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Arizona Considers Selling Capitol Buildings 301

Posted by samzenpus
from the everything-must-go dept.
Things are so bad in Arizona that legislators are considering selling the House and Senate buildings where they've met and worked for more than 50 years. Dozens of other state properties may also be sold. The plan is to sell the properties and then lease them back over several years before assuming ownership again. "We've mortgaged the legislative halls," said an exasperated state Rep. Steve Yarbrough, a Chandler Republican. "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." I bet they could get a great price on the Grand Canyon.

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Arizona Considers Selling Capitol Buildings

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  • Re:Really? (Score:5, Informative)

    by Delwin (599872) * on Thursday July 30, 2009 @04:14PM (#28887273)
    You don't live in Arizona do you? They've already cut everything they can. There's constitutional restrictions on what they can touch (direct voter mandates cannot be cut) and there's a lot of essentials that cutting will cripple the future of the state if they're cut any farther than they already have been (Education being the most commonly talked about one).

    They're out of things to cut and any attempt to raise taxes has been shot out of the water by the legislature. The final compromise sends the tax hike to the voters so the legislature doesn't get their political hands dirty with it.

    Should they have saved during the boom more than they did? Yes. Did Arizona save a lot during the boom? Actually yes it did but all of that savings only covered last year's deficit. Now savings is depleted and current tax revenues have fallen by double digit percentages but the population hasn't fallen by much (most areas are actually still growing) so basic services that the government is responsible for still need to be covered.

    As is a lot of the state parks are now shut down because there's no money to pay for them. So don't knock the government here for doing everything in their power to fix the problem. At least we haven't had to send out IOU's like California yet.
  • by religious freak (1005821) on Thursday July 30, 2009 @04:28PM (#28887545)
    I'm sure the covenants of any contract would keep the owner's options quite slim. Probably a NNN lease where the ownership is almost a formality. There's no way you could do such a thing as you suggest without landing in court for a very long time.

    Unlike California, Arizona cannot issue state debt (I believe it may even be in the constitution), so it looks like they're looking for a back-end deal to issue debt without violating state laws. It may not even be such a terrible idea. Interest rates (cap rates, more specifically) on real property for a AAA tenant are very reasonable. If they could incur a small amount of debt constitutionally, and pay a reasonable rate for it, pay it off in the future, it's not entirely bad. I'm not saying it's good, but that's where AZ is at right now.
  • by TroyM (956558) on Thursday July 30, 2009 @04:34PM (#28887695)

    Under Eminent Domain, the government still has to pay fair market value for what they take.

  • There's a difference between patriotism and theft.

    Look at the budget for the State of Arizona...for 2000, it was 27 billion, for 2009, it is 55 billion...

    http://sunshinereview.org/index.php/Arizona_state_budget [sunshinereview.org]

    Gov't spending is up 8% annually. Where the hell is the money going? Why do you want to raise taxes to double their current levels when people's paychecks have not gone up. Cut services... the state spending is out of control.

  • by thisnamestoolong (1584383) on Thursday July 30, 2009 @04:55PM (#28888063)
    A real patriot would think that we ought to give as little money to the thieves who have stolen our free country away from us and covertly enslaved us.
  • by hey! (33014) on Thursday July 30, 2009 @05:22PM (#28888509) Homepage Journal

    OK, answers to your question:

    (1) Yes, they do have to pay rent. Where will the rent come from? From the proceeds of selling the building.

    (2) Yes, they want to buy it back, they will pay more for it than they got. The rent money they'll have sent will be gone forever.

    (3) Yes, the state will end up losing money on this.

    (4) No, it is not a BS accounting scheme, it's actually quite straightforward. It might be a bad financial decision. Or it might not.

