Cities and states across the nation are selling and leasing everything from airports to zoos””a fire sale that could help plug budget holes now but worsen their financial woes over the long run.
California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it’s parking meters. In Louisiana and Georgia, airports are up for grabs.
About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland’s RBS Global Banking & Markets. Those assets have a market value of about $45 billion””more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.
Here’s a shocker…Los Angeles spent over half a Billion dollars on a K-12 school that has a 4,200 student capacity. That’s $578,000,000 for a building capable of handling 4,200 students. That breaks down to $137,619 per student…which is more than my mortgage. In fact, the average mortgage in the USA is only $136,000. Gee, is it any wonder that some cities are going bankrupt? States? And when these big spenders go bankrupt, they will wail and moan to the Federal Government for a bailout, and Ma and Pa Kettle in fly-over land will end up paying for a half Billion dollar school in the big city. This is not reasonable nor is it fair for the rest of the country to have to pay for the idiotic and profligate spending of some municipalities.
This seems much like the private following the public sector in finding ways to tweak the balance sheet. In recent years many large corporations have divested themselves of the buildings in which they have their manufacturing operations or their headquarters. The problem I see with this approach is that while companies are not tied to a geographical area and have a freedom to leave behind what they sold, public agencies generally do not have such flexibility and it may make little sense to become dependent on a landlord even for a short-term gain.
Whoops, I meant public following the private.
So much for the triumph of socialism in the United States.
“”The investors will make their money back in 20 years and we are stuck for 50 more years making zero dollars,”
Looks as the the government doesn’t know how to add. I’m not sure if this demonstrates that they shouldn’t be in the market, or if they’ve given up any sense of representing the citizenry, preferring to take things the public has bought, sell it to companies at firesale prices, to let private corporations charge their own fees and cut their own corners for institutions formerly expected to serve civil societies. Instead of soldiers, we have mercenaries, who we are forced to pay double.