in which you
did does a disservice to this community and to yourself."

"I would like to respond," Powell said.

"There is no response," said County Council President Nancy M. Floreen (D-At large) of Garrett Park, who presided over the hearing.

County Councilman George L. Leventhal (D-At large) of Takoma Park said he could "understand why some elected officials and some community members
might confuse the Yeshiva Academy with the Hebrew Academy," though "they have nothing whatsoever to do with each other."

Leventhal (D-At large) of Takoma Park said that he circulated a memo to colleagues "that clarified that the two are not the same in any way and that it just isn't fair
or reasonable to conflate the two.

"So although it's understandable, because there are some surface similarities between the two situations, it's understandable that some might make that error, it is an
error. And so while I would ask for those in the audience who feel strongly in support of the Berman Academy to understand that it's an easy mistake to make, I
would ask those like Mr. Powell who make the error to understand that it's hurtful to those of my faith. It's hurtful."

"I agree with you Mr. Leventhal and Mr. Berliner," Powell said. "And I am not suggesting for a moment that there is any wrongdoing here and three minutes
unfortunately — I am not suggesting that. Three minutes doesn't give me the opportunity to state that I think the Melvin J. Berman Hebrew Academy is a fantastic
organization and I think it deserves to stay there under the terms of the lease. The only thing I object to is the purchase and all I'm saying is that there are
similarities."

"This is not your time, Mr. Powell," Floreen said, interrupting. "And I'm going to ask you to stop because this is not your time."

"There are similarities," Powell said.

"You've had your moment," Floreen said. "Thank you very much. And when you have failed to identify the information that justifies your comment, as
Councilmember Berliner has suggested, I suggest you offer this community an apology."

Many in the audience applauded.

The County Council's Management and Fiscal Policy and Education committees will discuss the proposed sale at 9:30 a.m. on Monday. The full council is
schedule to vote on the proposal at 1:50 p.m. on Tuesday. Both sessions will be held in the third floor Council Hearing Room of the Stella B. Werner Council
Office Building, at 100 Maryland Ave. in Rockville.

Link: http://rockville.patch.com/articles/former-mayoral-candidate-draws-boos-at-peary-hearing
PAC Digs Into Debate on Growth, With Teeth
Montgomery PAC Tracks Development
By Ann E. Marimow
Washington Post Staff Writer

Sunday, February 11, 2007; Page C01

Montgomery County Council member


George L. Leventhal came loaded like
a prosecutor to cross-examine two of
the leading players in a group that has
for the past year mocked him and
other elected officials as being
puppets for the development industry.

The targets of his interrogation at a


recent public meeting: a retired actor
from Bethesda and a
telecommunications consultant from
Rockville, who represent the evolution
of civic activism into a politically
charged operation with an edge.

Their all-volunteer political action


committee, Neighbors for a Better
Montgomery, campaigned vigorously At the Montgomery County executive's ball in December, newly elected
last fall for County Executive Isiah Executive Isiah Leggett (D) with Jessica Warnick and Isabel Delapyente. He ran
Leggett (D) and a new slow-growth on a slow-growth platform. (By James M. Thresher -- The Washington Post)
majority on the council that intends to
tighten controls on development. The group also helped frame the debate that the council is beginning
about how and where Montgomery should grow.

NeighborsPAC sought to dislodge Leventhal (D-At Large), who was first elected as part of a pro-growth
slate in 2002, but he survived.

Lingering tensions boiled over last month in a heated exchange between Leventhal and Drew Powell and
Jim Humphrey, two leaders of the group, which has created a database of developers' campaign donations
and says that such contributions can have undue influence on policy decisions.

From the dais of the council auditorium, Leventhal suggested that the group's aim is to shut down growth,
which he said is at odds with the wishes of most county residents. Leventhal quoted from Leggett's
inaugural address and accused the group of engaging in what the county executive said he hopes to end: a
"permanent political campaign and gotcha politics."

Powell shot back, saying that NeighborsPAC "reported fact." He challenged Leventhal to dispute the
group's findings, but Council President Marilyn Praisner (D-Eastern County) intervened to end the
exchange.

Page 1 of 3
To admirers, NeighborsPAC is a watchdog, fighting to ensure that the voices of residents -- not just those
of paid business interests -- are heard by government officials elected to represent them. Leggett and
others who have benefited from the group's backing credit the PAC's leaders with translating eye-glazing
policy decisions into tangible effects on taxpayers, the roads they drive and the schools their children
attend.

"They made it easier for the average citizen to understand," Leggett said. "That helped create the
atmosphere that I think led voters to make the decisions they made."

NeighborsPAC critics say its tactics are akin to those of national political parties and that it unfairly
accuses politicians of making decisions based on inflated assumptions in the PAC's database about what
counts as a development interest. Some critics have debated how much influence the group had in the
election.

Former council member Steven A. Silverman, who lost to Leggett in the Democratic primary, said that
NeighborsPAC members might have reflected the public mood, but "I don't think they created the mood."

The group of self-described eccentrics has its beginnings in 2002. Then-council member Blair Ewing
brought together community leaders to create a broad-based political action committee with campaign
activities to rival those of development and business interests.

Veteran groups such as the 80-year-old Montgomery County Civic Federation had long taken positions on
issues, but the civic movement was not in the business of endorsing candidates or partisan politics.

"There was a sense that the county was in danger of becoming a decision machine for developers," Ewing
said.

NeighborsPAC raised $63,000 that year, no match for then-County Executive Douglas M. Duncan (D),
who helped make traffic congestion -- not growth -- the defining issue of the 2002 campaign. Duncan,
along with real estate and development interests, poured hundreds of thousands of dollars into helping
elect an "End Gridlock" slate of five candidates.

After the PAC's dismal showing, which included Ewing's defeat, it regrouped, seeking to turn the business
community's fundraising advantage into a weakness. With volunteers digging into the interests of
individual donors, NeighborsPAC spread the word in public presentations and e-mails about the
percentages of contributions that council members collected from development-related interests.

An animated cartoon on the NeighborsPAC Web site portrays council members, including Leventhal, as
marionettes whose strings are being pulled by a fedora-wearing developer with wads of cash.

Two of the public faces in the PAC's newly aggressive front got their start in civic activism close to home.
Humphrey, a former actor with a penchant for Hawaiian shirts, is the group's technician, having learned to
translate legalese at his former day job at the National Institutes of Health. He was inspired to master
land-use policy after learning about a development decision affecting his neighborhood.

"That got my hackles up," said Humphrey, 56, who devotes 40 to 50 hours a week to NeighborsPAC and
the civic federation. "Developers have paid advocates; citizens don't have anybody."

Page 2 of 3
Powell, a sales consultant, is the burly, bearded public face of the group who turned data into quotable
rhetoric. He was motivated to join the cause when he found out by accident that his home was in the path
of a proposed Potomac River crossing. Later, he pulled his youngest son, a special needs student, out of
public schools after losing a battle with school officials.

"Citizens cannot allow themselves to be intimidated by the school system or the county government," said
Powell, 51, the PAC's executive director. "All these people work for us."

In talking about NeighborsPAC, Powell emphasizes that his group is not against development: "There's
nothing wrong with developers giving money. There is, however, something wrong with candidates
accepting more than half of their money from any one industry."

The NeighborsPAC message resonated with a new crop of candidates in the 2006 campaign. Leggett was
among those who received its endorsement after taking the group's voluntary pledge to limit donations
from development interests to no more than 33 percent of a candidate's total take.

Leggett said he was struck by the group's analysis of the council's decision in 2003 to rewrite the county's
growth policy. The changes effectively lifted a moratorium on home building in some of Montgomery's
most congested neighborhoods. The impact taxes that the council imposed on developers to build roads
and schools fell millions of dollars short of projections, in part because of a delay the council allowed
before instituting the higher fees.

NeighborsPAC had mixed results on Election Day. Marc Elrich and Duchy Trachtenberg, who ran
unsuccessfully in 2002 with the group's endorsement, won at-large seats in a crowded field. But so did
Nancy Floreen and Leventhal, both members of Duncan's 2002 slate.

And there were other factors: the absence of Duncan as a kingmaker, the influence of the teachers' union
and its "Apple Ballot" recommendations, and revelations by Clarksburg residents of a breakdown in the
county's oversight of development.

Regardless of whether the PAC was a determining factor in the election, few would dispute its emerging
role as a force in the county's debate over growth. The question is how elected officials whom the PAC
supported will vote in the months ahead.

To Leventhal, the council's unanimous decision this month to back off a proposed moratorium and vote
for a weaker measure was a defeat for NeighborsPAC.

To Powell, the measure's provision that would probably apply tougher growth controls to all plans filed
this year was a success -- and just the beginning of the broader debate he will be watching. "The jury is
certainly out," he said.

© 2007 The Washington Post Company

LINK: http://www.washingtonpost.com/wp-dyn/content/article/2007/02/10/AR2007021001280.html

Page 3 of 3
Developers a pivotal issue in Montgomery vote
By Jon Ward
THE WASHINGTON TIMES
September 14, 2006

Voter discontent with developers' influence on Montgomery County politics carried an underdog county
executive candidate to victory, political observers said yesterday.
"We're talking about a seismic change in Montgomery County," said Drew Powell, executive director of
Neighbors for a Better Montgomery, a watchdog group -- also known as Neighbors Pac, that had a significant
impact on this year's races.
Isiah "Ike" Leggett defeated well-financed opponent Steven A. Silverman, an at-large County Council
member, after results were delayed well into yesterday because of problems at polling places.
"I made the question of slowing down growth a pivotal issue," Mr. Leggett said. "My intent was to literally
slow it, not just manage what is growing already."
Mr. Leggett, 61, will run against Republican challenger Chuck Floyd, 56, a security consultant, and
independent Robin Ficker, 63, a lawyer, in the November general election.
Mr. Leggett would become the first black county executive in the county's history.
"It demonstrates that our community has matured beyond the race distinctions that far too many other
communities still suffer from," said Mr. Leggett, who in 1995 became the first black person elected to the
County Council.
Mr. Leggett also said that the 2005 building scandal in Clarksburg -- where residents discovered that the
county was allowing developers to run roughshod over zoning regulations -- added to anti-developer sentiment.
"It became the poster child for those feelings that people had about special interests and the influence of
developers," he said. "A case like this comes along [and] that sort of affirms the suspicions people had all
along."
Mr. Silverman, who did not return phone calls, raised $2.2 million for this race, an unprecedented amount for
a county executive run. Mr. Leggett raised $831,000, state campaign finance records show.
Neighbors Pac said that more than 70 percent of Mr. Silverman's money came from development interests,
while about 20 percent of Mr. Leggett's contributions were from developers.
The group criticized Mr. Silverman's development ties relentlessly, saying that many of his decisions as
chairman of the council's Housing Committee were too developer friendly.
Neighbors Pac also posted large amounts of information on its Web site and endorsed candidates who vowed
to take less than 33 percent of campaign contributions from developers. Mr. Leggett was among them.
"This is the first time I think [the Internet] was a big factor in Montgomery County elections," said council
member Phil Andrews, a Rockville Democrat who has refused money from developers since being elected in
2002. "It helped a lot in getting out information."
Council member Michael Knapp, Clarksburg Democrat, was one Silverman ally who easily defeated his
primary challenger, though Neighbors Pac has said Mr. Knapp took about 60 percent of his campaign cash from
development interests.
Mr. Knapp said county government will look very different under Mr. Leggett.
"Ike is a good person at bringing people together," he said. "I'm not clear yet as to the vision that he has."
Copyright 2006 The Washington Times LINK: http://www.washingtontimes.com/metro/20060913-110456-5596r.htm
Developers Help Silverman Dominate in Fundraising
By Miranda S. Spivack and Nancy Trejos Washington Post Staff Writers

Wednesday, August 23, 2006; Page A01

Development industry money is helping power Steven A. Silverman's bid for Montgomery County executive, allowing
him to open a wide fundraising advantage over Democratic primary opponent Isiah "Ike" Leggett, an analysis of campaign
finance records shows.