    You see, this is not about saving money. It's about having enough cash on hand to pay the bills. From a financial standpoint, it's a lot like taking a loan. Does it make sense to take a loan to buy a car, even though you end up spending a *lot* more? Sometimes yes, sometimes no. If you don't need the car, it doesn't make sense. If you have the cash on hand to buy the car without risking running out, it doesn't make sense to take the loan unless you've got really *excellent* investments. If you don't have the cash to buy a car, and you *need* a car to get a job, then the loan makes sense.

    Does this make sense for a state? Well, the deal is you get cash up front but in the end pay a fee for the use of that cash, just like a loan. The alternative is to either (a) obtain more cash or (b) eliminate current cash outlays. In other words, raise taxes or cut spending.

    If you raise taxes, you may delay the economic recovery in your state as businesses choose to relocate to places with lower taxes.

    If you cut spending, you may store up problems like bridges that need to be replaced because they hadn't been painted; an increasingly ignorant and unemployable population; greater costs of fire, crime, and public health crises which are borne in an arbitrary way by random population members, which *also* cause businesses and people to relocate.

    Now if you can find the cash you need by identifying *wasteful spending* that accomplishes absolutely nothing, then hallelujah! On the other hand, reducing spending on *useful* things isn't always a financial bargain.

  • by cpt kangarooski (3773) on Thursday July 30, 2009 @05:32PM (#28888665) Homepage

    No, you get to argue. If you have property which is taken by the state via eminent domain, you have a right under the federal constitution (and typically the state constitution) to go to court on the issue of what the fair value is. You'll present evidence as to what you think the value is, the state will present evidence as to what they think the value is, and a jury will decide which evidence they think is most credible and make a determination based on what they hear. If the government is determined to take your property, they can, but their determination as to fair value is hardly made at gunpoint.

  • by MartinSchou (1360093) on Thursday July 30, 2009 @05:48PM (#28888915)

    In Denmark the former tax minister Peter Brixtofte [wikipedia.org] was mayor in the Farum municipality [wikipedia.org] (he's apparently infamous enough to get his own Wiki page in English).

    He implemented a similar scheme in Denmark (now called "Farummodellen"). If we ignore the fact that this was and still is against the law in Denmark, Farum municipality has ended up with the worst economy in any municipality in the country, despite the fact that it used to be one of the richest and most prosperous ones.

    To give you an idea of the state it left them in:
    In Denmark we have several types of taxes, the municipalities set two types: Municipaly/council tax and property tax. All non-calculated numbers below taken from here [noegletal.dk]
    And compare these two for two fairly close and I think fairly comparable municipalities:
    In 1995 it was 17.30 and 0.60 percent respectively for Farum (sell and lease back)
    In 1995 it was 19.20 and 0.88 percent respectively for Lyngby Taarbæk

    In 2005 it was 22.80 and 1.80 percent respectively for Farum (sell and lease back) (total increase of 5.94%)
    In 2005 it was 19.90 and 0.83 percent respectively for Lyngby Taarbæk (total increase of 0.54%)

    Taxes doesn't tell the whole story of course. So let's look at expenses for the two, calculated pr resident:
    In 1995 it was (Euro)4,256 for 17,835 residents in Farum (sell and lease back)
    In 1995 it was (Euro)4,526 for 49,578 residents in Lyngby Taarbæk

    In 2005 it was (Euro)8,949 for 18,662 residents in Farum (sell and lease back)
    In 2005 it was (Euro)7,572 for 51,611 residents in Lyngby Taarbæk

    So, an increase in expenses of 110% and an increase of 4.6% of the population for the sell and lease back municipality
    And, an increase in expenses of 67% and an increase of 4.1% of the population for the other one

    Now, I'll be honest and say that economics is tricky, and it doesn't get easier when you factor in Brixtofte's convictions for corruption and criminal breach of trust and the still unresolved main case against him partly involving the sale and lease back issues, but all in all it really really didn't pan out in Farum, despite the municipality getting a huge (Euro)268M subsidy paid out over 15 years from the government.

