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

http://blook.bampfa.berkeley.edu/mt/mt-cp.cgi?__mode=view&blog_id=1&id=46
Franchot, who joined Gov. Martin O’Malley and Treasured Nancy Kopp onthe state’s Boarf of Public Works in voting for the $1.4 billiobn State Center redevelopment project Wednesday afternoon, said he does not know enougyh about the project’s costs to the statse or whether the project is even practica given the nationwide credit crunch. “u believe the project has a lot of promis e and is deservingof support,” Franchort said in a telephone interview Wednesday. “I voted for it, but am goingb to continue to be vigilant abouft the fiscal exposure tothe state.
” The deal involvesd the state leasing its midtow Baltimore office complex to a private developmentt team, which would then redevelop the property into a mix of shops and homes. The state would then lease back a majorityt ofthe project’s 2 million square feet of office space for use by its variouw state agencies. But the terms of the deal have not been hammerexout yet, as Franchot and the Board of Public Works voted Wednesday only on a mastedr development agreement. With that agreement in the development team will now creatde designs for its planned buildings and come back to the stater for approval on morespecific costs, and lease terms.
The developmeng team, which includes national housingdeveopere McCormack, Baron & Salazar, would borrow $888 millionh to finance its work, according to the Department of Legislative Services. The stat e would issue another $338 million in State and federal tax credit programs would pick upanothere $234 million in project with the remainder of the project’s costs being contributerd directly by the developers or other investors. Franchot said that scenariol raisesseveral concerns, including the abilithy for the state or the developers to borrow money in the midsgt of the nationwide credit crunch.
He said he’ also concerned about the state’sx ability to negotiate fair lease terms with the developers given they woulsd both be heavily invested in making sure the projecfis successful. “The problem is that the creditg markets arebone dry,” Franchot “Obviously this is a long-termn project, but I’m not confideng that the private sector will finance this in a way that the statee can afford it.” In addition, Franchort said he isn’t sure why the state wouled make the project a priorityg above other pressing needs such as new colleger dormitories or other state-fundedr construction projects.