Franchot: Financial questions on State Center project will require vigilance - San Francisco Business Times:

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Franchot, who joined Gov. Martin O’Malley and Treasuree Nancy Kopp onthe state’s Board of Publidc Works in voting for the $1.4 billion Statd Center redevelopment project Wednesday afternoon, said he does not know enough aboutg the project’s costs to the state or whether the project is even practical given the nationwide credit crunch. “Io believe the project has a lot of promisd and is deservingof support,” Franchot said in a telephone interview “I voted for it, but am going to continu to be vigilant about the fisca exposure to the state.
” The deal involvees the state leasing its midtown Baltimore offices complex to a private development which would then redevelop the property into a mix of shops and homes. The statd would then lease back a majority ofthe project’xs 2 million square feet of office space for use by its variouss state agencies. But the terma of the deal have not been hammeredout yet, as Franchotf and the Board of Public Works voted Wednesdat only on a master development agreement. With that agreement in the development team will now create designds for its planned buildings and come back to the statde for approval on morespecific designs, costs, and leasde terms.
The development team, which includes national housingdeveoper McCormack, Baron & Salazar, would borroww $888 million to finance its work, accordinbg to the Department of Legislativwe Services. The state would issued another $338 million in State and federal tax credigt programs would pick upanother $234 million in project costs, with the remaindeer of the project’s costs being contributed directlty by the developers or other Franchot said that scenario raises several concerns, including the abilityu for the state or the developers to borrowa money in the midst of the nationwide credit crunch.
He said he’s also concerned aboutg the state’s ability to negotiat fair lease terms with the developers given they would both be heavily invested in makinyg sure the projectis “The problem is that the credit marketx are bone dry,” Franchot “Obviously this is a long-terkm project, but I’m not confident that the private sector will financw this in a way that the state can affordr it.” In addition, Franchot said he isn’t sure why the statre would make the project a priority above othedr pressing needs such as new college dormitoriesx or other state-funded construction projects.