In a county where congestion and the pace of growth are near the top of voters' concerns, Silverman, a County Council
member since 1998, is seen as more pro-development by the industry. Silverman has many more large contributions than
Leggett, and most appear to come from developers, builders, land-use lawyers and related businesses.

Since he began raising funds three years ago, Silverman has received at least 95 contributions of $3,000 or more.

At least 86 of those large contributors were people or companies associated with the development industry, and they gave
at least $285,000, according to the review of campaign finance reports that were posted on a state Web site.

The total amount of money Silverman has collected from the industry is difficult to precisely determine because Maryland
campaign finance laws do not require donors to disclose their occupations. The at-large council member has received at
least 2,162 contributions, and The Washington Post reviewed the largest ones.

Leggett, who has been raising funds since early last year, has received at least 12 contributions of $3,000 or more, with at
least half coming from development interests.

Overall, Silverman has raised about $1.9 million, a record for a Montgomery executive race; Leggett has raised about
$770,000. The primary is Sept. 12.

The pace of development in Montgomery has emerged as a defining issue in a primary campaign in which the two leading
candidates are seen by voters as holding similar positions on many other issues. A recent Post poll showed that the
county's residents are more concerned about development than voters elsewhere in Maryland.

Leggett and Silverman both say they want to manage growth and congestion but offer different solutions. Leggett believes
slowing construction would unclog roads. Silverman argues that the county should build more roads and mass transit, not
fewer homes.

"Leggett has been seen as fairly pro-business and pro-growth throughout his career. But now he is positioning himself
towards slowing things down," said Montgomery County Chamber of Commerce President Richard Parsons, a longtime
Democratic operative. "Someone who says 'slow things down further' is not likely to get a lot of support from this
particular industry."

Leggett, who served on the County Council from 1986 to 2002, said yesterday that Silverman had compromised his
objectivity by accepting so many donations from the development industry.

"How can you bring people together . . . when half of the community will look at this and at least perceive there is no
objectivity?" Leggett said.

Silverman, who played an extensive role in crafting the county's land-use policies in the past four years and was a leading
member of the "End Gridlock" slate that County Executive Douglas M. Duncan (D) helped elect in 2002, said developer
donations do not influence him.
"The contributions that I get are from people who support my views about building roads and transit and affordable and
middle-class housing," Silverman said. "I will remain independent. I am happy to debate issues with Ike Leggett. There is
no reason for him to be questioning my integrity, since I don't question his."

Silverman and Leggett have differed sharply on the campaign trail on managing growth.

In 2003, the council loosened restrictions on development while increasing the fees developers pay for roads, schools and
other improvements. Silverman led that effort, which was sought by the development industry and backed by members of
the End Gridlock slate.

Leggett said that if he is elected, he would ask the council to return to the pre-2003 standard, which had halted
construction in several parts of the county. Leggett also has complained that the higher taxes failed to raise money to pay
for the new services needed for increased growth. And he has questioned Silverman's commitment to restricting
development in the county's 93,000-acre agricultural reserve, where housing is limited to one unit per 25 acres.

"I'm going to fight to protect it," Leggett said.

Silverman disputed Leggett's assertion that he wouldn't protect the reserve.

"He's clearly desperate in his attempt to paint me as something I'm not," Silverman said.

Some of Silverman's contributions from developers, builders and land-use lawyers have been made through multiple
corporate entities and by various members of families, allowing donors to avoid the $4,000 donation cap. The so-called
bundling of donations is legal in Maryland.

For example, Southern Management Corp., which has substantial holdings in downtown Silver Spring, gave at least
$26,000 to Silverman through 11 companies July 6, according to campaign finance and state incorporation records. At
least one piece of Silverman's campaign literature reminded donors last year that they could give through various entities.

In interviews and campaign literature, Silverman has accused Leggett of accepting large developer contributions in past
campaigns, citing a Washington Examiner article from last year that reported Leggett received 64 percent of his campaign
funds from developers when he was on the council from 1994 to 1998.

But Leggett -- who vowed to limit developer contributions in this campaign -- said yesterday that in his 16 years on the
council, he raised about $400,000 and that no more than 25 percent of it came from developers.

Most of Leggett's contributions have come in small amounts in this campaign. As of the most recent finance reports,
which were due Aug. 15, the average amount per donor for Leggett was $147.30, and the majority of the contributions
were from individuals -- not business entities -- who donated $25 to $35.

County Council member Nancy Floreen (D-At Large), who has endorsed Silverman, defended his fundraising.

"Politicians need money to run campaigns, so you have to ask people with money for money," said Floreen, who was part
of the End Gridlock slate. "It's no more complicated than that. Nobody likes to do it, but it has to be done."

Staff researchers Meg Smith and Derek Willis contributed to this report.

© 2006 The Washington Post Company

LINK: http://www.washingtonpost.com/wp-dyn/content/article/2006/08/22/AR2006082201287.html?sub=AR
Duncan to Return Abramoff-Tied Funds
$20,000 in Donations Came From Firms Linked to Lobbyist
By Cameron W. Barr
Washington Post Staff Writer
Friday, May 26, 2006; Page A01

Montgomery County Executive Douglas M. Duncan received $20,000 in political contributions from corporations he said
were "related to or affiliated with" former lobbyist Jack Abramoff, at a time when the county was considering leasing a
school to a Jewish organization Abramoff supported.

Duncan said in a statement last night that he was


unaware of the contributions he received seven years
ago and was returning the money.

Duncan, who is seeking the Maryland Democratic


nomination for governor, issued the statement three
hours after answering questions about the
contributions from The Washington Post. Most of
the contributions reached his campaign account in
July 1999, four weeks before Duncan authorized the
lease and potential sale of a shuttered county public
school to the Yeshiva of Greater Washington, a
private religious school that Abramoff served as a
board member in the late 1990s and early 2000s.

Yeshiva board President Jeffrey Lee Cohen said "Last year, I reviewed my campaign account to see if I had received any contributions
yesterday that Abramoff was not involved in from Mr. Abramoff and had none," Douglas M. Duncan says.
negotiations with the county over the leasing of the Photo Credit: By Andrea Bruce -- The Washington Post
school and never discussed contributing to Duncan. Related Article: Duncan to Return Abramoff-Tied Funds, page A01
Cohen, three business partners of Cohen's and two
of their businesses donated an additional $15,000 to Duncan in the same week that the Abramoff-related contributions
reached the campaign account.

Duncan said there had "absolutely not" been any relation between the lease of the school and campaign contributions. "I
feel very strongly that closed, abandoned schools are bad for neighborhoods. I wanted to get the schools reused."

Cohen said, "We're businessmen in the county, and we feel Duncan has been an excellent county executive for
Montgomery, and we support him." He and his partners and their businesses and family members have since contributed
an additional $50,000 to Duncan's political account, state campaign finance records show.

The Abramoff-related contributions came from five companies in the Northern Mariana Islands, a U.S. commonwealth in
the Pacific, and from a company in the nearby U.S. territory of Guam. All the contributions were for $4,000, the
maximum allowed under Maryland law to a single candidate in an election cycle. Donations from the five Saipan
companies were recorded in campaign records July 31, 1999; the Guam contribution was listed Dec. 16, 1999.

In the interview yesterday, Duncan said he had no recollection of receiving contributions from Saipan or Guam, which
came in the first year of his second term as county executive.

"Last year, I reviewed my campaign account to see if I had received any contributions from Mr. Abramoff and had none;
other types of contributions made many years ago, however, were not as readily apparent," his statement said. Abramoff,
a once-powerful Washington lobbyist, is at the center of a broad investigation into allegations of congressional corruption.
In the wake of the scandal, some officials on the state and local levels have voluntarily returned money they received from
Abramoff, even if it had no connection to the federal investigations. He is serving five to 10 months in federal prison for
his role in the fraudulent purchase of a fleet of casino cruise boats.

Evelyn Sablan, the owner of Toys 4 U, a defunct toy store in Saipan, said in a telephone interview that she was
reimbursed for her contribution to Duncan by an executive of Tan Holdings Corp. Records show that in 2000, Abramoff
billed Tan Holdings chief executive Willie Tan for $223,679 in lobbying expenses. And Tan's companies contributed
$650,000 to the U.S. Family Network, a conservative nonprofit organization largely funded by Abramoff clients. In the
1990s and early 2000s, Abramoff lobbied extensively for the Mariana government and other organizations in the Western
Pacific.

"I didn't give out any money from my own pocket, not even one penny," Sablan said. She said the executive who asked
her to send money to Duncan and who later reimbursed her is Jack Torres, who is identified in Tan Holdings Corp. news
releases as its personnel director. In a brief telephone interview this week, Torres said he didn't recall Duncan's name. "I
don't think I've ever been involved in organizing political contributions," he said.

A Maryland State Board of Elections official, Jared DeMarinis, said this week that a campaign contribution "has to come
from the person" making the donation to be legal.

John Pangelinan, owner of Bobbie's Amusement, another business that sent $4,000 to Duncan in July 1999, said he
couldn't recall who solicited his contribution. Pangelinan is publisher of the Saipan Tribune, a Tan Holdings subsidiary. "I
contributed, but I don't know why I contributed -- I don't even know" Duncan, he said.

The Bobbie's Amusement check bounced, a Duncan campaign spokeswoman said last night, declining to be named
because the matter predates Duncan's gubernatorial campaign.

The Saipan contributions occurred a month before Duncan signed a lease -- over community and school system opposition
-- that gave the Yeshiva of Greater Washington the option to buy Belt Junior High, an unused and largely dilapidated
building in Wheaton. Then-Superintendent Paul L. Vance said before the lease was approved that the school system
wanted to modernize and reopen the facility and keep it public. The County Council backed Duncan and authorized the
transaction.

