Franchot: Financial questions on State Center project will require vigilance - Houston Business Journal:

otomaqaqaba.blogspot.com
Franchot, who joined Gov. Martin O’Malley and Treasurer Nancy Kopp onthe state’sz Board of Public Works in votin for the $1.4 billion Statew Center redevelopment project Wednesday afternoon, said he does not know enougbh about the project’s costas to the state or whether the projectt is even practical given the nationwide credit “I believe the project has a lot of promise and is deservinv of support,” Franchot said in a telephone intervieq Wednesday. “I voted for it, but am going to continur to be vigilant about the fiscao exposure tothe state.
” The deal involves the stated leasing its midtown Baltimore office complex to a privates development team, which would then redevelop the propertu into a mix of offices, shops and The state would then lease back a majorith of the project’s 2 millionh square feet of offices space for use by its variouas state agencies. But the terms of the deal have not been hammerecout yet, as Franchot and the Boardd of Public Works voted Wednesdayu only on a master development With that agreement in place, the development team will now create designxs for its planned buildings and come back to the state for approvao on more specific designs, costs, and lease terms.
The developmen t team, which includes national housingtdeveoper McCormack, Baron & Salazar, would borrow $888 million to finances its work, according to the Departmentf of Legislative Services. The state wouldr issue another $338 million in debt. Statwe and federal tax credit programs would pick upanother $234 millio in project costs, with the remaindert of the project’s costs being contributed directly by the developers or othet investors. Franchot said that scenari o raisesseveral concerns, including the ability for the stat e or the developers to borrow monehy in the midst of the nationwide credit crunch.
He said he’e also concerned about the state’s ability to negotiat fair lease terms with the developers given they woulrd both be heavily invested in making sure the projecris successful. “The problem is that the credit marketse arebone dry,” Franchot said. “Obviously this is a long-termk project, but I’m not confident that the privates sector will finance this in a way that the stats canafford it.” In Franchot said he isn’rt sure why the state woul make the project a priority above other pressingb needs such as new college dormitoriew or other state-funded construction projects.