Arizona Gov. Jan Brewer's plan to buy back the state capitol complex that she sold in 2009 has been met with swift opposition from Democrats in the state legislature and been dragged into a debate over the math behind the decision.
Brewer asked the Republican-dominated legislature Monday for approval to purchase the buildings that make up the capitol complex in Phoenix by Feb. 14, the 100th anniversary of statehood. Brewer had sold and then leased back the buildings as part of a larger real estate deal to plug a hole in the state's budget in 2009. During her State of the State address on Monday, the Republican governor said she wanted to repurchase the buildings to celebrate the state's centennial.
"There's just one problem, most of our capitol complex, including the building we gather in today, is not ours," Brewer said Monday.
But the Arizona House minority leader, Rep. Chad Campbell (D-Phoenix), has raised concerns that the state will have to shell out an extra $24 million to roll back this part of the real estate deal. He said the dollar amount represents the penalty for buying back bonds early that were issued to cover the deal.
"There is absolutely no way or no reason to try to buy back the Capitol now," Campbell told HuffPost. "It is not economically possible. It was a horrible idea to begin with."
Brewer spokesman Matthew Benson disagreed with Campbell's assertion, saying the governor was structuring the new deal to avoid paying a penalty. He said that Brewer is asking legislators for a $105 million appropriation this year to pay off the bonds over the next eight years. The original revenue from selling the bonds was $82 million. Benson said the $23 million increase accounts for interest payments over the life of the bonds. He said that interest on the bonds would be paid through 2019 so that no early buyback penalty would be charged.
While those payments would continue through 2019 under the governor's proposed deal, the deed to the property would shift back to the state in 2012, Benson explained. He said Brewer's calculations have the state saving $47.5 million over the life of the deal by eliminating the final 10 years of interest payments.
The funds to buy back the capitol complex would come from the state's $600 million surplus, which exists courtesy of a voter-approved sales tax hike and Brewer's cuts in education and health care spending. Benson said Brewer's budget priorities include paying down the state's debt -- including the capitol buyback -- and funding tourism promotion, local governments and the state's "safety net." Brewer is scheduled to unveil her spending plan on Friday.
Rep. Campbell said he believes the surplus funds should be used to erase past budget cuts.
"If you buy back early, then you are throwing tax money down the drain," Campbell said.
Campbell has also voiced concern about who actually bought the capitol complex. Under the terms of the deal -- which also included the sale/leaseback of the state archives, state fairgrounds, a prison and a hospital -- the deeds are held by U.S. Bank as trustee for the investors, who purchased "certificates of participation" to receive part of the annual lease payments. (The deal did not include the original capitol building, which is now a museum.) The Arizona Republic reported in 2010 that 15.5 percent of the shares were sold to individuals, while the bulk went to institutional investors. Underwriters on the project include Citigroup, Barclays, Goldman Sachs, Merrill Lynch and Bank of America.
"We have no idea who owns these buildings," Campbell said. "They are basically commodities."