A group of residents sued the county to block the transaction, arguing that "the result will be an unlawful permanent
transfer of public property to a private interest at a grossly inadequate price." The assessed value of the property in 1998
was $9.7 million; the sale price under the agreement was $1.75 million.

In 2001, Superintendent Jerry L. Weast reclaimed the school. School and county officials then found another unused
public school, in Silver Spring, for Yeshiva. Duncan had a bill introduced in the council to exempt the transaction from a
review mechanism instituted after the Belt transaction.

Yeshiva lost the option to purchase, but it obtained a lease that can stretch as long as 90 years for a rent of $40,000 a year.
The county also gave Yeshiva $9.8 million to cover the cost of improvements it had made to the Belt property.

Dennis Berman, a Yeshiva board member and Duncan contributor, said the transfer of the schools has been a "win-win"
for Yeshiva, its neighbors and the county. His donations to Duncan, as well as those by other Yeshiva backers, are
unrelated to the school deals, Berman said. "I'm still giving to him for a job that doesn't do me a lick of good," he added,
referring to Duncan's aspiration to be elected governor.

Staff researcher Bobbye Pratt contributed to this report.

CORRECTION TO THIS ARTICLE


A May 26 article misstated the prison term for former lobbyist Jack Abramoff. He is serving five years and 10 months, not five to 10 months, for his role in the
fraudulent purchase of a fleet of casino cruise boats.

© 2006 The Washington Post Company

LINK: http://www.washingtonpost.com/wp-dyn/content/article/2006/05/25/AR2006052502368.html
Duncan Campaign Aide Involved in School Deal
Assistant Accepted Abramoff Fundraising Help
By Cameron W. Barr and Ann E. Marimow
Washington Post Staff Writers
Saturday, May 27, 2006; Page A01

A longtime aide to Montgomery County Executive Douglas M. Duncan played a key role in the county's leasing of two
schools to the Yeshiva of Greater Washington at the same time he was working as a political adviser and fundraiser for
Duncan.

Jerry Pasternak, a special assistant to Duncan (D), knew lobbyist Jack Abramoff -- a Yeshiva board member in the late
1990s and early 2000s -- from the Orthodox Jewish community and accepted his offer to help raise money for Duncan in
1998, Duncan's gubernatorial campaign manager, Scott Arceneaux, said yesterday.

Pasternak's dual role raises the question of a potential conflict of interest. He is on leave from his county job while he
volunteers on Duncan's gubernatorial campaign.

On Thursday, after inquiries from The Washington Post, Duncan announced that he would return $20,000 in campaign
contributions from companies based in Saipan and Guam linked to Abramoff. The contributions, as well as $15,000 in
donations from other Yeshiva supporters, reached Duncan's executive campaign in the last week of July 1999, a month
before he signed a lease/purchase agreement with Yeshiva for a closed county school.

Some residents who opposed the lease deals reacted angrily to the news of the Abramoff connection and said they were
worried that the deal was inappropriately influenced. But at the time of Abramoff's offer to Pasternak, Arceneaux said,
"there was no reason to think that Jack Abramoff was anything other than a lobbyist who lived in Montgomery County."

Abramoff was sentenced in March to five years and 10 months in prison for his role in the fraudulent purchase of a fleet
of casino cruise boats.

Although the 2006 campaign acknowledged Abramoff's role in helping raise money for Duncan, officials insisted that the
county executive had no knowledge of the contributions from Saipan, an island in the U.S. commonwealth of the Northern
Mariana Islands, and the U.S. territory of Guam.

One of those contributors, Evelyn Sablan of Saipan, said she was reimbursed by a businessman for her $4,000 donation.
That businessman, Jack Torres, works for a company with links to Abramoff. Torres denied in an interview this week that
he had ever been involved with fundraising for politicians.

In 1999, over objections from the neighborhood and the school system, Duncan and the County Council decided to offer
Yeshiva a lease with an option to purchase Belt Junior High School in Wheaton. The superintendent reclaimed the school
in 2001, so officials offered to lease Montgomery Hills Junior High School in Silver Spring to Yeshiva.

County Council member Tom Perez (D-Silver Spring), who in 2003 opposed the lease of Montgomery Hills to Yeshiva,
said Pasternak "led the negotiations on behalf of the county."

Yeshiva board member Dennis Berman said this week that Pasternak also "was probably" the person who solicited him
for contributions to Duncan's campaign account.

Pasternak declined an interview yesterday, but the Duncan gubernatorial campaign released a response to a reporter's
question. "At no time during our discussions about Yeshiva, did I ask Mr. Berman for campaign contributions," Pasternak
said. He said that although he was "involved in the project," county attorneys handled the leases.

In an interview Thursday, Duncan said he does not support any overlap between county business and political fundraising.
"You should not be asking people for contributions if you're negotiating with them," he said.
Community activists said the timing of the contributions raises concerns that the money was intended to influence county
policy. "This is a very clear example of special interest money securing favors," said Duncan critic Drew Powell,
executive director of Neighbors for a Better Montgomery, a nonprofit group that tracks campaign contributions to local
officials.

Powell was incredulous that such large overseas contributions could have gone unnoticed among Duncan's donations, as
Duncan has asserted.

That Duncan was unaware of the fine print of his contributions is not unusual and says nothing about his strength as an
executive, Arceneaux said. "It's not uncommon for campaign folks to be working on this and handling the campaign side
without Duncan's input on a week-to-week basis," he said.

Perez said Pasternak's possible mixing of official and fundraising roles creates a perception problem. "The perception is
there is some kind of quid pro quo involved," he said.

But council member Michael L. Subin (D-At Large), who supported the school leases as chairman of the council's
education committee, said Duncan and Pasternak had kept a clear demarcation between their political and official
activities.

The $35,000 the campaign took in from Yeshiva supporters and the Abramoff-related companies in late July 1999
constituted a little more than a quarter of the $120,850 it collected that month. At the time, Duncan was six months into
his second term as county executive.

The $120,850 he raised that July was the most he had collected in a single month since at least the beginning of 1997,
according to campaign reports examined by The Post. That month's 71 itemized contributions were larger than normal;
during June 1999, for example, the Duncan campaign raised $42,675 from nearly the same number of contributions.

Isiah Leggett, a former County Council member and a Democratic candidate for county executive, said he takes Duncan
at his word that he was not aware of the donations and praised him for immediately pledging to return the money. But
Leggett said he would have noticed an overseas contribution.

"I would know -- at least I would see the address," he said.

Montgomery residents who opposed the lease deals said the disclosure of the campaign contributions yesterday provided
new insight into a situation they found puzzling at the time.

Ed Ferrigno, a member of the North Woodside Montgomery Hills Civic Association, was active in pressing for safeguards
requiring greater public and official review of school reuse that were instituted after the Belt transaction. When Duncan
and the council sought an exemption for Yeshiva soon after the safeguards were approved, he said, the group was "floored
that they would reverse like that."

Ferrigno, a federal lobbyist, said he has no problem with local members of the Yeshiva board making political
contributions.

"That's part of the system," he said. "But it certainly appears that a political contribution drove a decision to override
sound public policy."

Baltimore Mayor Martin O'Malley, who is also seeking the Democratic nomination for governor, appears to have received
no contributions from Abramoff-related entities, according to state campaign contribution records. Gov. Robert L. Ehrlich
Jr. (R) returned $16,000 in contributions from Abramoff in January.

Staff writers Matthew Mosk, John Wagner and staff researcher Derek Willis contributed to this report.

© 2006 The Washington Post Company

LINK: http://www.washingtonpost.com/wp-dyn/content/article/2006/05/26/AR2006052602088.html
Duncan Defends Stance On Yeshiva Lease Deal
Executive Says He Saw Prejudice in Plan's Critics
By Cameron W. Barr and Ann E. Marimow
Washington Post Staff Writers
Friday, June 9, 2006; Page B05

Montgomery County Executive Douglas M. Duncan (D) said in an interview this week that he advocated
leasing a former public school to the Yeshiva of Greater Washington to combat neighborhood blight and
because he would not tolerate "the objections of anti-Semitic neighbors."

Duncan offered the comments to dispel the perception that his support for the 1999 transaction, which the
school system also opposed, had any connection to $85,000 in campaign contributions he has received from
Yeshiva supporters in the past seven years. Of that money, $20,000 was linked to former lobbyist Jack
Abramoff, who served on Yeshiva's board, including one term as president, in the late 1990s and early this
decade.

The deal's leading opponents say they were motivated by a desire to keep the school in public hands, not by
anti-Semitism, and angrily dismissed Duncan's charge this week. Some of the opponents -- as well as a lawyer
who represented them, Norman Knopf -- are Jewish.

Duncan's comments came in a meeting Monday with Washington Post reporters and editors. The comments
echoed those he made in an interview last week with Washington Jewish Week.

"That is so much garbage," said Thomas Robinson, one of the community opponents, referring to Duncan's
charge.

Similar allegations were part of a County Council debate during consideration of the lease in the late 1990s.

After more than a year of negotiation and two council votes in support of the deal, Duncan signed a lease with
Yeshiva in August 1999 that included an option to buy the Col. Joseph A. Belt Junior High School in Wheaton.

A month earlier, Duncan had received $35,000 in campaign contributions from Yeshiva supporters, including
Abramoff. Duncan, who is seeking the Democratic nomination for governor, announced last month that he
would return $20,000 in contributions from Saipan and Guam linked to Abramoff. The lobbyist was sentenced
in March to nearly six years in prison in connection with the fraudulent purchase of a fleet of casino cruise
boats.

Duncan and Yeshiva's current board president, Jeffrey Lee Cohen, deny any connection between Duncan's
support for the lease and campaign contributions. Since 2000, Duncan has received an additional $50,000 in
political donations from Cohen and his partners and their businesses and family members.

In the interview, Duncan said that he backed the lease because he wanted to return a derelict public school to
"productive use" and that he supported several similar leases of former schools after first being elected county
executive in 1994.

The anti-Semitism he perceived among the deal's opponents was "an extra incentive to me" to push the leasing
of Belt to Yeshiva, a Jewish educational organization, Duncan added.
Duncan cited a meeting he held with a half-dozen neighborhood opponents during the period when the county
was deciding whether to lease the school.

During his 12 years as county executive, Duncan said, "I've only walked out of one meeting, and it was a
meeting with the Belt neighbors, because their comments were so outrageous. I said, 'I'm not going to listen to
this anymore.' "

He added that he felt the neighbors' anti-Semitism "was clearly part of their objection" to the school deal.

Jeremy Harris, a former resident of the neighborhood surrounding Belt and one of those who met with Duncan,
said this week that "there was nothing anti-Semitic" about the community opposition. "We obviously wanted
the school to be reopened" as a public school, Harris said.

