PHOENIX ÷ State legislators said Friday that it's unlikely they will try to sell and lease back UA residence halls to help solve a $1.3 billion state deficit.

Legislators are considering selling and leasing back state assets, like prisons and dorms, to pay for state-based programs like health care and education this year.

But selling UA residence halls would be problematic because they wouldn't be worth enough, would raise legal questions and aren't paid off, according to legal council for the Board of Regents and the universities.

"Revenues for pretty much everything on campus have been pledged to the bondholders," said Tim Pickrell, a Snell and Wilmer attorney who advises UA on bonding issues.

Though the Senate and House Appropriations Subcommittee on Assets did not reach a public decision on whether anything should be done with the residence halls, two of the committee members questioned whether selling the dorms would bring in enough money to help address the budget shortfall.

"It just doesn't look like a very viable option at this point," said Sen. Robert Burns, (R-Phoenix) chair of the Senate Appropriations Committee.

Another member on the committee concurred.

"We just found out that there are no unencumbered assets in the university system. Nothing," said Rep. John Huppenthal (R-Chandler). "We can't do it."

Burns is, however, introducing a bill Monday to sell state assets to private businesses, which may include UA residence halls, but he said he doesn't expect it to get wide support in the legislature.

The subcommittee didn't consider the legal issues involved in such a move Friday, but there would be serious legal barriers if the legislature were to propose selling dorms or other facilities that legally belong the Arizona Board of Regents, said Joel Sideman, deputy executive director and attorney for the board.

UA President Pete Likins was at Friday's meeting.

"It's not a question of whether we oppose (selling UA residence halls), it's the question of whether it's legal," he said.

The UA has about $501 million in outstanding debt for buildings and facilities, which, at current rates, won't be paid off until 2024 or 2025, said UA budget director Dick Roberts.

The residence halls that are not paid off are still owned by bondholders, but the buildings that are already paid off function as collateral for those that aren't, Pickrell said.

About $10 million worth of the older dorms on campus, those financed federally in the 50s and 60s, could be sold, but the revenue wouldn't be worth the work and expense involved in the sale, Burns said.

Lawmakers also may have predicted that selling UA and other university residence halls would bring in more money than they'd actually sell for. Estimates were based on how much revenue the decades-old dorms would bring in on the amount it would cost to replace them with new buildings.

Any plan to sell UA residence halls to private corporations and lease them back would have to come with many strings attached.

Corporations would have to determine how much rent to charge residents, specify who could live in the buildings, and agree that the buildings would remain residence halls and not, for example, bulldozed and made into other businesses.

Administrators are currently in the process of refinancing $65 million of UA debt to reduce the UA's annual debt payment of $42 million per year to about $37 million per year.

The proposal involves making smaller payments on the debt now and bigger payments later, with the projection that inflation will devalue the future payments, making all payments equal.