Arizona may sell Capitol. Should states lease back properties?
Filed under: Real Estate, Economizer
Has the Great Garage Sale of America's landmarks begun? In an effort to cut its deficit, Arizona is planning to sell off as many as 32 state properties, including state capitol buildings, to help cover a $3 billion budget deficit, according to a Christian Science Monitor story.Joining in the fire sale are California, Pennsylvania and Connecticut, which are also unloading state holdings.
While the sales in Arizona could put $350 million to $700 million into state coffers this year, the state would pay $60 million to $70 million to lease back many of the properties. The deals could cost taxpayers more money in the long run to lease the sites back.
Is this how taxpayers want their money spent? Leasing back government buildings to cover deficits? I hope not.
Leasing can make sense for a short-term purchase, such as a car, and renting a house is prudent if you plan on moving within a few years. But for a state government to lease back its own buildings just doesn't make long-term sense.
"It just shows how deeply the recession really has affected state finances," Todd Haggerty, a research analyst with the National Conference of State Legislatures, told the Christian Science Monitor.
The good news for Arizona is that if it sells its Capitol buildings and leases them back, the state would eventually resume ownership when the arranged terms end.
That would be a nice deal to get if you're selling your home: Sell it and lease it back, then resume ownership some years later.
Arizona Gov. Jan Brewer signed the bill that allows the sale of state buildings on Sept. 3, and the state is now deciding what to sell.
Properties that may be sold and leased back include the House and Senate buildings, the Arizona State Hospital, a state retirement home and Kartchner Caverns State Park.
California is selling 11 properties and leasing them back. They include the Ronald Reagan Building in Los Angeles, the Orange County Fairgrounds and the Civic Center in San Francisco.
I just hope the Golden Gate Bridge and other national landmarks don't end up for sale by short-sighted sellers eager to cover a deficit. It would be a shame to have a private developer build condos atop it.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area. Reach him at www.AaronCrowe.net
