HELENA – Gov. Brian Schweitzer is defending hard bargaining going on with commercial landlords who rent space to the state, saying it’s part of the process of a free-market economy that he expects will save the state several million dollars.
“Real estate is a market,” said Schweitzer, a Democrat. “If in this negotiating process the parties who own these properties say, ‘what you are offering is not what we’re willing to rent it for,’ then they have options and we have options.”
Schweitzer in February began sending out letters to about 120 landlords requiring rent reductions, in some cases more than 20 percent, for the state to remain a renter.
Tom Budewitz is a Helena attorney who represents three individual landlords. He said commercial landlords in the current economy can’t afford reduced rents from the state but would have a hard time finding new tenants.
“What they’re trying to do is they’re trying to impose significant reductions, up to at least 20 percent,” Budewitz said. “These landlords have property taxes they have to pay and they pay them every year and don’t quibble about them. Then all of the sudden the governor thinks that’s not important.”
Earlier this month Schweitzer finalized about $40 million in state government budget cuts due to the recession.
“The people of Montana expect me to maximize their tax dollars,” Schweitzer said. “I don’t believe there’s a single taxpayer in Montana that would say to me with a straight face, ‘you should pay more than market value because somebody’s feelings might get hurt.'”
Eric Stern, Schweitzer’s senior counselor, said he expects to reach agreement on most of the 120 contracts being negotiated.
“We are definitely moving some offices because there are a few landlords that have refused to accommodate the governor’s request, and we will most likely be moving out of those because we’ve found better deals elsewhere,” Stern said. “If we’re walking away it means (the landlord) found another taker at the same price and we’ve found something.”