In the Post interview, Duncan recalled seeing an anti-Semitic placard held by a protester at a 1999 ceremony at
the Charles E. Smith Jewish Day School in Rockville. Council member Michael L. Subin (D-At Large)
corroborates Duncan's recollection of what the placard said -- "We don't want your kind here" -- but said that
protest concerned the Charles E. Smith school, not the Belt transaction.

Council member Steven A. Silverman (D-At Large) received a letter in April 1999 from Robinson and Frank
Vrataric, the main leader of the movement to retain Belt as a public school. In the letter, Robinson and Vrataric
say they "would not want to be put into the position [of] wondering if your change in heart on Belt is related to
your ties to the Jewish community."

"I don't want to suggest the entire community opposition was driven by anti-Semitism," Silverman recalled this
week, adding that he was "shocked and appalled" by the letter.

Vrataric died in 2002, but his attorney David W. Brown said this week that he "never experienced any anti-
Semitism in dealing with Frank." Brown and his partner Knopf also represented Vrataric in challenging an
earlier plan to turn Belt into a private rental facility for senior citizens.

Robinson said he and other opponents of the lease to Yeshiva "never, ever played any religion card."

Knopf wrote in a 1999 letter to the council that "this resort to defamatory smear tactics is a clear indication the
proponents of the [deal] realize the weakness of their position on the merits." The county reclaimed the school
in 2001 so it could be reopened as a public school.

© 2006 The Washington Post Company

LINK: http://www.washingtonpost.com/wp-dyn/content/article/2006/06/08/AR2006060801648.html
Berman bid to buy site hits snag
Planning Board rejects proposal to sell property
Wednesday, Sept. 21, 2005 by Warren Parish, Staff Writer

The Melvin J. Berman Hebrew Academy’s bid to buy the Aspen Hill property on which it operates took a hit Thursday when the Planning
Board rejected recommending the sale to the County Council.

The academy, which rents the 19.5-acre property from the county for $60,000 per year, is seeking to exercise a clause in a long-term lease
agreement entered into in 1996 and buy the parcel for $1.5 million. Under the proposal, the county would have the option to repurchase
the property beginning in 2026.

But selling the public property would complicate any future attempt to repurchase it, Planning Board Chairman Derick P. Berlage said.

‘‘The Berman Academy is an excellent use for the facility,” he said. ‘‘The question put to us was, ‘Does it make sense for the county to
give up the property?’”

Planning staff recommended rejecting the deal, arguing that the 1994 Aspen Hill Master Plan calls for the land to remain in public
ownership. A staff report questioned the long-term reliability of county school system projections indicating the land is not needed for
public education purposes.

Regardless of whether the sale is approved, the academy must continue using the property as a school and allow the public access to its
recreational facilities.

The Montgomery County Civic Federation joined the debate last week by unanimously passing a resolution opposing the proposed sale of
the land, which formerly housed Robert E. Peary High School.

The Board of Education closed Peary High School in 1984. The school deteriorated and residents began complaining about criminal
activity and vandalism.

‘‘[W]e believe the terms of the proposed sale, as we understand them, are highly unfavorable to the taxpayers of Montgomery County,
and unnecessarily favorable to the Hebrew Academy,” states the resolution.

Federation member Arnold Gordon called the proposal a giveaway made possible by the academy’s ‘‘substantial political constituency in
the community.”

‘‘You do not dispose of a school property at a time when real estate values are booming and you don’t sell a $20 million property for 1.5
million bucks,” he added, estimating the current land value if it were subdivided.

Jerry Pasternak, special assistant to Montgomery County Executive Douglas M. Duncan (D), disagreed.

‘‘You can’t value the property as if it was going to be developed residential or office buildings,” Pasternak said. ‘‘It’s use is restricted to
school uses. When you limit the use like that, you eliminate the income-producing component of the land.”

Duncan supports a deed restriction limiting the property to its current use and allowing the county future repurchase rights.

Since the Melvin J. Berman Hebrew Academy occupied the property, it has spent more than $10 million renovating the 200,000-square-
foot building, academy spokeswoman Ilene France had said in a previous interview in March.

Some agree that the Berman Academy has been a good neighbor.

‘‘Instead of having an eyesore in the community, we have an asset,” said David Polinsky, president of the Aspen Hill Civic Association, a
local group that supports the purchase offer.

At the time the school entered into the lease agreement, ‘‘part of the incentive to the academy was that it would have the right to purchase
the property and, in return, the academy would invest a sizable amount of money” in repairs, said James Dattaro, an attorney representing
the school. ‘‘I think it’s somewhat unfair to look back and say the [$1.5 million purchase] price is low.”

The lease agreement allows the academy to purchase the site, if the County Council approves.

Making the academy pay more for improvements it already paid for is unreasonable, Pasternak said.

‘‘We’re following through on our commitment to the school, just as the school followed through on its commitment to the county and
community,” he said.

The County Council’s Management and Fiscal Policy Committee is scheduled to consider the issue on Oct. 17.

http://www.gazette.net/stories/092105/olnenew210629_31904.shtml
TECHNICAL MEMORANDUM
TO: Councilmember Marilyn Praisner
Chair, Management and Fiscal Policy Committee
Montgomery County Council

FROM: Jacob Sesker


ZHA, Inc.

RE: Old Peary H.S./MJBHA

DATE: November 6, 2006

INTRODUCTION

The Administration recommended that the County Council approve a pro-


posed deed, thereby conveying the old Peary High School property to the Berman
Hebrew Academy. The Administration recommended that the County Council
approve the sale, even though the sale and repurchase would be more expensive
than continuing the Lease until the earliest point at which the County could termi-
nate the Lease.

County Council requested an objective review of the assumptions and


methodology used in the Administration’s calculations. The Council essentially
wanted to know whether the Administration’s assumptions were reasonable and in
accordance with industry standards, and whether the Administration took into
account the value of the lease and the underlying property.

Based upon the information available, the answer to the above questions
would be “No.” The Lease document was not interpreted consistently throughout
the Analysis, nor was the interpretation in the Analysis consistent with a reasonable
reading of the terms of that document. The comparisons made in the Analysis were
not apples-to-apples comparisons, and therefore were inaccurate representations of
the relative quantitative merits of the Lease and Proposed Deed. The Analysis
failed to convey the qualitative merits of the Lease and the Proposed Deed, and
furthermore failed to take into account the “value” of maintaining ownership and
control over the property during the coming decades.
-2-

TECH MEMO—Ms. Praisner November 6, 2006

In a fair and equitable sale, the value of the land would accurately reflect its
current market value. If the County, recognizing the scarcity of large available
sites for new school construction, would like to be able to re-purchase the property
at some later date for use as a public school, then it would only be fair to discount
the sale price. However, it would not be reasonable for the County to discount the
sale price without adequately protecting its ability to repurchase the premises at
some later date. As explained in this memorandum, it appears that the proposed
deed offers the Academy a low price and offers little or no protection to the
County’s interests. As such, the information available would indicate that this is not
a good business deal for the County.

A review of the Lease, the Proposed Deed, and the analysis prepared by the
Administration (hereafter, Analysis), as well as other supporting materials illus-
trated the following:

• The Analysis was not an “apples-to-apples” comparison.


• The Analysis was not consistent with the often confusing language of the
Lease and the Proposed Deed.
• Given that the County’s interests here are more than just financial and given
that the timeframes contemplated are fairly lengthy, a private-sector analysis
of this proposed transaction would be more qualitative than quantitative in
nature.
• Under the Proposed Deed, it may not be possible for the County to repur-
chase the school for use as a public school at less than fair market value.
• The Analysis performed by the Administration did not clearly convey to the
Council that the proposed transaction was a sale of a rare asset probably well
below market value with no guarantee that said asset would be available for
repurchase should the County need to re-use it as a public school.
• A sale under the proposed terms does not represent the best deal available
to the County.

Finally, it must be noted that any analysis of the Lease and Proposed Deed
necessarily involves interpretation of legal documents. However, nothing herein
stated should be construed as legal advice. The County Council is ably represented
by legal counsel and as appropriate should seek their interpretations of the Lease
and Proposed Deed.

BACKGROUND ON THE LEASE

The Lease was executed on April 15, 1996. The Lease provided for a two-
year renovation period following execution. The renovation period was not to be
-3-

TECH MEMO—Ms. Praisner November 6, 2006

counted as part of the 25-year term of the Lease. Therefore, the term of the lease
would expire on April 15, 2023.1

Assumptions Timeline
1998 to 2023: The 25-Year Lease Term
The Lease may only be terminated prior to 4/15/2023 for violation
constituting default under Article XVI.
Five-years notice may be given of intent to terminate the lease if the
premises are needed for use as a public school, so long as that
termination is effective after 4/15/2023.
2023 to 2038: Three Five-Year Extensions
MJBHA can exercise each five-year extension by providing 12-months
notice.
During this time, Lease may be terminated either (1) for violation
constituting default under Article XVI, or (2) with five-years notice if
the premises are needed for a public school.
After termination, County might be able to use for any purpose,
though such use may be subject to claims of bad faith, breach of
contract, etc.
2038: Expiration Of Lease & Extensions
Lease expires, County may use property for any use.

f: 60020/Peary Memo Numbers.xls/Timeline

The Lease also sets forth the conditions upon which the Academy may pur-
chase the Premises from the County during the term of the Lease and any applica-
ble extensions. The Lease also establishes a methodology for setting a baseline
price and adjusting that baseline for inflation.

IDENTIFICATION OF POTENTIAL OUTCOMES

In analyzing these transactions, three potential outcomes merit evaluation:

1
The lease is to end April 15, 2023, which is the day after the end of “Lease Year 2022.”
The calculations prepared by the Administration for the Council assumed that the lease
could not be terminated until 2028. This requires the conclusion that the 25-year lease is
actually a 30-year lease. Furthermore, that interpretation is not consistent with the
response memo (dated September 20, 2006), in which John Fisher, Associate County
Attorney, stated: “The County may terminate the lease upon five-years notice to the lessee,
but the termination would not become effective until after the initial 25-year lease term
expires.”
-4-

TECH MEMO—Ms. Praisner November 6, 2006

1) Sale/Buyback: The County sells the property to the Academy, buying it


back at the earliest possible date under the Proposed Deed (March 1,
2031).

2) Lease Termination: Council rejects this and other proposed sales, contin-
ues the Lease, and then terminates the Lease at the earliest possible date
(April 15, 2023).

3) Lease Continuation: Council rejects this and other proposed sales, contin-
ues the Lease, and allows the Lease and all extensions to expire (not later
than April 15, 2038).

A more detailed explanation of each of those outcomes, as well as the rele-


vant language in the Lease, Proposed Deed, and supporting documentation is pro-
vided below.

