A company co-owned by state Del. Ben Kramer, who has defended Montgomery County’s embattled Department of Liquor Control (DLC), receives more than $20,000 a month in lease payments for a DLC retail store, Bethesda Beat has learned.
Kramer, a Wheaton Democrat, co-owns a real estate business with his sister Rona Kramer that collected $2.56 million in lease payments from the DLC from 2003 to 2015 for a 6,350 square-foot retail store in the Cloverly section of Silver Spring, near the Howard County border. Kramer’s real estate business also stands to collect $2.7 million over the next 10 years under a lease renewal that runs until September 2025, according to documents provided by the county’s Department of General Services.
Personal financial disclosure documents Kramer filed with the General Assembly note he jointly controls the commercial building at 700 Cloverly Ave. with his sister, who is the state’s secretary of aging.
The DLC controls the wholesale distribution of almost all alcohol in the county and is the only retailer of liquor, which it sells at its 25 county-controlled liquor stores. Any significant changes to the DLC must be approved by the state legislature because the department’s monopoly protections are part of state law.
During the 2016 General Assembly session, Kramer argued that the county should be able to decide the future of DLC’s operations. He has also publicly supported UFCW Local 1994 MCGEO, the county employee union that represents approximately 350 DLC workers that has opposed proposals to privatize the department.
The Montgomery County liquor store in Cloverly. Credit: Andrew Metcalf
On Aug 10, Kramer pitched a plan to maintain the county’s unique alcohol monopoly, but turn over the day-to-day operations to a private business that he said would be able to better manage product distribution. Kramer made the proposal at a meeting of the working group appointed by County Executive Ike Leggett to study alternatives to the DLC’s current structure. He said his plan would maintain the salaries, benefits and collective bargaining rights of the DLC’s union employees.
At the meeting, Kramer identified himself as a delegate before pitching the plan.
He did not publicly disclose his business’s lease arrangement with the DLC during the meeting. Three of the working group’s members contacted by Bethesda Beat—County Council member Hans Riemer; Brian Vasile, owner of Brickside Food & Drink in Bethesda; and Pinky Rodgers, co-owner of Pinky and Pepe’s Grape Escape in Gaithersburg—said they were not aware of Kramer’s business relationship before he made the presentation.
“I had absolutely no idea,” Rodgers said. “That was completely withheld. Had I known about that I would have asked him about it point blank in the meeting.”
Riemer said Kramer “certainly” should have disclosed it to the working group.
Jennifer Bevan-Dangel, executive director of Common Cause Maryland, a nonprofit organization that promotes transparent and accountable government, said in an email Kramer should make sure to note the potential conflict of interest when he comments verbally or in writing on the DLC.
“This type of situation is sadly common with our part-time legislature,” Bevan-Dangel said. “Strictly speaking, it is not a legal conflict given the way our ethics law is written and enforced. However, it certainly raises concerns because this is a case where a public official’s actions in a public capacity can have an impact on his private business and private gain. While his actions do not cross a legal line, we are concerned that there was not more proactive disclosure. Documenting your business interests on a form that sits at the ethics commission is the minimum step.”
Kramer filed a disclaimer of possible conflict of interest form with the General Assembly in 2007, shortly after he was elected, that stated he may have a conflict with regard to “commercial real estate.” However, he has not filed any similar forms with regard to the DLC, according to state records.
Kramer said he doesn’t believe his dual role as a businessman dealing with the DLC and as a state delegate proposing a change to DLC’s management presents a conflict of interest. “It has no direct implications,” Kramer said when asked about the lease after the working group meeting.
Kramer later said in a follow-up email that Kirkland had invited him to “present a common sense alternative for consideration that I discussed with her, should the working group choose to recommend a change to the DLC.”
“I am not a member of the working group and will have no role in the deliberations nor the decision process,” he added.
He said his proposed public-private partnership would not affect the Cloverly store and he would receive no personal gain from the county adopting the model.
Over the weekend, Kramer sent an email to the working group disclosing his business relationship and noting that Bethesda Beat was working on a story about his proposal and business relationship with the DLC.
“It did not occur to me that there would be an effort to create the impression that I might somehow benefit from the work group’s decisions or have a hidden agenda,” Kramer wrote to the working group. “Therefore, I did not announce at the start of the meeting that I have an interest in the property that has a lease.
“However, I am also not hesitant to share that fact. I certainly have never hidden this information and have had colleagues and other elected officials who have utilized the same property for campaign signs and offices,” Kramer added.
Gino Renne, president of UFCW Local 1994 MCGEO, responded Monday to Kramer’s email in support of the public-private partnership proposal and accused Bethesda Magazine, which publishes Bethesda Beat, of having a bias.
“Your presentation at the last work group offered a viable option for the group to consider,” Renne wrote. “It protects both the workers and the revenues generated by the DLC, which help fund critical services to include education… . This whole uproar about the DLC is being driven by a very small group of Bethesda based [sic] restaurants, business owners and liquor interests. The Bethesda Chamber declared this as its top priority. Bethesda alcohol related [sic] advertising dollars and Bethesda Magazine… those dots aren’t very hard to connect.”
