Arizona once again owns its state Capitol buildings, Gov Doug Ducey said Monday.
The Governor’s Office and the Department of Administration is finalizing a deal to reclaim ownership of approximately nine properties, including the House and Senate buildings and the state’s Supreme Court, state leaders sold off during a state fiscal crisis prompted by the Great Recession.
Nearly a decade after Gov. Jan Brewer approved plans for a $1 billion “sale-lease-back” deal involving 27 state-owned buildings, Arizona is eligible to refinance the debt the state took on to buy back those buildings by 2030.
In doing so, the state is able continue paying off the debt at a lower interest rate and reduce the number of state facilities put up as collateral.
The refinancing will allow the state to regain control of other buildings it previously owned, including the state fairgrounds, Arizona State Library, Archives and Public Records and the Arizona State Schools for the Deaf and Blind.
Arizona was approved to remove the cluster of buildings from its collateral debt package Monday. Budget documents obtained by the Arizona Capitol Times said the state will regain ownership of the buildings “free and clear.” The state will finalize the refinancing deal later this year.
Arizona is on track to save nearly $109 million — approximately $10 million a year — by 2030 from the refinancing, according to budget documents. Ducey will release his executive budget, which will likely contain more details of the deal, Friday.
Arizona still owes approximately $1.14 billion in debt service from the 2010 deals that netted the state $1.42 billion.
In 2010, the state pulled in just under $1 billion in short-term cash by selling off about dozen state properties to help close the gap on Arizona’s $3.2 billion revenue shortfall. Arizona sold “certificates of participation” that required the state to make semiannual payments to certificate holders from the general fund.
The state also secured another $425 million in financing by borrowing against future state Lottery income.
The state will not regain control of all the buildings sold off amid Arizona’s financial crisis. The state will work over the next decade to continue paying off debt on numerous prison facilities and Arizona State Hospital.
The 2009 decision by Arizona leaders to sell off state properties, including the Capitol buildings, made national news. At the time, “The Daily Show,” then hosted by comedian Jon Stewart, had a four-minute segment mocking Arizona’s plan.
In his “State of the State” speech Monday, Ducey vaguely hinted at Arizona’s reclamation of the Capitol buildings, throwing shade at “The Daily Show” in the process.
“Breaking news. Somebody call ‘The Daily Show,’ we even own this building again,”Ducey said.
Lawmakers responded with raucous applause, but none seemed to know the context behind Ducey’s comments.
Ducey’s remarks on the buildings came as a complete surprise to most people at the “State of the State” speech because his comments weren’t even included in a pre-released copy of his speech.
In 2012, Brewer, in her “State of the State” address, asked lawmakers to put forth a bill to repurchase the state House, Senate and Executive Tower.
Brewer aimed to use $106 million in “surplus” revenue to buy back the three buildings, but the deal never materialized because the governor faced resistance from lawmakers who wanted to save the money or use it elsewhere.