OUTCOME #1: SALE/BUYBACK

The Academy’s non-assignable right to purchase the property from the


County is established in Article III of the Lease. Under Article III, the Academy
may purchase the property at any time during the original 25-year term and any
subsequent extension. That purchase would be subject to the approval of the
Council and the Executive and subject to “any restrictions, conditions or require-
ments which the County Executive and the County Council may elect to attach to
such a purchase.”

According to the Lease, the parties expected that the price would reflect the
value of the land at the time the Lease was executed, and would not include any
value for the improvements. The method in the Lease for establishing the purchase
price reflects that expectation; the purchase price is to be established by appraisals
of the land performed shortly after execution of the Lease as adjusted periodically
for inflation.2

Under the proposed “Deed and Reservation of Rights to Re-purchase,” cer-


tain restrictions will apply to the Academy’s use of the property after the purchase.

2
Adjustment for inflation may, over the long term, prove to be fair to all parties. Over the
short term, that method produces results that can be disproportionately beneficial to one
party. Such a method of adjustment fails to take into account various relevant economic
trends. For example, since the execution of this Lease land values have risen much more
quickly than overall inflation. Additionally, the portion of property values that is attributable
to the value of the underlying land is increasing. In light of such trends, adjusting the
baseline price for inflation is likely to significantly understate the value of the land.
-5-

TECH MEMO—Ms. Praisner November 6, 2006

• The Academy must continue to permit Community Use of the facilities, as set
forth in the deed.
• The Academy may not materially alter the dimensions or character of the
athletic fields without prior written approval.
• Beginning on March 1, 2026, the County shall have the right to send written
notice to the Academy of the County’s intention to repurchase the property
for use as a public school not earlier than five years after the date that such
notice is sent. This right by the County will continue for 99 years. The repur-
chase price would be the fair market value of the property if used as a pri-
vate school.

Furthermore, the deed purports to restrict the use of the property to use as a
private educational facility, and “incidental uses related and accessory to use for
private educational purposes.”3 However, this restriction on use is less than iron-
clad—in fact the restriction on use may be largely illusory.

Should the Academy wish to change the use of the property, all that the
Academy must do is first offer to sell the property to the County for the fair market
value of the property at that time. If the County were to decide not to repurchase
the property for fair market value, then the Academy would be released from the
covenant and would be free to proceed with the change in use.4

OUTCOME #2: “TERMINATION” OF LEASE

The earliest possible date that termination can occur (absent conduct consti-
tuting default) is April 15, 2023. The County may elect to terminate the Lease by
providing the Academy five-years advance written notice—thus in order to termi-
nate the Lease at the earliest possible date, written notice must be provided by
April 15, 2018 (see Article II, §2). This right of termination is subject to a signifi-
cant limitation—it may only be exercised “in the event the leased premises are
needed by the County for public education purposes.”

Financial obligations will arise under Article VIII of the Lease should the
County elect to terminate. Under Article VIII, §4 et seq., the County must reim-
burse the Academy for a portion of approved Non-Elective and Qualified Elective
capital improvements completed by the Academy. Upon termination, reimburse-
ment for capital improvements is to be pro-rated for the remaining useful life of the
improvements. The cost of reimbursement under Article VIII is likely to be signifi-
cant; however, reimbursement will be less expensive than building a new school.

3
See paragraph “B” of the “Deed and Reservation of Rights to Repurchase.”
4
To illustrate, this could lead to the following absurd result: the County sells the property
today to the Academy for $1.6 million, the Academy offers it back tomorrow for $16 million
(hypothetical FMV), the County rejects the offer, the Academy is released from the
covenants in the deed and sells the property to a residential developer.
-6-

TECH MEMO—Ms. Praisner November 6, 2006

County staff has indicated that there are no other restrictions on the use of
this property, so presumably the County would be able to use the property for any
politically feasible purpose.5 However, the Lease indicates that the requirement for
this type of termination is that the facilities are needed for use as a public school.
Whether termination under this section would operate as a de facto limitation on
the County’s use of the property, and for how long, are legal questions.

OUTCOME #3: CONTINUATION OF LEASE

The Lease automatically expires at the end of the 25-year term and any
extension, without notice or demand from the County (see Article II, §2). The latest
date upon which the Lease would expire is April 15, 2038. Expiration is thereafter
governed by Article XVII of the Lease.

Upon expiration the County has no obligation to reimburse the Academy for
Non-Elective and Qualified Elective capital improvements—those obligations only
arise if the County terminates the lease prior to the expiration of the Lease and any
exercised extensions. All buildings, alterations, additions or improvements on the
premises then become property of the County (see Article XVII). It seems that the
County could then use the Premises for any use whatsoever.

EVALUATION OF POTENTIAL OUTCOMES

Each of the three outcomes described above can be evaluated on the basis of
various criteria. The following are among the criteria that might be used in an
analysis of these potential outcomes:

• Time: What is the earliest possible date the facility is available for re-use as
a public school?
• Financial Benefit: What revenue accrues to the County?
• Financial Cost: What is the cost to the County?
• Opportunity Cost: What opportunities are missed and at what cost?

The extent to which those or any other evaluation criteria should be consid-
ered depends upon the policy objective. If the County Council’s objective is to have
the flexibility to use the Premises for a public school when such a need arises in the
coming decades, then the calculation and weighting of the evaluation criteria must
reflect that objective.

5
Re-use by the County for a purpose other than public education may give rise to causes of
action for bad faith or claims on the contract—County Council might seek legal clarification
of the effect of any possible restrictions on the re-use of the property.
-7-

TECH MEMO—Ms. Praisner November 6, 2006

OUTCOME #1: SALE/BUYBACK

Under the sale/buyback scenario, it is unlikely that the County would be able
to use the property as a public school prior to March 1, 2031. Furthermore, it is
quite possible that the school will never be available for the County’s re-use as a
public educational facility.6

A current sale would result in a current influx of capital. Using the methodol-
ogy established in the Lease, the 2007 sale price would be between $1.6 million
and $1.7 million. Based upon the language of the Lease, it appears that the County
could ask for a higher price than that obtained through the methodology set forth in
the Lease.

Sale Price Under Lease


CPI for All Urban Appraisal
Date
Consumers (Adjusted)
Dec-97 161.3 $1,335,000
Dec-05 196.8 $1,628,816

f:/60020/Peary Memo Numbers.xls/Sale Price Under Lease

The price in the table above assumes that the baseline price was established
in December of 1997, and that the sale is consummated in 2006. Should the sale
occur in 2007, that price would be slightly higher.

The proposed deed, which is dated in 2005, cites a sale price of exactly
$1,500,000. The Administration’s Analysis (from 2006) cites a figure of
$1,650,000.7 It is not clear why the methodology established in the Lease was not
followed in either instance.8 In any event, it is worth noting a few things regarding
the method established in the Lease and the sale price that the method produced:

6
See Paragraph B of Proposed Deed. The proposed deed does not truly restrict the use of
the property. The Academy could, at any point in time, force the County to decide between
(a) paying the Academy fair market value for the property and (b) allowing the Academy to
use the property for other purposes and/or sell the property to a developer who would
develop other uses on the property.
7
The only explanatory reference to the $1.65 million number is a footnote in the figures
that the Executive staff provided to the Council, which reads in its entirety: “This is the
actual amount, as per the agreement between the County and Berman Hebrew Academy.”
8
A reasonable reading of the Lease indicates that the County may ask for a price that is a
higher price than that established under the methodology set forth in the Lease. Whether
the County could accept a price that is lower than the price established under the
methodology set forth in the Lease is a legal question. In any event, the $1.5 million figure
may have been below the value that would have been established using the methodology
-8-

TECH MEMO—Ms. Praisner November 6, 2006

• Since 1997, land values have increased much faster than inflation.
• The portion of property value attributable to the land itself has increased
rapidly in recent years.
• The proposed sale price is low for 19.5 acres of residential land in
Montgomery County.
• This price is well below the current replacement cost, i.e., Montgomery
County could not buy the land, parking and athletic fields for this amount of
money.

Once the Academy has purchased the Premises, it gains control over the
County’s cost of repurchasing the Premises for use as a school. The cost to the
County of repurchasing the Premises for use as a school will be either (1) fair
market value of the property (all land and improvements) at a time chosen by the
Academy, or (2) fair market value of the property used as a private school (all land
and improvements) not earlier than March 1, 2031.

In the first case, the “sky is the limit.” In the second case, the value would
be limited by its use as a school. The value for use as a school will include the
value of the land and the value of the improvements.

The Analysis cites a present value cost of repurchasing the property in 2032
of nearly $3.8 million. However, the earliest possible date that the property would
be available for repurchase under the proposed deed is March 1, 2031. Applying
the methodology used in the Executive’s Analysis correctly, one arrives at a present
value cost of approximately $4.8 million, which is significantly higher than the $3.8
million figure cited by the Administration, and yet still probably quite low.9

established in the Lease, whereas the $1.65 million appears to be slightly above the price
established under the Lease.
9
This figure ($4.8 million) assumes a 5 percent discount rate, a 2007 value of $8.6 million,
and an inflation rate of 2.5 percent. The Administration used a 2 percent inflation rate
when calculating this figure, but used a 2.5 percent inflation rate when escalating the rent.
This was changed to allow for an “apples-to-apples” comparison. The Administration
established a repurchase price for 2032, even though the Proposed Deed establishes a right
to repurchase in 2031. Furthermore, the Administration depreciated the 2032 repurchase
price as though it were occurring in 2034.
-9-

TECH MEMO—Ms. Praisner November 6, 2006

Estimated Appraised Value of Land & Improvements Using


Framework of Executive's Methodology
Value as Present Value PV as School
Lease Year
School ($) Factor ($)
2007 8,600,000 1.00 8,600,000
2008 8,815,000 0.95 8,395,238
2009 9,035,375 0.91 8,195,351
2010 9,261,259 0.86 8,000,224
2011 9,492,791 0.82 7,809,743
2012 9,730,111 0.78 7,623,796
2013 9,973,363 0.75 7,442,277
2014 10,222,697 0.71 7,265,080
2015 10,478,265 0.68 7,092,102
2016 10,740,222 0.64 6,923,243
2017 11,008,727 0.61 6,758,403
2018 11,283,945 0.58 6,597,489
2019 11,566,044 0.56 6,440,406
2020 11,855,195 0.53 6,287,063
2021 12,151,575 0.51 6,137,371
2022 12,455,364 0.48 5,991,243
2023 12,766,748 0.46 5,848,595
2024 13,085,917 0.44 5,709,342
2025 13,413,065 0.42 5,573,406
2026 13,748,392 0.40 5,440,705
2027 14,092,101 0.38 5,311,165
2028 14,444,404 0.36 5,184,708
2029 14,805,514 0.34 5,061,263
2030 15,175,652 0.33 4,940,757
2031 15,555,043 0.31 4,823,120
f:60020/Peary Memo Numbers.xls/Repurchase Values_2.5%

The Administration’s methodology does not accurately reflect the true cost of
the Premises. By using the estimated cost of replacement for systems and adding
the estimated appraised value of the land in 2031 one would arrive at a figure in
the $6.6-million to $7.9-million range. That range is more accurate, but still very
conservative. Given the possibility that land values might be considerably higher at
that time, it is possible that those numbers could be low by an order of magnitude.

