Land Speculation and the General Assembly

I had one of those "only in Rhode Island" moments this morning when I picked up the ProJo and read that the Democrat leaders of the General Assembly had secretly placed a bid on a prime piece of downtown Providence real estate for the purpose of expanding the bureaucratic office space.

House Speaker William J. Murphy and Senate President Joseph A. Montalbano confirmed last night having made the bid, on the General Assembly's behalf, to buy the former American Express building next to the train station for unspecified state use, which could include office space for the state's part-time legislators.

The two Assembly leaders went public after refusing initially to either confirm or deny having made a play for the building in the auction being conducted by the Rhode Island Public Employees Retirement System, under the supervision of a U.S. bankruptcy court judge.

In a statement issued last night in response to two days of questioning, Murphy and Montalbano cited the "significant rents" that several state agencies -- including the treasurer's office -- are paying to lease privately owned office space in Providence.

They said: "Moving these departments into a state-owned building would save the taxpayers money over the long term. Further, the bid helps to protect the state pension fund."

The third reason they cited for making a bid on the 135,110-square-foot, four-story building, with a two-level underground garage: with 150 parking spaces, "the property would help ease the parking situation faced by the public when visiting state departments or the State House."

Said Murphy in an interview: "We look at this building and this opportunity and say there are endless possibilities for the State of Rhode Island." Added Montalbano: "The focus is on the opportunity of acquiring the building. We didn't want to sit idly by and let the opportunity go by."

Governor Carcieri and former Democrat Governor Bruce Sundlun wasted no time in decrying the move.

"The idea that we should be buying a Class A, premium office building in downtown Providence for some unknown use is absolutely ridiculous," said Carcieri, ticking off his objections one after another. Among them:

"That's got a lot more potential for economic development. Bring a real business into the city. That will bring jobs with it and income taxes and corporate taxes, hopefully, and all those things. That's what it should be used for.

"The state doesn't need it. My gosh, we've got plenty of buildings we are looking at converting, rehabbing and so forth" at the state-owned Pastore complex in Cranston, "so I have no idea what they are thinking."

"Last time I looked, it's the executive branch that purchases property."

Finally, he said: "Here we are scrambling for money to do much more needy projects . . . [and] we are going to spend that kind of money? I see no sense in this whatsoever."

Added a "disappointed" Sundlun: "All that does is tell me why all of the arrangements that had been made and worked on -- for what, three years at least -- to acquire that Francis Street land are apparently going down the drain.

"Everything was going swimmingly and then all of a sudden, it closed off and I couldn't get a word out of Murphy . . . Other people talked to him on my behalf and he said, 'tell Bruce I love him, but I can't talk to him now.' "

I wonder if there's any other angle being played here?

After meeting Murphy for coffee at a Dunkin' Donuts in Warwick earlier in the day, Watson said: "I can confirm that I met with the speaker this afternoon and he confirmed that the General Assembly has submitted a bid for the building.

"I understand it is in and around $20 million . . . [and] the speaker hopes and expects to save money by consolidating agencies, such as the auditor general and perhaps other agencies that are, perhaps, leasing properties."

Watson said he had many questions, among them: how much money will be removed from the City of Providence tax rolls if the state buys the building. According to Capitol Properties, which owns the separate groundlease on the building, current city taxes on the land and building are $616,393.

He said Murphy promised answers and also assured him "it would require approval of the General Assembly."

But Watson said his most significant question -- where would the money come from -- remains unanswered, and "I have yet to be convinced by anyone a part-time legislature requires additional office space."

As for the possibility of housing other non-legislative agencies in that building, Watson said: "we have a duly elected governor who can address those issues."

UPDATE: Watson was on with Dan Yorke this afternoon. Essentially, he repeated his concerns but, with some questioning by Yorke, the picture became a bit more clear. According to Yorke, and confirmed by Watson, the Joint Committee on Legislative Services has a $30 million block of cash that they keep rolling over every year that they can use when they want. As such, though Murphy indicated to Watson that the General Assembly would be consulted to approve or reject the purchase, the fact is that there is no legal reason for this to occur. According to Watson, there are also some Separation of Powers issues.

Yorke gave his impression that the offer by Murphy to bring in the General Assembly seems to have occurred only because the deal was found out. To this, Watson commented that, as he understood it, the bid has to close by the end of November. Since the General Assembly doesn't meet until January, he wondered, "How do we go about approving this?" Finally, Watson speculated that, given the Governor's position on the matter, how many members will feel comfortable dashing up to the State House to approve this purchase in November? By that time, heating oil prices are going to be rising and the appearance could be given that the Legislature is throwing the public's money around for the benefit and comfort of themselves.