The Arizona government is considering selling and leasing back approximately $1 billion of state-owned properties, including its House and Senate Capitol buildings.
The measure is one of a number of potential solutions reluctantly being considered by Arizona Governor Jan Brewer as a way to help the state fill an estimated $3.4 billion budget gap.
A list of the candidate properties made available by Governor Brewer’s office indicates that the state could potentially sell 33 properties.
These include 11 prisons, three legislative buildings, including the House and Senate and each valued at $18.2 million, two administrative buildings, the Arizona State Hospital, and the state’s Coliseum and Exposition Center. Arizona said it would also consider selling the Phoenix headquarters of the Department of Public Safety, valued at $50.5 million, and the executive office tower for the Department of Administration, valued at $39.5 million.
Under the transaction structure being considered by the Governor’s office, the state would sell the properties and then lease them back for a specific amount of time before assuming ownership at the end of the lease.
A spokesperson for the Governor said no specific buildings had yet been selected and any selection would have to be approved by the legislature before a sale could happen. A lengthy review and appraisal process would also need to occur, the spokesperson added.
All told, the properties’ total value, as estimated by their replacement cost, is estimated at a little over $1 billion.
Like many states struggling with budget deficits, Arizona has seen its revenue sources, such as property taxes, erode as a result of the recession.
In just one sign of the state’s continuing economic woes, Phoenix, Arizona’s capital and most populous city, was one of only five cities on the closely watched S&P/Case-Shiller index of home prices to show a decrease in the index’s latest quarterly results, published today.
The index, which tracks home prices in 20 metropolitan areas, rose 0.5 percent during the second quarter of this year, marking its first increase after 34 straight months of decline. Phoenix home prices fell 0.9 percent over the same period.