Gov. Bobby Jindal’s administration is leasing the rights to a state-owned parking garage for $2 million to help balance Louisiana’s budget, a deal that appears to have the state taking a loss for the cash up front.
The 91-year lease will generate less money than the state paid for the garage, while also giving away possibly millions of dollars the state stood to receive in parking revenue over the life of the contract.
The arrangement is part of a Jindal administration trend of leasing and selling state property to patch short-term budget gaps.
In several instances, deals are front-loaded to provide maximum benefit for the Republican governor while leaving his successors with less revenue to balance state budgets. For example, privatization deals for the state’s public hospitals included “advance lease payments” that provided millions in immediate cash.
The governor’s Division of Administration said the 466-space parking garage was built for employees in a nearby state building that recently sold, so it wasn’t needed.
Spokeswoman Meghan Parrish said the lease will pay “for the highest appraised value of the property, allowing us to meet financial obligations while maximizing the use of the space.”
The attorney general’s office criticized the deal, saying the appraisal didn’t reflect the worth of the prime downtown Baton Rouge property, in the hub of successful revitalization efforts.
Currently, annual income from the garage ranges from $330,000 to $400,000, with the state and city splitting the revenue. If the revenue stayed flat at the low end, the state would lose at least $13 million in income over the life of the deal. That doesn’t count lost income from the lease of retail space on one side of the garage.
Meanwhile, the city of Baton Rouge will receive $1 million in the lease deal and keep one-third of the money generated by the facility. Local officials negotiated their deal separately.
The parking garage, which was completed in mid-2005, cost $6.9 million to build, with the city paying about $2.5 million.
Parrish said the facility was built for employees who worked in the art-deco State Office Building, which recently sold for $10 million to a developer that intends to convert it into a hotel.
“The previous administration built it, and it was for a specific purpose for the State Office Building. Once we sold that building, it wasn’t necessary for us to keep it up,” she said.
At a meeting of the Office Facilities Corporation, which oversees several state-owned buildings, the attorney general’s office raised objections.
Rick McGimsey, the attorney general’s Civil Division director, said the appraisal didn’t take into account construction planned for the area, according to the minutes of the meeting.
McGimsey wouldn’t speak to The Associated Press.
“Under our legal advice and opinion, the appraisal submitted in support of the value of the lease was insufficient, as we conveyed at the June 16 meeting,” said Laura Gerdes Colligan, attorney general’s spokeswoman.
The appraisal said there was a surplus of parking in Baton Rouge. As for a new $55 million IBM facility planned for downtown and the new luxury hotel in the Old State Office building, the appraiser said it would be two to five years before those impacts could be measured.