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 Treasurerf Nancy Kopp onthe state’as Board of Public Works in voting for the $1.4 billionn State Center redevelopment project Wednesday afternoon, said he does not know enougy about the project’s costws to the state or whether the projectf is even practical given the nationwide creditg crunch. “I believe the projectt has a lot of promise and is deservinvof support,” Franchot said in a telephond interview Wednesday. “I voted for it, but am goinh to continue to be vigilant about the fisca exposure tothe state.
” The deal involves the state leasingf its midtown Baltimore office complex to a private developmentt team, which would then redevelop the propertuy into a mix of shops and homes. The state would then leasr back a majority ofthe project’s 2 milliob square feet of office space for use by its various state agencies. But the terms of the deal have not been hammeredout yet, as Franchot and the Board of Publicv Works voted Wednesday only on a mastet development agreement. With that agreement in place, the development team will now createw designs for its planned buildinge and come back to the stater for approval on morespecific designs, costs, and leas e terms.
The development team, which includes national housintdeveoper McCormack, Baron Salazar, would borrow $888 million to finances its work, according to the Department of Legislative Services. The state would issue another $338 million in State and federal tax credit programs would pick upanothee $234 million in project with the remainder of the project’s costs being contributed directly by the developers or othe investors. Franchot said that scenario raiseaseveral concerns, including the ability for the state or the developerw to borrow money in the midstg of the nationwide creditr crunch.
He said he’s also concerned about the state’s ability to negotiat fair lease terms with the developersx given they would both be heavily invested in making sure the projectis “The problem is that the credit markets are bone Franchot said. “Obviously this is a long-term but I’m not confident that the privatee sector will finance this in a way that the state canafforf it.” In addition, Franchot said he isn’t sure why the stater would make the project a priorithy above other pressing needs such as new collegd dormitories or other state-funded constructionj projects.