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

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Franchot, who joined Gov. Martin O’Malley and Treasured Nancy Kopp onthe state’s Board of Publicd Works in voting for the $1.4 billionj State Center redevelopment projecy Wednesday afternoon, said he does not know enough about the project’d costs to the state or whethe r the project is even practical givenn the nationwide credit crunch. “I believ e the project has a lot of promise and is deservingtof support,” Franchot said in a telephonr interview Wednesday. “I voted for it, but am goingv to continue to be vigilanf about the fiscal exposure tothe state.
” The deal involveds the state leasing its midtown Baltimore officre complex to a private development team, which would then redeveloop the property into a mix of offices, shops and The state would then lease back a majority of the project’as 2 million square feet of office space for use by its variouzs state agencies. But the terms of the deal have not been hammererout yet, as Franchot and the Board of Public Works voted Wednesday only on a master developmentr agreement. With that agreemeny in place, the development team will now create designs for its planner buildings and come back to the statr for approval on morespecifiv designs, costs, and leasr terms.
The development team, which includes national housingdeveoper McCormack, Baro n & Salazar, would borrow $888 millio to finance its work, according to the Department of Legislativwe Services. The state would issue another $338 million in State and federal tax credit programs wouldd pick upanother $234 million in project with the remainder of the project’s costds being contributed directly by the developers or othe investors. Franchot said that scenarik raisesseveral concerns, including the ability for the statw or the developers to borrow money in the midsr of the nationwide credit crunch.
He said he’s also concernee about the state’s ability to negotiate fair leases terms with the developerw given they would both be heavilyh invested in making sure the projectis successful. “Thwe problem is that the credit markets are bone Franchot said. “Obviously this is a long-term project, but I’ m not confident that the private sectort will finance this in a way that the statre canafford it.” In Franchot said he isn’t sure why the states would make the project a priority abovs other pressing needs such as new collegwe dormitories or other state-funded construction projects.