Business & Economy

Judge asked to rule in battle over selling state properties

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A legal battle over a plan to sell 11 state-owned properties spills back into court Friday. The buildings, including the Ronald Reagan State Building in Los Angeles, were supposed to be sold to a private investors Thursday. But earlier this week, an appeals court in San Jose put the deal on hold. Now the state’s gone to another judge to get the sale moving.

Lawmakers are counting on $1 billion from the sale to help plug the state government’s budget deficit.

The buildings the state government wants to sell aren’t non-descript slabs of concrete. Along with the Reagan Building in LA, the California Supreme Court in San Francisco, the Attorney General’s office in Sacramento and eight other buildings are up for sale.

“What we have here is a deal that is the equivalent of the federal government selling the US Supreme Court and the FBI headquarters,” said attorney Louise Renne, who’s fighting the sale in court.

The onetime San Francisco City Attorney is part of the legal team supporting two former state building authority members who managed the financing of the Reagan Building. Gov. Arnold Schwarzenegger removed them from their posts after they opposed the sale of the 11 state buildings. Now they’ve sued to stop the sale. They say it will cost state taxpayers billions more in the long run.

“We’re just carrying out the intent of the legislature and the governor,” said Eric Lamouruex with the Department of General Services.

The agency negotiated the deal to sell the state properties to private investors. As part of that plan California gets to lease the buildings back from the new owners for 20 years.

“And we believe over that time we’ll actually break even and we’ll save the state approximately 2 million over that 20 years,” said Lamouruex.

But the state’s non-partisan Legislative Analyst came up with a different number.

“Y’know, a lot of the costs of leasing the buildings back and a lot of the benefits of continuing to own the building aren’t necessarily felt until years 25 and 30,” said Mark Whitaker with the Legislative Analyst’s office.

He said if the state sells the 11 buildings, it’ll probably lease them back for more than 20 years. That means California could eventually pay billions more to rent the buildings that it’ll get from selling them.

“This certainly isn’t an ideal solution,” said Whitaker, “but a lot of the other solutions that can close the gap aren’t ideal, either. And so both the governor and the legislature have had to weigh this solution with a lot of other bad solutions.”

Renne said that’s no reason to let the sale of the state buildings proceed.

This is not a deal that is any way shape or form in the best interest of the state,” she said. “In fact, it is in the worst interest of the state and I don’t think they can stand to have a public hearing on it.”

Renne thinks the state is trying to push the sale through before the new governor takes over. She thinks they’re worried that Governor-elect Jerry Brown won’t support another short-term scheme that deepens California’s debt.