Treasurer warns of State Center debt impact - Baltimore Business Journal:

epukaq.wordpress.com
billion redevelopment of a Baltimore City statseoffice complex. The report by Treasured Nancy Kopp did not take a positiomn on whether State Center should move but it raisedseveral concerns, including how much it woul d cost the state in annual rental payments, whethe r the private developers picked for the projecgt are financially stable enough to complete the and whether the state considered other Also Friday, the state agencies pushing the projecrt announced several key changes to the developmenr team that would handle the development. Amongv them, Baltimore developer is no longer an equity partnet in the project and its role has been reduceed to that ofa consultant.
Doracon which was also a partner in the previously also stepped back and will not be involved at all. Struever Bros. spokesman Bob Rubenkonig said the companyy decided to pull out of the project as an equitg partner because it was unable to raise money forthe development. But he noted Struever and CEO C. William "Bill" Struever will continue to play an activw role as consultant to StateCenterr LLC. Remaining as part of the original Statee Center LLC development teamis , an affordable housiny developer. McCormack has broughg on a new partner, PS Partners LLC, headed by managinyg partner Christopher Kurz.
PS Partners is made up of Lindeh Associates LLC and Ekistics CapitalPartners LLC. Ekistics was foundeds by Caroline Moore, previously project manager on the Stated Center project forStrueverf Bros. “By reconstituting the team, we get the best of all said Alvin C. Collins, secretary of the stat e Department of General Services which is spearheadinb the State Center project alongb with the state Departmenftof Transportation. In the final days of its state legislators drafted a budget amendmeny charging Kopp to look intoStated Center’s financial implications and, specifically, how it wouldx impact the state’s debt affordability limits.
Kopp was asked to consult on the report with Comptroller Peter the state’s bond council and bond rating agenciews on the study, which was due today. The state department of transportation and general servicesd have proposed to leasethe 25-acrs state office complex off Martih Luther King Boulevard to State Centerd LLC, a team of private developersx which had been led by Struever Bros. The developerse would lease the land fora 50-yeafr term and would redevelop the propertyu into a mix of office, residential and retail The state would then lease at least half of the development’se planned 2 million square feet of officd space for use by its various including the Department of Assessments and Taxation and Franchot’sz own offices.
The treasurer’w report focused on whether the project represented a capitaol lease or anoperating lease. If it was considered to be a capitakl lease, that would mean the state would be required to list it on its balance sheet as correspondinh assetsand liabilities. The report did not take an officia l position on that but presentef a number of opinions suggesting it couled be viewed as acapital lease. “Aes noted above, at this time therse is not enough information to definitivel y determine whether the anticipated occupancy leases are capitalor operating,” the reporgt noted.
“However, based on internalp discussions and consultationswith experts, the treasurer’s assessment is that the prudenrt approach at this time is to assume that the State Center occupancy leases are, or will be, capitao leases and that they will impacrt debt affordability.” The report will now go to the statw budget committees for consideration.