The ~$1.94–2.00 billion is the nominal, undiscounted total the state will actually pay out over the life of the lease. It comes from roughly $48.5 million a year × 40 years, covering rent plus pass-through costs like utilities, insurance, taxes, and fees reimbursing the developer.
The Net Present Value of that cash flow stream is $611 M That is what the deal is “worth” in today’s money.
NPV is the standard financial tool to evaluate and compare any long-term lease or direct investment gets evaluated.
This isn’t a traditional state-funded build. It’s a public-private lease-back deal: the developer privately finances and builds the ~330,000-sq-ft facility, then leases it to the Commonwealth for an initial 40-year term with two optional 10-year extensions (up to 60 years total occupancy).
The bids to the Commonwealth were all evaluated on an NPV basis. But critics allege the state chose the cheapest bid, not the best one. Liberty Junction’s $611.4M projection undercut rival bids ($720.7M for a Dwight Street proposal, $772M for a riverfront proposal). But the Globe’s editorial board flags that comparison as apples-to-oranges: the Liberty Street bid pushes ongoing building maintenance costs onto the state (rivals had the owner cover that), the building is reportedly less energy-efficient than competing proposals, and the winning bid’s cost doesn’t include a project labor agreement with construction unions — all of which could raise real long-term costs beyond the headline number. Springfield’s Clerk of Courts and Mayor Sarno have also criticized the pick as inadequate on parking and site quality, not lavish.
That doesn’t fix the problem of the conflict of interest, of course. And $50 million per year WITHOUT maintenance costs? Sounds very extravagant to me.
And, being a lease, the Mass Commonwealth does not own the building at the end of the 60 years.