A problem with establishing value in 2031 based upon the market value (as
established by appraisals) of the Premises in 1997 is that housing appraisals have
increased at a rate many times the rate of inflation in recent years.10 In fact, a
2006 study by the Federal Reserve opined that even if land appreciation returns to
the slower pace seen before the recent housing boom, prices might rise more

10
e.g., see Washington Post, January 5, 2006: “Housing Appraisals in Md. Rise 67%.”
-10-

TECH MEMO—Ms. Praisner November 6, 2006

quickly on average than they did before the boom.11 Thus, the rate-of-inflation
assumption may yield results that are less and less accurate as time progresses.

Beyond cost, additional factors must be considered in weighing the


sale/buyback:

• The County may forever lose the ability to use the property as a public
school.
• There are few other sites in the County appropriate for a new public school.
• The County may be forced to allow the Premises to be used for something
other than a private school.
• The County may lose the opportunity to participate in the redevelopment of
this site, or to see to it that that redevelopment of the site achieves other
public purposes (e.g., affordable housing).
• If the Academy purchases the property at this low price, is released from the
covenant and promptly sells the property for a significant profit, there will
likely be a public perception that the County gave away a substantial
resource and opportunity.

OUTCOME #2: LEASE TERMINATION

The Lease may not be terminated (other than for default) prior to April 15,
2023. The Lease may only be terminated with five-years written notice, and only in
the event that the Premises are needed for use as a public school. Among the
three potential outcomes, this is the earliest date on which the County could use
the site for public education.

The net present value of rents received from April 15, 2007 until April 15,
2023 would be approximately $912,175.12

11
See The Wall Street Journal Online, June 22, 2006: “Land Prices Increasingly Drive
Housing Markets, Fed Study Says.”
12
Assuming 2.5 percent inflation and assuming that current rent payments are as
represented in the Administration’s Analysis. This figure is different from the
Administration’s figure. In the Administration’s Analysis, the rent seems to have included
the years 1998 to 2006 and 2023 to 2027, and seems to have been calculated in 1998
dollars.
-11-

TECH MEMO—Ms. Praisner November 6, 2006

Lease Income Through April 15, 2023


PV of PV of
Annual Rent
Lease Year PV Factor Annual Rent Cumulative
($)
($) Rent ($)
2007 67884 1 67884 67884
2008 69582 0.95 66269 134153
2009 71322 0.91 64691 198843
2010 73105 0.86 63150 261994
2011 74932 0.82 61647 323641
2012 76806 0.78 60179 383820
2013 78726 0.75 58746 442566
2014 80694 0.71 57348 499914
2015 82711 0.68 55982 555896
2016 84779 0.64 54649 610545
2017 86898 0.61 53348 663893
2018 89071 0.58 52078 715971
2019 91298 0.56 50838 766809
2020 93580 0.53 49628 816436
2021 95920 0.51 48446 864882
2022 98318 0.48 47292 912175
f:/60020/Peary Memo Numbers.xls/Lease Income table

Under this Lease, the established rents are very low. For example, assuming
that the facility is 210,000 square feet, the 2007 rent is approximately 32.3¢ per
square foot. As such, even when aggregated over 16 years, the total rent received
is nominal.13

In contrast to the relatively small rent payments, termination of the Lease


triggers significant financial obligations on the part of the County. If the County
terminates the Lease, the County must repay the Academy for the amortized value
of systems replacement.

However, the cost of reimbursement is essentially the cost of the school, and
that cost will be less than the cost of buying land and building a new school. Thus,
if the County is terminating the Lease in order to use the Premises for a public
school, then the County is just buying the improvements (the County already owns
the land) that it needs in order to operate the school.

In order for any capital improvement made by the Academy to be eligible for
repayment by the County, that improvement must have qualified under the terms
set forth in the Lease and the Academy must have obtained prior approval from the
County. As such, it was assumed that all improvements took place in 2017, which

13
That fact reflects the condition of the school at the time that the Academy entered into
the Lease, and presumably also reflects the County’s stated desire to re-use the facility as a
school in the future.
-12-

TECH MEMO—Ms. Praisner November 6, 2006

will be nearly the end of the useful life of all improvements made in the Renovation
Period, and more than five years before the end of the Lease.14 The present value
cost of repayment for systems replacement is approximately $6 million.15

Reimbursement for Systems Replacement At 2.5%


Repayment PV of
Total
Years Until for Present value amortized
Lease Year Replacement
Termination Replacement factor repayment
Cost ($)
($) ($)
2007 15 10,195,761 2,548,940 1.00 2,548,940
2008 14 10,450,655 3,135,197 0.95 2,843,716
2009 13 10,711,921 3,749,172 0.91 3,238,676
2010 12 10,979,719 4,391,888 0.86 3,613,217
2011 11 11,254,212 5,064,396 0.82 3,968,086
2012 10 11,535,568 5,767,784 0.78 4,519,210
2013 9 11,823,957 6,503,176 0.75 4,852,770
2014 8 12,119,556 7,271,734 0.71 5,167,885
2015 7 12,422,545 8,074,654 0.68 5,465,244
2016 6 12,733,108 8,913,176 0.64 5,745,513
2017 5 13,051,436 9,788,577 0.61 6,009,337
2018 4 13,377,722 10,702,178 0.58 6,257,342
2019 3 13,712,165 11,655,340 0.56 6,490,130
2020 2 14,054,969 12,649,472 0.53 6,708,285
2021 1 14,406,343 13,686,026 0.51 6,912,373
2022 0 14,766,502 14,766,502 0.48 7,102,940
f:/60020/Peary Memo Numbers.xls/repay for replace

Termination of the Lease may only occur if the Premises are needed for a
public school. Realistically, the need would have to be acute in order for this option
to be politically palatable. Though it is possible that other land uses will seem more
attractive than educational uses in 2023, political and legal considerations may pre-
clude any use other than education for some time following the termination of the
Lease.

OUTCOME #3: LEASE CONTINUATION

Of course, the County may choose to reject this and all other attempts by the
Academy to exercise the option to purchase the property. Assuming that the
Academy would exercise all three of the five-year options under the Lease the
latest date that the County could use the property as a school would be April 15,

14
This method is different from the unnecessarily complicated method used in the Analysis.
15
This figure assumes that the very high estimated replacement costs are accurate. The
Analysis by the Administration assumes that the current cost of replacement would be
nearly $47 per square foot (in contrast to the 32 cents per square foot that the Academy
pays in rent), and that those costs inflate at 5.69 percent for five years, and thereafter
inflated at 3 percent. For purposes of this table, a 2.5 percent inflation rate was assumed,
rather than the higher rates assumed by the Executive.
-13-

TECH MEMO—Ms. Praisner November 6, 2006

2038.16 It should be noted that under this scenario, the County could use the prop-
erty for anything, e.g., affordable housing or the development of a town center.

Assuming that inflation adjustments occur at an annual rate of 2.5 percent,


the net present value of the cumulative rent received until April 15, 2038 would be
approximately $1,500,355.

The income received must be weighed against any financial costs directly
related to the expiration of the Lease. There is no financial cost to the County asso-
ciated with allowing the Lease and all extensions to expire, i.e., the County has no
obligation under the Lease to reimburse the Academy for improvements.17 The
County would have the property “free and clear.”

Lease continuation would allow the County to maintain a civic use on the
Premises until the existing Lease and all extensions expire, while also preserving
the County’s ownership of this land until a time when it can be developed to its
highest and best use and put back on the County’s tax roll. On the other hand,
Lease continuation would not allow the County to use the facility to meet a need for
a public school facility, unless and until the Academy chose to end its tenancy.
Thus, it is possible that the County would be unable to meet the need for a new
school in 2026.

CONCLUSION

To engage in a point-by-point evaluation of the methods and assumptions


included in the Administration’s Analysis would be to miss the larger issues relevant
to the Council with respect to this proposed sale.

The Proposed Deed raises questions as to whether that price (less than
$85,000 per acre) is a reasonable price in today’s economy and whether the terms
of the Proposed Deed accurately reflect the County’s desire to re-use the Premises
for a public school if a need for a public school arises. If the County would like to
have the flexibility to re-use the property as a public school in the future, this Pro-
posed Deed does not provide that protection. If the price in the Proposed Deed is
this low in consideration of the purported use restriction and the potential for later
re-use by the County, perhaps the price should be adjusted upward.

16
It is possible that the Academy would choose not to exercise their options, making the
property available in April of 2023, 2028 or 2033. The 2038 date is the latest date on
which the Lease will expire, though the County cannot assume that it will expire prior to
that point, because the expiration is entirely dependent upon the actions of the Academy.
17
It is, of course, possible that the County might agree to share costs of replacement with
the Academy during the later years of the Lease, in order to encourage the Academy to
continue to operate the school in a condition of good repair through April 15, 2038.
-14-

TECH MEMO—Ms. Praisner November 6, 2006

Second, the transaction that has been proposed is to sell 19.5 acres with a
school and athletic fields in a County that is growing rapidly and which has experi-
enced skyrocketing land values in recent years. The cost of replacing that much
land at some unknown point in the future is likely to be very high and replacement
of the land may be impossible after two more decades of growth.

In short, no matter how much weight is given to the financial aspects of


these possible transactions, the differences between them can be summed up in
entirely qualitative terms.

In the Sale/Buyback scenario:

• The County will be selling the land for well below its value.
• The County may forever lose the opportunity to repurchase the
Premises for use as a school.
• The County may be given the opportunity to buy the land and
improvements back from the Academy at Fair Market Value at a time
not of the County’s choosing.
• The County may be able to buy the land and improvements at fair
market value as a school in 2031.
• There is a great deal of uncertainty as to both the price and timing of
any future repurchase by the County.

In the Lease Termination scenario:

• The County will be spending a significant amount of money to


terminate the Lease, but will be buying a school for much less than
the cost of a new school.
• The County will be able to buy a school without having to buy the
land on the open market at an uncertain price.
• The County will retain control over a large, contiguous parcel of
land.
• The timing of the Lease termination is more certain and/or within
the control of the County.

In the Lease Continuation scenario:

• Even if the County does reimburse the Academy for improvements,


the County will still be buying a school for less than the cost of a
new school.
• The County will be able to buy a school without having to buy the
land on the open market at an uncertain price.
-15-

TECH MEMO—Ms. Praisner November 6, 2006

• The County will retain control over a large, contiguous parcel of


land, and will be able to re-develop that parcel in the future in a
way that achieves multiple County objectives.