    Even without looking elsewhere, think of it like this:

    Government owned: expenses = Maintenance_g
    Privately owned: expenses = Maintenance_p + profit

    The only way that (maintenance_p + profit) < (maintenance_g) is if maintenance_p << maintenance_g, in which case you'll either end up with a horribly maintained building, possibly unsuitable for people to work in, OR you're paying low level government employees way too much. Last I checked that the latter has never been the case. When's the last time you heard someone say "I'll get a nice cozy government job - it pays a lot better"?

  • by Shivetya (243324) on Thursday July 30, 2009 @05:49PM (#28888923) Homepage Journal

    First, it always is spending that is too high. Politicians make promise after promise because they are not truly responsible for the costs they impose on their constituents. I know some will say that is not true because we can vote them out, but we don't. Just like schools, its the other guy's politician that is bad; theirs is great. Yet while we have politicians clamor to hold corporate executives responsible for the slightest expenditure or such they allow no such hold on themselves. Throw in their truly golden retirement programs we only encourage them to laden on the promises so they can stay in office.

    Just as the Federal government has lost its way so have the states. Both have moved to remove all responsibility for life's difficult decisions. They take our rights away because we ourselves have lost what our rights really are. People today are more concerned with their right to choose who the next American idol is, the right to choose their preferred cell provider, and the right to watch the channels on TV they want. Yet the turn a blind eye to rights that require self responsibility. However politicians are more than willing to step into this void and grant you rights that you already have but they do it with a twist. If you have noticed, most of these new rights come at the cost of someone else paying for it, doing the work.

    As for illegals, please don't try to write off their burden on society. They consume the same if not more of the same government provided resources we all pay for yet the majority don't pay the same taxes we do. After all they aren't legal so how do we collect from them? Buying food at the local grocery and paying rent does not pay for the services our society provides. There are also many studies which show a large illegal population both committing crimes and incarcerated. You cannot have a great society if you guilt yourself consistently in to turning away from the hard decisions.

    What I find amazing is that regardless of loss of income governments only resort to blackmailing the tax paying populace into paying more instead of cutting back on the frivolous or over staffed government agencies. Instead of cutting "lifestyle" agencies and such where do they hit us first? Education, police, and fire. This was well played out in Atlanta recently. Until the city folk caved and accepted higher taxes the city set about to close fire and police stations in sensitive areas - read areas where resistance to increased and undue taxation were most evident.

    Yet people want to hand their right to choose their own health care to these people? Guess what, you will see endless expansion of it as well. Think its bad that Arizona is thinking of selling state property, wait till it becomes too expensive to afford your own because of the endless increases to the promises made possible by your work.

  • Re:Don't think so... (Score:3, Informative)

    by tjstork (137384) <todd.bandrowskyNO@SPAMgmail.com> on Thursday July 30, 2009 @06:40PM (#28889643) Homepage Journal

    I'll be glad to. Get me a site with actual detailed figures.

    Better yet, tell me exactly what you were planning to cut, since you seem so intimately familiar with exactly how much it should cost to accomplish the necessary, life-improving functions of government.

    There aren't any. In fact, there are no sites at all that offer comparisons at all. That's your government for you. I could pull a series of historical annual reports for any public corporation and get comparisons but no such animal exists for government.

    Therefor, you have absolutely no proof that the sudden increase in spending over the last 8 years, or even the last 4, are necessary, life improving, or life saving.

  • seen this all before (Score:1, Informative)

    by Anonymous Coward on Thursday July 30, 2009 @06:51PM (#28889787)
    great wheeze, very popular in UK. Sell public building cheap to friend of politician, then lease back with public money. Friend gets cheap building, plus good income, friend takes politician out to lunch every now and then, for free. Friend then increases rent. Great transfer of wealth from public (tax payers) to private, rich happy friend, fat happy politician.

Their idea of an offer you can't refuse is an offer... and you'd better not refuse.

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