Renne also claims that Bethesda Magazine “barely offered a whisper” about ethical questions the union had raised against Del. Bill Frick (D-Bethesda), who proposed legislation during the 2016 General Assembly session that would call for a referendum to allow voters to decide whether the DLC’s monopoly should remain intact. In fact, Bethesda Beat was the first to report the allegations.
Kramer said in the interview with Bethesda Beat that he met with the General Assembly’s ethics adviser, Dea Daly, to discuss any possible ethical concerns before testifying on the merits of Frick’s bill and another that failed earlier this year in the General Assembly.
“Neither of these bills would have had any effect on the referenced store and as such I would have received no personal gain or loss with or without the passage of those bills,” Kramer said.
Daly said she could not confirm nor deny whether she had a conversation with a specific legislator.
Kramer said the county would still be required to honor its lease with his business even if private companies were allowed to begin selling liquor in the county. And he said he potentially could benefit from privatization because it could bring new liquor stores and therefore new potential tenants to his commercial buildings in the county.
“It’s much ado about nothing,” Kramer said.
The other failed bill, supported by the County Council, would have privatized the distribution of special order products in the county—mostly craft beer and fine wine that restaurants and private beer and wine stores say the department has struggled to deliver in an accurate and timely fashion. The special order bill was not approved; Kramer joined 20 county legislators who voted against it.
After Frick proposed his bill, Renne called for the ethics investigation into the delegate because Frick’s wife works as an executive for the international alcohol producer Diageo.
In his email Monday, Renne said, “I sure don’t remember EVER hearing the sponsor of the private distribution bill announce all of his direct and personal financial ties to the private distribution monopoly that supplements his family’s income so that they can enjoy their BETHESDA home and BETHESDA lifestyle.”
As Frick’s bill was being considered by the county’s House delegation in February, Kramer urged the legislators to allow the county government to decide whether to alter the DLC’s monopoly.
“[County officials] have hired new management, they are investing in the capital infrastructure of the department and we are giving them no time to do what they’re supposed to do,” Kramer told the legislators. “Let’s give them that opportunity and leave the responsibility where it belongs and work with the county and not against the county.”
He also asked union employees who were in the audience wearing bright yellow shirts to stand and be recognized. The employees received a round of applause from several of the county’s legislators.
Three weeks before, Kramer had questioned Frick during an Economic Matters Committee meeting about Frick’s bill. Kramer cited a Centers for Disease Control study that found privatization of the alcohol business results in an increase per capita in alcohol consumption and said a liquor producer—Diageo—“was looking to saturate Montgomery County with liquor stores.”
Kramer said his concerns about the legislation during the General Assembly were related to the “safety, health and welfare of Maryland’s citizens.” He noted he has long advocated on behalf of drunken driving victims during his more than a decade working with Mothers Against Drunk Driving. During this year’s General Assembly session he led the effort to pass Noah’s Law, which requires more drunken driving offenders to use ignition interlock systems in vehicles.
“Advancing socially responsible alcohol laws and regulations has been a tenant of my service in the legislature,” Kramer said, in the email sent to Bethesda Beat.
Frick later withdrew his bill after it failed to get enough support from the county’s House delegation.
In December 2015, Kramer also defended the department during a discussion about efforts to privatize it on the Kojo Nnamdi Show on WAMU. Kramer called in to the radio show, which featured Riemer and Renne, and said, “I don’t think Montgomery County wants to see a liquor store on every corner and just like the gaming industry, the alcohol beverage industry will not be satisfied until the market is completely saturated.”
During the show he also called state Comptroller Peter Franchot “irresponsible” for his efforts to privatize the county department and said county “residents benefit significantly from the revenue we receive” from DLC operations.
“I would also much rather have the professional well-paid and competent people dispensing alcohol in our stores than to immediately have private enterprise cannibalize one another’s business,” Kramer said.
While Kramer said he is not an advocate of the department, he does believe the DLC should be given more time to work out its issues. “In fact, I’ve acknowledged criticisms of the DLC if they are founded,” Kramer said.
Leggett and eight of nine council members have opposed efforts to end the DLC’s monopoly in part because the DLC contributes about $30 million a year to the county’s general fund.
Ethical lines at the General Assembly are often open for interpretation.
The 2016 General Assembly Ethics Guide notes that the law requires a legislator to recuse himself or herself from participating in legislation if a “presumed or apparent conflict is ‘direct and personal’ to the legislator, a member of the legislator’s immediate family, or the legislator’s employer.”
That provision, the guide notes, is intended to apply “only to interests that are quite narrowly focused, and as to which a clear financial impact would flow from the passage or defeat of the legislation.”
Kramer said in the email he often encounters proposed legislation that affect other tenants of his commercial buildings such as nail salons, hair salons, restaurants and gyms. He said he has dozens of tenants at his other “six or seven” commercial properties and does not consider the DLC liquor store more valuable than any other tenant.
Kramer’s 2016 personal financial disclosure from 2016 lists that he has an ownership stake in other other commercial properties in the county on University Boulevard and Lockwood Drive in Silver Spring, Club House Road in Montgomery Village and in the Norbeck area of Rockville, as well as properties in Annandale and Fredericksburg, Virginia. Ben and Rona Kramer are the children of former County Executive Sid Kramer. Kramer, 91, got his start in business owning a carwash, which he turned into a commercial real estate empire that The Washington Post described in 1990 as “so vast he won’t estimate its value.”