A sale of the school would be fair if the land value used to determine the sale
price accurately reflected its current value, and if the sale price reflected the value
to the County of maintaining control over the property. If the deed actually pro-
vided the County with adequate protection of its interests, it might be fair for the
County to discount the sale price to reflect any restrictions on use or alienation.
However, here the sale price has been discounted and adequate protection of the
County’s interests has not been written into the proposed deed. The County is
being asked to sell this property below its market value, and may need to buy it
back at market value at some undetermined point in the future.

Given these qualitative concerns, the sale and repurchase option does not
compare favorably to other alternatives under the Lease. Unless more favorable
terms are offered, the County’s various objectives will more likely be met by main-
taining ownership and control over the site.

F:\60020- Mont Co - Old Peary School\MEMO-Peary-Final.doc


Yeshiva Facility Deals Costly for Montgomery
County Has Spent Millions in Public Money to Help Fund the Nonprofit's Renovations of Two Schools

By Cameron W. Barr
Washington Post Staff Writer
Sunday, August 13, 2006; C01

In 1999, Montgomery County leased a shuttered public school to the Yeshiva of Greater Washington, a deal
both sides considered a bargain. The nonprofit group got a derelict building and 20 acres in Wheaton for $1.75
million, with the understanding that it pay the millions more needed to renovate it. The county unloaded a
neighborhood eyesore.

Seven years later, the deal has turned out to be costly for taxpayers and a boon for Yeshiva.

The county school system took back the building to ease


overcrowding, had to compensate Yeshiva for renovations it
had made and spent $12.4 million on further improvements
needed to reopen the facility as a public school. The county
then leased a second former public school to Yeshiva, where it
now operates a private girls academy.

Yeshiva's compensation was a $9.9 million construction


contract with the school system that provided nearly enough
public money to cover the cost of the organization's
renovations at both schools, according to a Yeshiva financial
document reviewed by The Washington Post.
The Montgomery County school system leased the former Belt
Junior High School in Wheaton, left, to the Yeshiva of Greater
A top aide to County Executive Douglas M. Duncan (D) was Washington in 1999 but later reclaimed it. In 2005, after making
renovations, the county reopened it as the Loiederman school. To
involved at every stage of the complex series of transactions. compensate Yeshiva, the county provided it a contract and a lease,
The aide, Jerry Pasternak, mixed policy and political roles, which was signed in June, for the former Montgomery Hills school
in Silver Spring. (Robert A. Reeder - Twp)
helping to negotiate the leases and the construction contract
with Yeshiva, in addition to raising some of the $92,000 that Yeshiva supporters have contributed to Duncan's
political account since 1998. Pasternak declined to be interviewed for this article.

Jeffrey Lee Cohen, president of Yeshiva's board of directors, said in written responses to questions that county
schools Superintendent Jerry D. Weast initiated the move from the first school to the second, not Yeshiva. The
construction contract "was executed and performed in good faith by both parties," Cohen said.

In interviews in late May this year, Cohen and fellow Yeshiva board member Dennis Berman said there was no
connection between Duncan's support for the leases and campaign contributions to him from the organization's
supporters. "It certainly never was a quid pro quo," Berman said.

Duncan spokesman David Weaver said that the county executive had addressed questions for this article in
earlier interviews. Weaver noted that Duncan did not act alone; the school leases and the construction contract
were approved or funded by the County Council.

Page 1 of 5
"I've spent 25 years working hard to do things for people," Duncan said in an interview in June. "Do people
give contributions? Yes. Is there a pay for play? No. Is any decision I make based on campaign contributions?
No. I always put policy before politics."

After being elected county executive in 1994, Duncan implemented a policy of leasing or selling unused public
schools as a way to return neighborhood eyesores to productive use, he added. "We had people living in [one
former public school]. We had syringes in the courtyard, we had mattresses in the courtyard, we had condoms
in the courtyard. That's not good for a neighborhood."

Duncan is completing his third term as county executive. On June 22, he abruptly halted his campaign for
governor of Maryland, citing a diagnosis of clinical depression.

Montgomery school system officials said they entered into the construction contract so that Yeshiva would
relinquish the first school, which Duncan had leased over school system objections. "We had to fulfill a lease
which we did not write, which we were not a party to," school system spokesman Brian Edwards said. He said
Weast was not available to discuss the issue.

The contract allowed Yeshiva to bill the full $9.9 million regardless of the renovation costs and to use the
leftover taxpayer money as it wished. The school system awarded the contract without competitive bidding and
waived rights to inspect the project.

"Our clear intent was to reimburse [Yeshiva] for what they had done" at the first school, said Richard Hawes,
the school system's director of facilities management. "If they made money off of it, that's the American way,"
he said.

The financial records reviewed by The Post indicate that in 2004, Cohen wrote checks for $200,000 to two
educational organizations in Israel from an account used for renovation work funded by the construction
contract. The records also show that Cohen wrote a $220,000 check on the same account to Brit Limited
Partnership, a firm he partially owns that has contributed $12,000 to Duncan.

Cohen declined to answer questions about these checks.

Two Deals for Yeshiva

In the mid-1990s, Yeshiva was searching for a new home for its girls school. The organization had vacated a
six-acre campus in the Four Corners area of Silver Spring and was temporarily housing the girls school at a
synagogue.

On Oct. 29, 1998, Pasternak wrote to the County Council in support of a Duncan initiative to lease the former
Col. Joseph A. Belt Junior High School in Wheaton to Yeshiva. The proposed deal gave Yeshiva the option to
buy the 20-acre facility for the amount of the 17-year lease: $1.75 million. The terms were similar to a 1995
lease between the county and a nonprofit group that defaulted in July 1998.

In the letter, Pasternak said Yeshiva had funds available to renovate Belt; the Maryland-National Capital Park
and Planning Commission had bought the organization's Four Corners property that year for $1.25 million.

The same day the letter was dated, the Duncan campaign received $4,000 from Brit Limited Partnership. The
amount is the maximum that a person or corporation can give a candidate in an election cycle under Maryland
law.

Page 2 of 5
Community members and the school system opposed Duncan's proposal because they wanted Belt reopened as
a public school. But the council twice approved the transaction, and Duncan signed the lease-purchase deal
Aug. 26, 1999.

A month earlier, Duncan's campaign had received checks for $20,000 from five Saipan companies linked to
then-lobbyist Jack Abramoff and an additional $15,000 from Cohen, Berman and their companies and partners.
Abramoff served on Yeshiva's board in the late 1990s and early 2000s, including one term as president.

In November 2000, schools superintendent Weast proposed that the school system reclaim Belt to alleviate
overcrowding, vindicating community members who said it was needed for public use. "This plan is a special
opportunity presented by the willingness and generosity of the Yeshiva of Greater Washington to modify its
plan to occupy the Belt facility as a private school . . . and, in return, gain the use of [a] different former school
site," Weast wrote to school board members Nov. 22, 2000.

A day earlier, Duncan's campaign had received $10,000 from five Yeshiva-related donors.

Weast proposed shifting Yeshiva to the former Montgomery Hills Junior High School in Silver Spring, which,
like Belt, was a former public school under county control and in poor condition.

Yeshiva said that it deserved to be moved into a renovated school because it had begun renovating Belt. In
March 2002, the school system hired an architectural firm to design the renovation of Montgomery Hills.

Cohen updated Yeshiva parents that month about the need to leave Belt. "[T]he County will present us with a
building of the same caliber as our current location, renovated to our specifications," he wrote, noting
approvingly that the Montgomery Hills facility was closer to a Jewish community. "The terms we negotiated are
very advantageous," he added, with "very" in bold type.

In late November 2002, a contracting firm employed by the school board drew up a $10.2 million budget for the
renovation work. But school officials and Yeshiva representatives soon agreed that the school system would not
employ independent contractors. According to notes dated Dec. 19 and taken by a county real estate analyst at a
meeting attended by Pasternak and other county officials: "Yeshiva is now going to do the work."

The price was slightly lower than the contracting firm's estimate: $9.8 million.

Yeshiva's leaders were on familiar ground in undertaking a construction project. Cohen and Berman, by this
time both members of the Yeshiva board, are partners in BECO Management Inc., a commercial real estate firm
in Rockville that they founded with other partners in 1986. BECO managed the school renovation work, the
financial records show.

Cohen is BECO's president and has been president of the Yeshiva board since 2001, when he took over from
Abramoff.

Contract Questioned

On March 28, 2003, school superintendent Weast, then-school board president Patricia B. O'Neill and Cohen
signed the "stipulated sum" contract for $9.8 million, which was later increased to nearly $9.9 million. The no-
bid agreement waived the county's right to inspect the work, apart from standard inspections required for
building and occupancy permits.

Page 3 of 5
Associate County Attorney Eileen Basaman sent an e-mail to Pasternak dated five days later. "The Construction
Contract frightens me. A lot," she wrote. "The County would never execute this contract for itself," she added,
in part because "we give up our rights to inspect the project."

Hawes, the school system's director of facilities management, said that such inspections would have been
pointless, because the contract gave Yeshiva the right to modify the work. He also defended the lack of
competitive bidding. "We were just looking for a deal that would ensure we had Belt back by July 1 of the
following year. We couldn't hire anyone else to do that," he said.

The deal with Yeshiva, Hawes said, allowed the school system to eliminate the risks of cost overruns and
delays.

The $9.9 million construction contract was intended to fund improvements at Montgomery Hills to match
Yeshiva's work at Belt and was simultaneously understood to represent "the agreed upon value" of Yeshiva's
Belt renovations.

A Yeshiva financial document reviewed by The Post indicates the organization's actual cost at Belt: a little more
than $4 million. The document also says how much it spent at Montgomery Hills: less than $6.4 million.

All told, the document indicates that Yeshiva spent about $10.4 million in renovating both schools,
approximately $500,000 more than the value of the $9.9 million contract with the school system. The original
1999 lease-purchase deal with the county for Belt was an "as is" transaction that required Yeshiva to fund the
millions of dollars needed in improvements.

The school system had agreed to take back one renovated school and provide another in return. But the system
later spent $12.4 million on Belt before reopening it in 2005 as the A. Mario Loiederman Middle School.

In switching schools, Yeshiva lost the option to buy that had been part of the Belt transaction. Instead, it
received a lease for up to 90 years at Montgomery Hills.

Cohen said in a statement: "After raising millions of dollars and spending hundreds of hours of volunteer time,
the [Belt] facility was renovated as a permanent home for Yeshiva." The school system, he added, "requested
that Yeshiva move out of the newly renovated Belt school and take on the burden of renovating the abandoned
Montgomery Hills School."

