Competition to be added to process

After ‘Healthy Holly’ scrutiny, Baltimore poised to OK 2nd ‘master lease’ agreement

Baltimore officials are poised to approve a second vendor to help the city finance expensive purchases, adding competition to a process that has for years been dominated by a well-connected political donor tied to the “Healthy Holly” scandal.

Grant Capital Management, a Columbia firm founded by J.P. Grant, has a longstanding agreement with the city to help it pay for large contracts. The arrangement, dubbed a “master lease,” came under scrutiny last year after it was revealed that Grant was among those who had bought former Democratic Mayor Catherine Pugh’s self-published children’s books.

For years, Grant’s company held the sole master lease with the city. At Wednesday’s Board of Estimates meeting, officials are expected to approve a second such agreement with Banc of America Public Capital Corp.

The details of the contract will not be available until after the vote.

Finance Director Henry Raymond previously explained that the city wants multiple master lease vendors because that means they are “always competing against each other so the city could get the lowest interest rate.” He did not respond to questions about the new deal, such as how the new vendor was selected.

He said in December that the city planned to expedite its search for a second lease agreement, in addition to the one held by Grant Capital Management. Raymond’s statement came shortly after a federal indictment against Pugh that detailed her financial relationship with Grant.

“We want to expedite it, especially under the current circumstances,” Raymond said at the time.

In the plea deal Pugh reached with prosecutors, they wrote that Grant allegedly gave $164,000 to Pugh over six years for her self-published children’s books, despite knowing that she was illegally funneling some of the funds into her political campaign and toward buying a house.

She is now serving a three-year federal prison sentence for fraud and tax evasion. Grant was not charged with a crime.

Grant’s company has held the rights to a master lease agreement with the city since 2003. The value of the contract depends on what the city uses it to buy — meaning the more it’s used, the more Grant makes. Contracts approved under the master lease are often not competitively bid. As of December, officials said the city had financed roughly $135 million in deals with the master lease.

City officials say the master lease agreement helps cash-strapped agencies get the equipment they need, particularly vehicles. The deal allows Grant’s company to quickly provide money upfront to do capital projects and be paid back with interest over time.

His arrangement has, for example, financed a $33 million upgrade to the city’s 911 system and a $53 million contract to install energy conservation systems in public housing. There are typically a couple of items on each weekly Board of Estimates agenda that are financed through the master lease.

City Council President Brandon Scott, the Democratic nominee for mayor, asked the city inspector general’s office in December to review the arrangement; no report on the subject has yet been published.

The Board of Estimates, under Pugh’s leadership, renewed the master lease agreement with Grant Capital Management in 2018. He did not respond to a request for comment Tuesday.

The city received a proposal that same year from Bank of America Public Capital Corp., as it was spelled in city documents at the time, but the law department wrote that the company’s bid was “nonresponsive” because it sought to make “material changes” to the conditions of the request for proposal.

The company declined to comment on the arrangement pending before the city’s spending panel.

The new agreement to be voted on Wednesday would run through July 2021, with the possibility for extensions.