If you buy something for $1 and sell it for $7, it probably means: (a) you’ve made a brilliant business deal, or (b) your customer is the State of Illinois.
Both (a) and (b) are correct. And when it comes to real estate, you don’t have to buy anything to earn a 700 percent return from Illinois taxpayers. You can just rent and sublet.
No need to worry that your price is above market, or that the state requires you to disclose that you don’t own what you’re trying to rent.
The state’s Department of Central Management Services, which spends $90 million-a-year renting space from Rockford to Cairo, has only the foggiest idea of what constitutes a reasonable rent in your area. And they’ll accept your word that you own the property, no proof required.
At least that’s the business lesson to be learned from the dealings of Charles Strock, a former cop-turned-political-bon vivant who has done very well for himself by renting property he doesn’t own to the state.
According to Tribune investigative reporters Ray Gibson and Hanke Gratteau, Strock has been renting a once-vacant Northwest Side factory for $28,000 a year and subletting it to you-know-who for $202,000 a year.
That means the state is paying about $16 per square foot to house branches of the Department of Rehabilitation Services and the Department of Employment Security at 3710 N. Kedzie Ave. That’s about what it costs to rent space in the Loop.
In order to discourage silent partners from collecting rent, the state requires all lessors to identify who does, indeed, own the premises. But it was an easy matter for Strock to claim ownership because no proof is required beyond a signature.
State Treasurer-elect Judy Baar Topinka is demanding an investigation.
Actually she was in a better position to curb such abuses last spring, when she was still a state senator and when legislation to overhaul Illinois’ purchasing laws died of political neglect.
That legislation, which could be revived in a trice if the political will exists, would require a form of competitive bidding on all but the smallest state leases. It would also extend the maximum duration of state leases to 10 years with a termination option at the current maximum of five years. And it would give the state a purchase option on certain properties if ownership becomes a better deal.
Competitive bidding? Longer, more economical leases? Purchase options?
Before you know it, the state might make some brilliant business deals of its own.
