Montgomery County gave the green light to the annexation of the Crown Property for high-density development earlier this week, even as concerns were raised about terms of the deal and the reputation of one of the key partners.
The Federal Trade Commission has battled Los Angeles-based KB Homes for decades. The FTC says it has received many complaints that charged the publicly traded company with shoddy workmanship and requiring customers to go through an arbitration process when they tried to exercise their home warranties.
“The FTC has repeatedly singled out KB Homes and said, ‘You can’t use arbitration,’ ” said Wayne Goldstein, chair of the Montgomery County Civic Federation’s planning committee.
In August, the FTC fined KB Homes $2 million for violating the terms of a 1979 court-approved consent agreement with the Department of Justice. The agreement bars the company from requiring homebuyers to submit to arbitration if they make any warranty claims.
“KB Homes has responded openly and completely about all thoseconcerns,” regional spokesman Tim Pittman said Thursday.
Now, KB is a partner in the Crown Farm development, a massive project planned to include 2,250 homes and 320,000 square feet of business and retail space on 183 acres of farmland that’s now part of the city of Gaithersburg. That site is the largest parcel of developable land in the county.
KB’s chief partner in the project isn’t worried about that company’s past.
The violations are “stale,” Crown Farm principal owner Aris Mardirossian of Gaithersburg told The Examiner this week. He said the infractions leading to the court order took place in 1972 and that leadership of KB Homes has long since changed.
“No other development company I talked to wanted to agree to donate 43 acres for a school,” Mardirossian said. “That’s $80 million out of their profits.”
He said KB Homes is looking for a larger presence in the mid-Atlantic region, and “they understand this project must be golden.”
Under current zoning, fewer than 700 homes could be built on the Crown Farm site. As of Thursday afternoon, no formal review or request for rezoning has been initiated in either the city Planning Department or the county Planning Board.
The Montgomery County Civic Federation, along with Common Cause Maryland, Neighbors for a Better Montgomery and other groups, petitioned the county and city to get concessions for affordable housing, rural land preservation and historic protections out of the developers. They called the $2 million offered for agricultural preservation “woefully inadequate.”
KB Homes Inc. history
» 1957: Kaufman and Broad Inc. is founded in Detroit to serve the entry-level housing market.
» 1972: First court sanctioned operating agreement signed with Federal Trade Commission.
» 1979: Agreement modified with stronger language about warrantyprotections.
» 1986: Former in-house lawyer Bruce Karatz named CEO.
» August 2005: KB fined $2 million for violating the 1979 order by requiring buyers to submit to arbitration over warranty claims.
