Why Rent if You Can Buy?

October 27, 1990

That's a good question. It is something Maryland Comptroller Louis L. Goldstein has been complaining about for decades. Why should Maryland spend nearly $50 million a year to rent office space when it would be cheaper to put its workers in state-owned buildings? As Mr. Goldstein says, leasing can be a bad deal; all you get at the end is "a shoebox full of rent receipts."

Legislative leaders thus should have no hesitation supporting a proposal to float a special $200 million bond issue so the state can buy and build its own offices in the Baltimore area. Over 750,000 square feet now leased at an annual cost of $11.5 million would be converted to state-owned space. This investment would pay for itself in 15 years -- plus giving the state ownership of extremely valuable real estate.

Bond-rating houses are likely to applaud this move because it saves so much money over the long run. When Delaware undertook a similar office consolidation program, it got rave reviews from bond authorities. Maryland's triple-A rating wouldn't be undercut one iota.

An added bonus is that with today's soft real estate and construction markets, the state could strike some handsome deals. For instance, the proposal calls for the purchase of four buildings occupied by state agencies, including 200 St. Paul Street, home of the attorney general. This brand-new structure can be had for $22 million under an option that expires next month. The building's appraised value: $25 million.

The same kind of savings might be possible for the $100 million tower that would be built across from the State Office Building on Preston Street. This new structure would consolidate state services, providing convenience for citizens and cost-efficiencies for the government. Two other new structures, to house District Courts in Towson and Pikesville, should also be built by the state while the market is favorable.

This bond issue is too big to include within the state's regular capital bond program. If that were done, there wouldn't be enough money to pay for needed prisons, local jails, local schools or college buildings. Maryland's financial stability is strong enough that a special, one-time bond authorization is not only feasible but eminently sensible.

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