A school system e-mail and other records indicate that FBI agents made inquiries about the construction
contract in 2005. Michelle Crnkovich, spokeswoman for the FBI's Baltimore office, said that a fraud
investigation was closed this year but declined to say why.

In June this year, a county official signed the Montgomery Hills lease with Yeshiva.

Role of Duncan Aide

Pasternak, an aide who has served Duncan as a political adviser for more than a decade, oversaw the
transactions involving Yeshiva as a special assistant to the county executive. In written answers provided to The
Post in late May, he said that although he had been "involved in the Yeshiva school project," county real estate
officials and lawyers "handle leases for the County."

Janice Turpin, the school system's team leader for real estate management, wrote in notes dated Aug. 9, 2002:
"Pasternak negotiating lease," referring to Montgomery Hills.

Page 4 of 5
Pasternak, in an e-mail dated Feb. 3, 2003, asked another county official to "[l]et me know if you believe this
[draft] allows us to enter into the lease that we need to have with Yeshiva."

In an e-mail dated Feb. 25, 2003, a month before the construction contract was signed, Turpin described
Pasternak as "very anxious to get the construction agreement [to] the Yeshiva folks ASAP."

In an interview, Hawes said Pasternak took part in construction contract negotiations.

Council member Tom Perez (D-Silver Spring), who voted against the lease on the two occasions it came up for
council approval, said Pasternak was deeply involved in the matter. "Nothing of substance got approved without
his okay," Perez said.

Duncan campaign manager Scott Arceneaux said that Pasternak met Abramoff through the Orthodox Jewish
community and accepted his offer to raise money for Duncan. This May, after inquiries from The Post, Duncan
announced that he would return $20,000 in campaign donations linked to Abramoff.

In recent years, campaign money has continued to flow from Yeshiva-related donors to Duncan. In January and
March 2004, his campaign raised $20,000 from Cohen, Berman and other contributors connected to them. This
past January, the campaign took in $23,000 from six donors affiliated with Cohen or Yeshiva.

"I believe that Doug Duncan has done a great job for Montgomery County, and therefore I have supported him,"
Cohen said.

Researchers Bobbye Pratt and Alice Crites contributed to this report.

© 2006 The Washington Post Company

LINK: http://www.washingtonpost.com/wp-dyn/content/article/2006/08/12/AR2006081200985.html

Page 5 of 5
MJBHA/GARSON-CLAXTON CONTRIBUTIONS 2005 – 2010*

Andrews
NONE FOUND

Berliner

Berliner, Roger Friends Of Jerald Pasternak $250.00 10/16/2009 Individual


(11722 Love Joy St. ,
Silver Spring, MD, 20902)

$250 total

Elrich

Elrich, Marc Friends Of Jack Garson $250.00 10/22/2009 Individual


(11223 River View Drive ,
Potomac,, MD, 20854)

$250 total

Ervin

Ervin, Valerie Friends Of Jerald Pasternak $500.00 04/23/2009 Individual


(11722 Love Joy St ,
Silver Spring, MD, 20902)

Ervin, Valerie Friends Of Jerald Pasternak $250.00 04/16/2008 Individual


(11722 Love Joy Street ,
Silver Spring, MD, 20902)

Ervin, Valerie Friends Of Marcy Garson $500.00 09/04/2009 Individual


(11223 River View Dr ,
Potomac, MD, 20854)

Page 1 of 7
Ervin, Valerie Friends Of Garson Claxson LLC $750.00 06/22/2009 Business Entity
(7910 Woodmont Ave Suite 650,
Bethesda, MD, 20814)

$2,000 total

Floreen

Floreen, Nancy Friends Of Michael Epstein $1,000.00 07/13/2005 Individual


(10501 Willowbrook Drive ,
Potomac, MD, 20854)

Floreen, Nancy Friends Of Jerald Pasternak $500.00 03/11/2009 Individual


(11722 Love Joy Street ,
Silver Spring, MD, 20902)

Floreen, Nancy Friends Of Jerald Pasternak $250.00 01/06/2008 Individual


(11722 Love Joy Street ,
Silver Spring, MD, 20902)

$1,750 total

Knapp
NONE FOUND

Leventhal

Leventhal, George L. Friends Of Garson Claxton LLC $500.00 01/09/2010 Business Entity
(7910 Woodmont Avenue Suite 650,
Bethesda, MD, 20814)

Leventhal, George L. Friends Of Garson Claxton LLC $500.00 06/02/2009 Business Entity
(7910 Woodmont Avenue Suite 650,
Bethesda, MD, 20814)

Page 2 of 7
Leventhal, George L. Friends Of Marcy Garson $650.00 03/31/2008 Individual
(11223 River View Dr. ,
Potomac, MD, 20854)

Leventhal, George L. Friends Of Garson Claxton LLC $1,200.00 04/15/2007 Business Entity
(7910 Woodmont Avenue Suite 650,
Bethesda, MD, 20814)

Leventhal, George L. Friends Of Garson Claxton LLC $101.01 07/27/2006 Other Income
(7910 Woodmont Avenue Suite 650, Remarks: Signage
Bethesda, MD, 20814)

Leventhal, George L. Friends Of GC Settlements LLC $500.00 08/25/2006 Business Entity


(7910 Woodmont Ave. Suite 650,
Bethesda, MD, 20814)

Leventhal, George L. Friends Of Hot Shot Cafe LLC $1,000.00 03/31/2008 Business Entity
(7910 Woodmont Ave. Suite 650,
Bethesda, MD, 20814)

Leventhal, George L. Friends Of Charles Claxton $500.00 03/24/2008 Individual


(8608 Woodbrook Lane ,
Chevy Chase, MD, 20815-4845)

Leventhal, George L. Friends Of Charles Claxton $500.00 03/28/2006 Individual


(8608 Woodbrook Lane ,
Chevy Chase, MD, 20815-4845)

Leventhal, George L. Friends Of Joan Claxton $500.00 03/28/2006 Individual


(8608 Woodbrook Lane ,
Chevy Chase, MD, 20815)

Leventhal, George L. Friends Of Jerald Pasternak $500.00 04/01/2008 Individual


(11722 Love Joy St. ,
Silver Spring, MD, 20902)

Page 3 of 7
Leventhal, George L. Friends Of Mark Jewell $100.00 03/21/2008 Individual
(6240 Valley Rd. ,
La Plata, MD, 20646)

Leventhal, George L. Friends Of Mark Jewell $1,000.00 07/30/2006 Individual


(6240 Valley Rd. ,
La Plata, MD, 20646)

Leventhal, George L. Friends Of Andrew Milne $100.00 03/22/2008 Individual


(6007 Osceola Rd. ,
Bethesda, MD, 20816)

Leventhal, George L. Friends Of Andrew Milne $1,000.00 07/30/2006 Individual


(6007 Osceola Rd. ,
Bethesda, MD, 20816)

Leventhal, George L. Friends Of Andrew Milne $500.00 10/26/2005 Individual


(6007 Osceola Rd. ,
Bethesda, MD, 20816)

$9,151 total

Navarro

Navarro, Nancy Friends Of Sue Pasternak $250.00 11/16/2009 Individual


(11722 Lovejoy Street ,
Silver Spring, MD, 20902)

Navarro, Nancy Friends Of Sue Spielberg Pasternak $125.00 05/18/2009 Individual


(11722 Love Joy Street ,
Silver Spring, MD, 20902)

Navarro, Nancy Friends Of Jerald Pasternak $125.00 05/18/2009 Individual


(11722 Love Joy Street ,
Silver Spring, MD, 20902)

$500 total

Page 4 of 7
Trachtenberg
NONE FOUND

Leggett

Leggett, Isiah Ike Friends Of Garson Media LLC $1,000.00 06/15/2010 Business Entity
(7910 Woodmont Avenue, Suite 650 ,
Bethesda, MD, 20814)

Leggett, Isiah Ike Friends Of Marcy Garson $500.00 12/31/2009 Individual


(11223 River View Drive ,
Potomac, MD, 20854)

Leggett, Isiah Ike Friends Of Jack Garson $500.00 12/31/2009 Individual


(11223 River View Drive ,
Potomac, MD, 20854)

Leggett, Isiah Ike Friends Of Jack Garson $500.00 12/13/2007 Individual


(11223 River View Drive ,
Potomac, MD, 20854)

Leggett, Isiah Ike Garson Claxton LLC $1,000.00 03/30/2006 Business Entity
Friends Of (7910 Woodmont Ave
Suite 650,
Bethesda, MD, 20814)

Leggett, Isiah Ike Garson Claxton LLC $585.00 03/06/2006 Other Income
Friends Of (7910 Woodmont Ave Remarks: $500.00 catering service, $50.00 groceries,
Suite 650, $25.00 supplie, $10.00 postage.
Bethesda, MD, 20814)

Leggett, Isiah Ike Jack Garson $2,500.00 09/20/2005 Individual


Friends Of (11223 River View
Drive ,
Potomac, MD, 20854)

Page 5 of 7
Leggett, Isiah Ike Marcy Garson $2,500.00 09/20/2005 Individual
Friends Of (11223 River View
Drive ,
Potomac, MD, 20854)

Leggett, Isiah Ike Friends Of Charles Claxton $2,500.00 11/23/2005 Individual


(8608 Woodbrook Lane ,
Chevy Chase, MD, 20815)

Leggett, Isiah Ike Friends Of Joan Claxton $2,500.00 11/23/2005 Individual


(8608 Woodbrook Lane ,
Chevy Chase, MD, 20815)

Leggett, Isiah Ike Friends Of GC Settlements LLC $250.00 10/27/2006 Business Entity
(7910 Woodmont Avenue Suite 650,
Bethesda, MD, 20814)

Leggett, Isiah Ike Friends Of GC Settlements LLC $2,000.00 06/08/2006 Business Entity
(7910 Woodmont Avenue Suite 650,
Bethesda, MD, 20814)

Leggett, Isiah Ike Friends Of Sue E. Spielberg Pasternak $250.00 02/06/2008 Individual
(11722 Love Joy Street ,
Silver Spring, MD, 20902)

Leggett, Isiah Ike Friends Of Jerald Pasternak $250.00 02/06/2008 Individual


(11722 Love Joy Street ,
Silver Spring, MD, 20902)

Leggett, Isiah Ike Friends Of Mark Jewell $125.00 03/30/2006 Individual


(6240 Valley Road ,
La Plata, MD, 20646)

Leggett, Isiah Ike Friends Of Andrew Milne $125.00 03/30/2006 Individual


(6007 Osceola Road ,

Page 6 of 7
Bethesda, MD, 20816)

Leggett, Isiah Ike Friends Of Michael Epstein $500.00 05/06/2010 Individual


(10501 Willowbrook Drive ,
Potomac, MD, 20854)

$17,585 total

$31,486 Grand Total for County Council and County Executive


* All data from Maryland Board of Elections

Page 7 of 7

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