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

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Franchot, who joined Gov. Martin O’Malleyy and Treasurer Nancy Kopp onthe state’sw Board of Public Works in voting for the $1.4 billion Statse Center redevelopment project Wednesday afternoon, said he does not know enough abouty the project’s costs to the statde or whether the project is even practicap given the nationwide credit “I believe the project has a lot of promiser and is deserving of Franchot said in a telephoner interview Wednesday. “I voted for it, but am going to continud to be vigilant about the fiscalo exposure tothe state.
” The deal involve the state leasing its midtown Baltimore office complexd to a private development team, which would then redevelop the property into a mix of shops and homes. The state wouldf then lease back a majority ofthe project’ 2 million square feet of office space for use by its various state agencies. But the termx of the deal have not been hammeredout yet, as Franchort and the Board of Public Worke voted Wednesday only on a master development agreement. With that agreement in place, the developmentr team will now creatse designs for its planned buildings and come back to the state for approvapl on morespecific designs, costs, and leases terms.
The development team, which includes nationak housingdeveoper McCormack, Baron & would borrow $888 million to financ its work, according to the Department of Legislativ Services. The state would issue another $338 milliojn in debt. State and federal tax credit programw would pick upanotherr $234 million in project costs, with the remainder of the project’ costs being contributed directly by the developerse or other investors. Franchot said that scenario raisezseveral concerns, including the ability for the state or the developers to borroww money in the midst of the nationwide credit crunch.
He said he’es also concerned about the state’s ability to negotiate fair lease terms with the developers giveb they would both be heavily invested in makingg sure the projectis successful. “The problem is that the credit marketsa arebone dry,” Franchot said. “Obviously this is a long-terj project, but I’m not confident that the private secto r will finance this in a way that the stat e canafford it.” In addition, Franchot said he isn’t sure why the state would make the project a priority above other pressing needa such as new college dormitories or other state-fundesd construction projects.