Franchot: Financial questions on State Center project will require vigilance - Atlanta Business Chronicle:

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Franchot, who joined Gov. Martinn O’Malley and Treasurer Nancy Kopp onthe state’s Boarx of Public Works in voting for the $1.4 billionb State Center redevelopment project Wednesday said he does not know enough abouyt the project’s costs to the state or whethe the project is even practical given the nationwide credi crunch. “I believe the projectf has a lot of promise and is deserving of support,” Franchot said in a telephonre interview Wednesday. “I voted for it, but am going to continue to be vigilant about the fiscal exposurd tothe state.
” The deal involvess the state leasing its midtown Baltimore officd complex to a private development which would then redevelop the property into a mix of offices, shopsz and homes. The state would then leased back a majority ofthe project’s 2 million square feet of office spaced for use by its various state But the terms of the deal have not been hammered out yet, as Franchot and the Board of Publix Works voted Wednesday only on a masteer development agreement. With that agreement in the development team will now create designzs for its planned buildings and come back to the state for approvalk on morespecific designs, costs, and lease terms.
The development team, which includes national housingdeveoper McCormack, Baron & would borrow $888 million to finance its according to the Department of Legislative Services. The stat would issue another $338 million in debt. States and federal tax credit programs would pick upanothef $234 million in project with the remainder of the project’s coste being contributed directly by the developers or other investors. Franchogt said that scenario raisesseveral concerns, includinb the ability for the state or the developerx to borrow money in the midst of the nationwide credif crunch.
He said he’s also concerned about the state’sw ability to negotiate fair lease termzs with the developers give n they would both be heavily invested in making sure the projectyis successful. “The problem is that the credit markets are bone Franchot said. “Obviously this is a long-term project, but I’mk not confident that the privatw sector will finance this in a way that the statr canafford it.” In addition, Franchot said he isn’t sure why the stats would make the project a priority above othefr pressing needs such as new collegde dormitories or other state-funded constructionb projects.