The Daily Show's coverage is far more entertaining, really gets across how dumb this plan is and is therefore quite devastating to Arizona and its GOP controlled government.
It has 205,901 square feet, terrazzo floors, a big chunk of
chrysocolla displayed in the lobby and a long-term tenant who wants to
stay put for 20 years — leasing the building back from a buyer for more
than its assessed value. Bonus feature: There is a nifty gun locker for any potential buyer or their guests who arrive packing heat.
The
office building houses most of the State of Arizona’s government and
was recently put on the market to help this broke state close its
budget deficit.
It is looking like a pretty good deal, if the state can prove it is credit worthy.
“People
are calling from all over the country,” said Alan Ecker, a spokesman
for the Arizona Department of Administration, who estimates that his
office has taken 60 calls of inquiry since Gov. Jan Brewer approved the
sale on Sept. 3 as part of a still-unresolved budget plan. “The balls
are rolling.”
Selling a building that the owner wishes to
continue to occupy — known as a sale and lease-back — is an oft-used
strategy for businesses looking to shore up cash flow, but it is less
common for governments to do so. But these are uncommon times for
states gasping under piles of Medicaid bills, unemployment claims and pension payouts, and fewer tax dollars rolling in.
“Everything
is on the table for a lot of states right now,” said Robb Willis, a
lobbyist for H&W Development, a developer in Mableton, Ga., that is
considering buying the executive office building here. “Arizona just
seems to be a hotbed right now.”
If the people of the proudly
independent state of Arizona would be the least bit despondent to have
the owners of their state buildings hail from the Peach State, that may
just be the cost of doing business right now.
To help close a
$3.2 billion revenue shortfall, lawmakers allowed the sale and
lease-back of the executive office tower, the buildings that house
offices for both chambers of the State Legislature, as well as 10
prison complexes, a state mental hospital and other buildings. (For
now, the historic Capitol, with its grand dome and aging interior, is
not for sale, though state officials continue to ponder the
possibility.)
All told, the assets are valued at $735 million.
They are expected to cost the state $1.5 billion in lease-back fees
over the next two decades, after which ownership of the buildings would
revert to the state. It is sort of like renting to own new furniture.
Except the state already owns the furniture.
For a state
looking to preserve its credit rating and in need of a quick infusion
of cash, and for an investor looking for a modest but easy return on an
investment — better than treasuries, say, but not as exciting as
equities — it could be a convenient marriage.
“There are a lot
of empty buildings around these days,” said Lee Hunter, a principal of
H&W, the Georgia firm. “So a fully leased building in this
environment is attractive, and it is going to be extremely competitive.”
The
centerpiece of the sale plan is the executive office tower, which holds
the executive functions of government as well as the secretary of
state, the state treasurer and the state mine inspector, and is valued
at $39,511,240.
State lawmakers have cut their way through the
rest of the budget, which remains unsolved months after the fiscal year
ended because of an impasse over a sales tax increase sought by the
governor but disliked by her fellow Republicans, who are a majority in
the Legislature. Yet more cash is still desperately needed to get
through this year and next. So prisons, historical societies, a
visitor’s center at a revered state park and the Legislature building
all must go.
Democratic lawmakers have little fondness for any of it.
“It’s a bad loan that makes no fiscal sense for the state,”
said Kyrsten Sinema, the ranking Democrat on the State House
Appropriations Committee. “We have to start paying interest in the very
next fiscal year, when we’ll still be stuck in a massive deficit. So
it’s definitely a penny-wise, pound-foolish plan.”
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