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Arizona Ponders Sale/Leaseback of Some State Buildings to Cover $3.4 Billion Deficit
The cash-strapped State of Arizona may sell the identical House and Senate buildings where legislative business has been conducted for 50 years. A total of 32 properties within the Capitol complex, valued in excess of $1 billion, may be sold and leased for several years prior to assuming ownership again. Investors would benefit from long-term lease payments from a stable tenant. According to projections, the sale/leaseback arrangement would infuse as much as $735 million into the state’s coffers. The plan, which has bipartisan support, isn’t popular with Arizona’s taxpayers, who once owned the buildings free and clear.
Although Governor Jan Brewer vetoed a sale/leaseback proposal during the summer, the provision is expected to return as a solution to the state’s $3.4 billion deficit. The list of properties targeted for possible sale and leaseback encompasses buildings that provide necessary government services. Included are the House and Senate buildings, the Phoenix and Tucson headquarters of the Arizona Department of Public Safety, the State Hospital, state fairgrounds and several prisons. The properties were selected based on their appeal to potential investors.
“We’ve mortgaged the legislative halls,” said Representative Steve Yarbrough. “That just tells you how extraordinary the times are. To me, it’s something we’re going to have to do no matter how much we find it undesirable.”
The 1900 State Capitol building, now a museum, is not up for sale.