To cut deficit, Arizona may sell its Capitol
The state could sell as many as 32 of its properties to help cover a $3 billion shortfall.
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On a more practical level, now might not be the ideal time to shed state assets, with Arizona in the midst of a deep real estate slump. Even so, the properties probably will appeal to institutional investors such as insurance companies and pension funds that seek guaranteed cash flow, says Chaz Smith of Colliers International, a commercial real-estate broker in Phoenix.Skip to next paragraph
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“Right now, the bond markets are just absolutely in horrible shape and people don’t know where to put their money,” he says.
State ownership represents a steady stream of revenue for investors, he says, adding that sale-lease mechanisms are not unusual. California, which faced a deficit of more than a $20 billion, is doing the same.
“We’re looking to the private sector expertise to help us liquidate these assets,” says Fred Aguiar, secretary of the State and Consumer Services Agency.
California hopes for bonanza
California is putting 11 properties on the market – like Arizona, selling them and leasing them back.
Mr. Aguiar has no doubt the assets will fetch top dollar: “These are unique properties, they’re some of our signature properties.”
Pennsylvania bids farewell to two office buildings
For its part, Pennsylvania has no interest in regaining ownership of the two state office buildings it has sold in Philadelphia and Pittsburgh. It sold the 19-story Philadelphia building, constructed in 1958, for about $25 million to a developer who plans to transform it into condos, says Ed Myslewicz, press secretary for the Pennsylvania Department of General Services.
The 16-story Pittsburgh building, a year older than its Philadelphia counterpart, also is destined to house state residents after the $4.6 million sale closes several months from now, Mr. Myslewicz adds.
The buildings are old and in need of major repairs, so moving nearly 1,800 employees to leased office space saves taxpayer money and helps spur the local economy by putting the structures back on the tax roll, he says.
Back in Arizona, the sales pitch is just beginning. News that the state may sell part of itself already is attracting inquiries from various investors, says John McComish, House majority leader.
“They have money, they’re looking for solid places to invest, and the state of Arizona is still a pretty good investment,” the Phoenix Republican says.