Photo Credit: Maryland-District of Columbia Utilities Association. Pictured: Anirban Basu, Sage Policy Group
[12/27/2017 Update: The SEC responded on Thursday that Basu filed his financial disclosure form on Aug. 7, in response to the agency’s request.]
The Baltimore County Council casually passed a $25,600 contract with Sage Policy Group on Monday, after putting the sole source consulting services job out to bid after some community members expressed concern in June over perceived conflicts of interests and lobbying efforts on the part of the company’s chairman and CEO, Anirban Basu.
The contract award, in which Sage will continue to provide economic analysis, personal income forecasting, and discussion facilitation services for the council’s Spending Affordability and Economic Advisory committees, came up for vote close to the holidays. And the topic did not appear on an agenda for a preceding county work session until the agenda was amended just prior to the meeting, taking some county residents off guard.
Of the timing of the contract approval and the process that led to the vote, Towson resident, Peta Richkus said, “Adding the controversial item as a last-minute addendum … adds to my concern.”
Richkus, a former secretary at the Maryland Department of General Services and former port commissioner of the Maryland Port Administration, opposed the initial sole source contract which prompted council members to put the job out to bid.
In November, four months after withdrawing Sage’s proposed contract, which the company has had with the county since 2010, council members opened the job to interested vendors.
Sage won the job on Monday after the only other company to bid on the job – Jacob France Institute at the University of Baltimore – quoted $100,800 for the four-year agreement. The council unanimously approved the contract with Sage since it was the lower of the two sole bids. (Council members Cathy Bevins and Izzy Patoka were not in attendance for the council meeting.)
“I strongly supported a competitive process, but at the end of that effort, it’s difficult to justify awarding the contract to an entity that is four times more expensive,” said Councilman David Marks about the contract award.
Marks, A Republican who represents the fifth council district which stretches from Towson through Perry Hall, also said that he was told that the contract was not initially added to a meeting agenda for the work session that preceded Monday’s meeting due to an issue in the purchasing department. But he said that the council did what it could to solicit bids for the job, which was in direct response to community concerns which the council took seriously.
“My personal opinion is that the community made its concerns well known; the Council responded by doing the competitive process,” Marks said. “(A)nd the final decision is defensible.”
While Basu did not respond to a request to discuss the allegations of perceived conflicts of interest or the awarded contract, Sage’s chief operating officer, Zachary Fritz, did respond to a question on whether the Sage Policy Group provided a new bid in November, or left its original bid on the table. “We bid again on the contract,” Fritz said simply.
Despite the council’s good faith effort to solicit other vendors, Richkus and others say they still are concerned that Sage and Basu may have too many fingers in too many pots around the county, in which Basu is paid to advise the county and Baltimore County Public Schools, both which may have a direct impact on his own business interests and clients, which he is not required to disclose.
Richkus said she has concerns about, not just the perception of possible business interest conflicts, but also Basu’s influence in so many sectors across the state and county in which he provides economic analysis for energy suppliers and real estate developers and their law firms, as well as for Associated Builders and Contractors, the Construction Financial Management Association, Maryland Realtors, and Marcum Construction Industry.
She said the new contract signals a “built-in conflict of interest” for Basu, especially due to his advisory role as chair of the Baltimore County Economic Advisory Committee, a group of business representatives that advises the Spending Affordability Committee, which sets the guidelines for county spending.
Richkus also said that it’s not the money for the county contract with which she takes issue, it’s the influence.
“By its process, and the award of this contract on the basis of Sage’s ‘low-ball’ bid, the Council may not have acted in the best interest of the County as is their charge. Their actions do not appear to move the County toward the greater transparency expected by Baltimore County residents,” Richkus said.
Basu, who also chairs the state’s Economic Development Commission and is chief economist for the Associated Builders and Contractors, is also an advisor for Baltimore County Public Schools which has granted Sage Policy Group $400,000 in contracts since 2012, records show.
For the school system, Sage is tasked with providing economic and demographic studies to support decision-making to include projections of future student enrollment, analysis of residential development, and analysis of historical enrollment trends.
Although the school system has been recently criticized for using outdated enrollment projection data, the influx of projected student enrollment – driven in part by development – has created concern for some parents who say it is causing overcrowding and a need for redistricting, including in the Towson area.
The impact of development on available seats at schools able to accommodate increased enrollment has created contention and a crossover by some Baltimore County school parents who have recently testified – not just at school board meetings – but also in front of the county council about school overcrowding due to development deals approved by council members who have been advised by Sage.
On Monday, one such parent who testified at a previous school board meeting, echoed her statements to council members. “I sit here tonight to call your attention to the crisis our schools are in. This is a countywide epidemic of severe overcrowding with a complete lack of foresight and planning for the current development occurring in the county,” county parent and resident, Jesse Yager, said.
