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’ Board of Public Works in voting for the $1.4 billiojn State Center redevelopment project Wednesday afternoon, said he does not know enougg about the project’s costs to the state or whether the project is even practicakl given the nationwide credit crunch. “I believe the projectf has a lot of promise and is deservintgof support,” Franchot said in a telephone interview Wednesday.
“I voted for it, but am going to continue to be vigilanyt about the fiscal exposure to the The deal involves the state leasing its midtown Baltimore office complex to a privatewdevelopment team, which would then redevelolp the property into a mix of shops and homes. The state would then lease back a majority ofthe project’s 2 milliomn square feet of officd space for use by its various state agencies.
But the terme of the deal have not been hammeredout yet, as Franchott and the Board of Publi Works voted Wednesday only on a master development With that agreement in the development team will now creats designs for its planned buildingz and come back to the state for approva l on more specific designs, costs, and lease terms. The developmentg team, which includes national housingdeveoped McCormack, Baron & Salazar, would borrow $888 million to financ its work, according to the Department of Legislative The state would issue another $338 million in State and federal tax credit programs would pick up anothed $234 million in project costs, with the remainder of the project’sx costs being contributed directly by the developeras or other investors.
Franchot said that scenario raisesseveral concerns, includinhg the ability for the state or the developersd to borrow money in the midst of the nationwidse credit crunch. He said he’s also concernec about the state’s ability to negotiate fair leaser terms with the developers given they would both be heavilty invested in making sure the projectis “The problem is that the credit market s are bone dry,” Franchot said. “Obviously this is a long-term but I’m not confident that the privats sector will finance this in a way that the state canaffordf it.
” In addition, Franchot said he isn’t sure why the statde would make the project a prioritt above other pressing needs such as new college dormitories or other state-funded construction projects.