Montgomery County Inspector General Wants Developers to Repay 'Double Payment'

Montgomery County’s inspector general is recommending that county officials try to recover a “double payment” to developers of a Germantown subdivision.

A recent inspector general’s report accuses developers of the Germantown development district of collecting more than $6 million from the county when they should have received about $3 million.

A spokesman told Germantown Patch the Montgomery County Council “will continue to look into” the inspector general’s report.

The report’s conclusions are contested by some members of the Council, said Neil Greenberger, the Council’s spokesman.

“The county executive’s staff says [the payments] were for different things and the inspector general’s report was misinterpreted,” Greenberger said. “It’s unresolved at the moment.”

He cast doubt on whether the issue would end quickly.

“Not all of the council members were satisfied with the answers they heard,” he said.

Inspector General Thomas J. Dagley is scheduled to resign his position next week for reasons unrelated to the investigation.

“We’re going to name a new inspector general on Tuesday,” Greenberger said.

The county’s chief administrative officer and an attorney for the developers described the report as misleading.

They do not deny double payments were made, but they describe them more like investments the county will get back. Much of the money was used to build the Hoyles Mill Wastewater Pumping Station and a pipeline.

The funds are coming back to the county through a special tax on homeowners, the developers say.

About 1,300 west Germantown property owners must pay the special tax from 2002 until 2025.

In addition, the developers say they passed on much of the money in the form of credits from the Washington Suburban Sanitary Commission to builders.

“To call these double payments is ludicrous,” said Jack Orrick, attorney for the developers. “The inspector general’s report doesn’t even bother to describe what the purpose of the transactions were.

“The loan transaction is repaid though special taxes,” he said. “The credits were given because [the developers] paid out-of-pocket to build infrastructure.”

The “double payments” alleged by the inspector general were made to Woodcliffe Development District for sewer and water service on properties owned by Artery Hoyles Mill of Bethesda and Arcola Investment Associates of Hyattsville.

Washington Suburban Sanitary Commission General Manager Jerry N. Johnson denied any wrongdoing.

He says the Commission followed standard procedures for reimbursing developers.

Much of the concern in the inspector general’s report focuses on $3.7 million in cash payments to the developers in 2002 and 2003. They were followed by another $1.87 million in cash payments and $1.1 million in credits in 2006 that the inspector general cited as being questionable.

Few invoices or other documents describe how the money was spent, the report says. The inspector general also questioned whether homeowners who “pay the annual special tax are protected from any unnecessary or unreasonable payments.”

The report recommends that Montgomery County and the Washington Suburban Sanitary Commission “jointly assess and seek recovery of the full amount of all questionable payments.”