“In the central area out of 23 elementary schools, 15 are over 92 percent capacity and 12 are well over 100 percent… You focus on growth, and yet you have failed to pay attention to our county’s best asset: our future generation. You have built skyscrapers on sand and our community will crumble if action is not taken immediately. To allow for such growth, without making sure there are schools and infrastructure in place to support the influx of people, is malfeasance,” Yager said. “We need a moratorium on all building…We need more schools and less residential development…”
As county council consultant, Basu provides economic data analysis and revenue forecasts which assists the council in its decision-making.
He has also testified before the council in favor of tax breaks and developer-friendly assistance which benefited the developer of mixed development project, Towson Row.
Basu told the council that he was in favor of giving $43 million in tax assistance to developer, Greenberg Gibbons, which included an up-front $26 million given to the company in lieu of tax credits it would have received when the project is completed.
An over $16 million grant for the developer was also supported by Basu, since a hotel which is part of the Towson Row project, will generate hotel occupant taxes for the county when it opens.
But some of the work done by Sage for its clients has run counter to what some say are needs for Baltimore County, while favoring the desires of developers. Basu has maintained that projected tax revenue from those developments are good for Baltimore County’s economy, over all.
In May, Sage issued a report commissioned by the Maryland Building Industry Association, stating that impact fees would negatively impact developers, thus making development less attractive to them. (The impact fees help to offset costs for county schools and roads.)
In part, Sage concluded in its reports that “(Impact fees) will result in a smaller Baltimore County construction economy, with construction presently supporting approximately 7.5 percent of countywide economic activity.”
David Plymyer, a former Anne Arundel County attorney and Pikesville resident, said of Sage and its new contract, “As of this morning, Mr. Basu still listed himself as the chief economist to Associated Builders and Contractors, a national trade organization that lobbies state and local governments, including Baltimore County, on behalf of the homebuilding and construction industries. Land development and homebuilding are regulated by the county, and in my opinion, his employment by the county council gives rise to the appearance of a conflict of interest.”
Plymyer posited, “Would the FDA hire the chief economist for Big Pharma as its economist? It seems like a common sense measure for the council to avoid hiring an advisor to an industry that it regulates as its own advisor.” Plymyer said, “Economic forecasting is not like weather forecasting; it is far more subjective. Why not avoid any appearance of a conflict of interest if you can?”
In August, Plymyer wrote a Baltimore Sun op-ed critical of the Sage contract in which he suggested that, while the county council did agree to allow other vendors to bid on the job, it failed to rule out Sage as a contender as the council’s continued economic consultant in spite of building community concern.
In an unusual move, Council Chair Tom Quirk went to bat for the paid county vendor, writing a response to Plymyer’s criticisms – also published in the The Sun – calling his remarks about Sage’s conflicts of interests “baseless.” Quirk, a Democrat who represents the first council district, did not respond to a request for comment on the contract.
In response, Richkus fired a Readers Respond letter back, stating that she believed Basu crossed the line from “independent consultant to lobbyist for the development community and their business partners” when he appeared in three separate videos on the Center Maryland Facebook page which ran contrary to the county’s proposals at the time which sought to implement the developer impact fees and to raise taxes as a way to support county needs amid an $81 million budget shortfall.
According to recent reports reviewed on the state’s lobbyist registration website, Basu has not registered as a lobbyist. But as the chair of the Maryland Economic Commission, he is required to file annual financial disclosure statements.
In August, those statements were reviewed by The Gunpowder Gazette, but they left much to be desired since they did not include more detailed information required of elected officials and state employees.
“(The) law imposes a different standard for what needs to be disclosed by a member of a board/commission than what an official or employee needs to file,” said Michael Lord, director of the State Ethics Commission (SEC).
Basu would only be required to disclose business interests involving the commission, itself, he said.
Basu Sage Policy Group and two other businesses with which he or a family member shares ownership: Baltimore-based Kiko Properties and Commonwealth Economics, based in Harrisburg, Pa. and his wife’s employment. Besides name and home address, all other disclosure questions were left blank or indicated “N/A” or not applicable.
At the time the records were reviewed in August, Basu had failed to file his 2018 disclosure by its required deadline of April 30, 2019.
The request for the missing record prompted the SEC to send Basu a notice of failure to file.
Since non-elected official filings can only be accessed in person at the SEC’s Annapolis-based office, as of Friday, it is not known if or when the late disclosure was ultimately filed. [12/27/19 Update: The SEC responded that Basu filed his disclosure on Aug. 7, in response to the agency’s request.]
Basu is one of the Mid-Atlantic region’s leading economic consultants and has twice been recognized as one of Maryland’s 50 most influential people by the Daily Record.
He has also been named one of the Baltimore region’s 20 most powerful business leaders by the Baltimore Business Journal.