Dan Rodricks State Center Straw Man
Over the years we’ve become quite adept at debunking the cockamamie logic and straw man arguments that our former colleague Dan Rodricks pours into his columns.
Rodricks found a local straw man/activist (most likely provided to him by KO Public Affairs, which represents the politically connected developers and who are tied to the hip of the Maryland Democratic Machine) to make the case that Hogan the businessman should support the “win-win” scenario and renew the development of State Center with the current developers.
However, missing from Rodricks’ “argument” is any notion of the outrageous cost the current State Center developers wish to foist upon state taxpayers……and a little something called the law.
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At issue in the Board of Public Works decision to retract authority to execute the State Center leases, is that by law it could not approve the leases. The leases were determined to breach the threshold classifies them as capital leases, and by law, the legislature must give the approval to enter into the leases—not the Board of Public Works.
Setting aside Roderick’s ignorance of the law, he completely ignores the massive impact of the current State Center plan on the state’s finances. Capital leases count against the state’s debt affordability and according to the Department of Legislative Services puncture Maryland’s 8% debt ceiling. This would necessitate a hike in the state’s property tax. Proceeds from the state property tax cover debt service payments.
Need we remind you that Governor O’Malley racked up so much debt on the taxpayer credit card that debt—because he swapped cash in capital accounts to cover operating deficits—that debt service payments from the general fund are on track to eclipse school construction spending.
Moving forward with the current State Center project would consume the state’s remaining debt capacity and crowd out other projects.
As the legislature’s own Department of Legislative Services stated:
- The proposed leases with the State Center LLC developers will according to DLS are likely capital leases.
- The leases would cause the state to breach its 8% debt ceiling.
- Annual lease payments would equal $18.5 million and escalate 15% every five years for 20 years, with total lease payments equaling $176 million.
- The state would pay $25.85 per square foot in rent, which is nearly $7 above the market rate. DLS estimates the “all-in” rent to be $35 per square foot.
In other words, Rodricks and the State Center Developers want to bestow a property tax hike on the rest of the state to make us pay for the privilege of paying for Class B office space at a rate far above the rate for Class A (waterfront) office space.
What kind of businessman would put his shareholders in that kind of position?