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

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Franchot, who joined Gov. Martin O’Malley and Treasure Nancy Kopp onthe state’s Boars of Public Works in voting for the $1.4 billion Statr Center redevelopment project Wednesday said he does not know enough aboutg the project’s costs to the state or whether the projecgt is even practical given the nationwidee credit crunch. “I believe the project has a lot of promis e and is deserving of Franchot said in a telephoneinterview “I voted for it, but am goingt to continue to be vigilant abouf the fiscal exposure to the state.
” The deal involvesz the state leasing its midtown Baltimore office complex to a private development team, which woul then redevelop the property into a mix of shops and homes. The state woulr then lease back a majority ofthe project’s 2 milliohn square feet of office space for use by its various statee agencies. But the terms of the deal have not been hammered out yet, as Franchot and the Board of Public Worke voted Wednesday only on a master developmentt agreement. With that agreemenyt in place, the development team will now create designds for its planned buildings and come back to the statd for approval on morespecific designs, costs, and leaswe terms.
The development team, which includes national housingvdeveoper McCormack, Baron & Salazar, would borrow $888 milliobn to finance its work, according to the Department of Legislativse Services. The state would issue another $338 milliojn in debt. State and federal tax credirt programs would pick upanother $234 million in projectt costs, with the remainder of the project’ws costs being contributed directlt by the developers or other investors. Franchot said that scenario raise sseveral concerns, including the ability for the state or the developers to borrow mone in the midst of the nationwidde credit crunch.
He said he’s also concerned about the state’a ability to negotiate fair lease terms with the developers given they would both be heavily investedx in making sure the projectis successful. “Thse problem is that the credit markets are bone Franchot said. “Obviously this is a long-term project, but I’j not confident that the private sectod will finance this in a way that the stated canafford it.
” In addition, Franchotf said he isn’t sure why the statse would make the project a priority aboves other pressing needs such as new colleg dormitories or other state-funded construction