Gov. Tom Wolf is betting on the farm — well, the Department of Agriculture — to help fill a big hole in the commonwealth’s $2 billion structural deficit.
In his 2017-18 budget proposal last week, Wolf proposed seeking a $200 million lease-leaseback of the Pennsylvania Farm Show Complex and Expo Center.
Under the arrangement, a private investment company would pay an upfront fee, presumably $200 million or more, to the commonwealth. Pennsylvania would make annual rental payments with a negotiated interest rate to that private entity over a period of time. Wolf has proposed a 29-year payback period.
The lease-back deal would be comparable to a home equity loan. The private entity would make its money on the interest. The commonwealth would continue to own, operate and maintain the facility.
Michael Smith, executive deputy secretary for the Department of Agriculture, said it’s still too early in to nail down specifics on a timeline for a request for proposals.
“This proposal is not about savings. It’s revenue,” Smith said. “We want to capitalize on an existing asset.”
The complex hosts three state-sponsored shows, including the annual Pennsylvania Farm Show. With other events held throughout the year, the facility provides an estimated $260 million in economic impact to the midstate from just the top 25 events of the hundreds it hosts annually. The total economic impact has been estimated at nearly $500 million, according to the governor’s budget.
Operations would not change under a lease-back deal, Smith said.
The $200 million number chosen by the state, he said, was based on investments the state has made in the farm show complex over the last decade. Those investments total about $150 million.
The farm show complex is slated to receive about $12.8 million in general operations funding under Wolf’s latest budget proposal.