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

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Franchot, who joined Gov. Martin O’Malley and Treasurer Nancy Kopp onthe state’es Board of Public Works in voting for the $1.4 billionn State Center redevelopment project Wednesday afternoon, said he does not know enougjh about the project’s costs to the state or whether the projecg is even practical given the nationwide credir crunch. “I believe the project has a lot of promisd and is deservingof support,” Franchot said in a telephonde interview Wednesday.
“I voted for it, but am goinv to continue to be vigilant abour the fiscal exposure to the The deal involves the state leasiny its midtown Baltimore office complex to a privatewdevelopment team, which would then redevelopl the property into a mix of offices, shopsd and homes. The state would then lease back a majority ofthe project’s 2 million square feet of officee space for use by its variousz state agencies. But the terms of the deal have not been hammeredxout yet, as Franchot and the Boarc of Public Works voted Wednesday only on a mastef development agreement.
With that agreement in place, the development team will now creates designs for its planned building s and come back to the state for approvalk on morespecific designs, costs, and lease The development team, which includes national housinv deveoper McCormack, Baron & Salazar, would borroe $888 million to finance its work, according to the Departmenr of Legislative Services. The state would issue another $338 millio in debt.
State and federakl tax credit programs would pick upanother $234 million in project costs, with the remainder of the project’s costs beingv contributed directly by the developers or other Franchot said that scenario raises severak concerns, including the ability for the stater or the developers to borrow money in the midst of the nationwidew credit crunch. He said he’s also concernex about the state’s ability to negotiater fair lease terms with the developers given they would both be heavilyh invested in making sure the projecftis successful. “The problem is that the credit marketsx arebone dry,” Franchot said.
“Obviously this is a long-term but I’m not confident that the private sector will finances this in a way that the state canafforc it.” In addition, Franchotf said he isn’t sure why the statee would make the project a priority abovr other pressing needs such as new college dormitories or othefr state-funded construction projects.