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Fire Sale Of State Building Going To Rendell Backer?

Fire Sale Of State Building Going To Rendell Backer?

Auditor General Is Reviewing Rendell Administration’s DGS Sale Agreement
By Chris Freind

Eyebrows have been raised concerning the possibility that some of Democratic Gov. Ed Rendell’s high-dollar donors may be buying state property at “fire sale” prices in a depressed real estate market. The prospective new owner of the State Office Building in Pittsburgh is affiliated with a company whose two top executives contributed $221,000 to Gov. Rendell’s campaigns.

Pennsylvania Auditor General Jack Wagner, the commonwealth’s elected fiscal watchdog, announced he was reviewing the Pennsylvania Department of General Service’s (DGS) agreement to sell the State Office Building in Pittsburgh to River Vue Associates for $4.6 million because the transaction amounted to a “fire sale.” DGS is part of the executive branch of the Rendell administration.

River Vue Associates is an affiliate of Millcraft Industries of Canonsburg, Washington County.

Millcraft chairman Jack Piatt has contributed $186,000 to Democratic Gov. Rendell’s campaigns, and Lucas Piatt, Millcraft’s Vice President, has donated $35,000 to Mr. Rendell.

River Vue would acquire the State Office Building early next year and possibly turn it into residential units with some hotel, retail or other types of space, according to the Pittsburgh Tribune-Review.

In a letter hand-delivered to DGS Secretary James Creedon, Mr. Wagner said the Department of the Auditor General’s Office of Special Investigations would be seeking all available information pertaining to the sale, including lease terms and associated build-out costs at all privately owned buildings where DGS has relocated, or plans to relocate, 800 workers from at least 22 state agencies.

“I continue to believe this is the worst possible deal for the taxpayers of Pennsylvania,” Mr. Wagner said. “It makes no sense for the commonwealth to sell this prized asset — the signature building of state government in Western Pennsylvania — for the lowest possible price during the most depressed real-estate market in decades.”

Mr. Wagner asked DGS a month ago to take the State Office Building off the market until economic conditions improve, after another developer, the Buncher Co., withdrew its bid of $4.5 million. As an alternative to selling the building, the auditor general suggested the state investigate the possibility of using federal funds for green technology to rehabilitate the 52-year-old structure.

The 274,000-square-foot building occupies a prime, 1.3-acre location in downtown Pittsburgh, at the entrance to Point State Park, and offers sweeping views of the confluence of Pittsburgh’s three rivers. Along with the Gateway Center complex, the State Office Building is a symbol of the post-Word War II downtown renaissance envisioned by David L. Lawrence, the late mayor of Pittsburgh, who served as Pennsylvania governor from 1959-63.

“The land alone is worth more than the sale price,” Mr. Wagner said. He noted the state has agreed to purchase the City of Pittsburgh’s Municipal Courts Building, which is one-fifth the size of the State Office Building and is situated in a less desirable location, under the Liberty Bridge and next to the Allegheny County Jail, for $9 million.

The State Office Building sale is a bad deal, Mr. Wagner said, because there would not be enough profits from the sale to offset moving expenses and pay for the first year of leases at multiple locations in downtown Pittsburgh, saddling taxpayers with an additional spending burden.

“During these difficult economic times, with the state facing multibillion-dollar deficits for the next few years, we should not be saddling hard-working Pennsylvania residents with additional financial burdens they cannot afford,” Mr. Wagner said.

“In addition to being financially wasteful, it would be ludicrous for Secretary Creedon to decentralize state offices in Pittsburgh while other government agencies are moving to centralize other functions in order to save money,” Mr. Wagner said. “Under the terms of this sale, the only certain winners are the buyer of the building and the landlords of the office space where state employees will be relocated.”

Chris Freind can be reached at cf@thebulletin.us

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March 28, 2009 at 2:19 pm
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