Skip to comments.(CA) Poised to Sell Trophy Buildings to Unidentified Investors (and pay rent)
Posted on 12/25/2010 11:31:21 PM PST by Cincinatus' Wife
As Gov. Arnold Schwarzenegger prepares to decamp from Sacramento on Jan. 3, he has displayed zealous determination to complete what critics say will be among the worst deals the state has ever made: the sale of 11 premier state office complexes to a group of politically connected private investors.
...California would pocket about $1.3 billion after debt is paid off, but would then be a tenant in the same buildings. According to the nonpartisan Legislative Analysts Office, the deal would cost taxpayers $6 billion over 35 years.
....Two prominent Bay Area lawyers sued to halt the sale, and the state appellate court issued a stay on Dec. 13, two days before the deal was scheduled to close. The plaintiffs are members of the state building authorities in San Francisco and Los Angeles who were ousted from their unpaid posts after questioning the plan.
This deal smells so bad. The more we get into it, the stronger the odor becomes, said Louise Renne, the former San Francisco city attorney who is among those working pro bono to scuttle the deal. Even as of today, nobody knows for sure who is behind this sale.
Lawyers representing Mr. Schwarzenegger have been working furiously to close the transaction before Mr. Schwarzenegger leaves office. Gov.-elect Jerry Browns views on the deal are unknown, though last month he declined, as state attorney general, to represent Mr. Schwarzenegger in the case.
A lot of people are going to make a lot of money off of this, said Donald Casper, the onetime head of the San Francisco Republican Party who is also involved in the court challenge. They are fighting tooth and nail to maintain their expected profits. ..................
(Excerpt) Read more at nytimes.com ...
The super slinky.
A similar plan has been floated by Gov. Jindal here in Louisiana. It’s the government version of the crack addict selling the TV and DVR to get money for the next fix.
What is bizarre about these arrangements is that you will now have a class of “investors” who will lobby the state to meet its contract obligations and pay its “rent” each year.
So why would you need to lobby a state to meet its contracts?
Because there just won’t be enough cash to go around—and somebody is going to get stiffed.
The legislators are going to find their pockets stuffed by these lobbylists as the state crashes and burns.
Except us taxpayers...
Actually, I stole it from a politician here in Louisiana that commented on Jindal’s plan. I just put up a blog post on it.
Monkey See, Monkey Do
I can imagine that anyone who could afford to make such a purchase would be "politically connected".
From the article:
“.......The 2009 bill authorizing the Department of General Services to sell the buildings (which, at 7.3 million square feet, amount to 43 percent of all the states office space) was hurriedly passed as part of an emergency budget measure. The bills title, State property: Orange County Fair: inventory; leases; sale and leaseback gave little hint of its import. In the third paragraph of subsection 2, it discussed entering into a sale or long-term lease of certain listed properties, which were identified several thousand words later.
After the bills passage, D.G.S. hired CB Richard Ellis (whose chairman, Richard C. Blum, is married to United States Senator Dianne Feinstein) to broker the sale. Its commission if the deal goes through will be $1.9 million. Three hundred entities submitted bids; 30 were invited to bid in the second round. By July, two bidders were left in the running.
.....In documents submitted to D.G.S., California First identifies a shifting roster of partners. One is Hines, a real estate company based in Houston. Another is CityView, the real estate investment company headed by Henry G. Cisneros, who served as federal secretary of Housing and Urban Development.
California Firsts listed partners and the entitys managing partners did not respond to e-mails or phone messages requesting comment. The lone exception was Mr. McKean. Though he is listed as one of three principal players in multiple offer letters, Mr. McKean wrote in an e-mail Thursday, I have been an adviser to the group from time to time but am not in a position to know their current thinking.
Michael Bustamante, former deputy chief of staff to Gov. Gray Davis who was hired as a spokesman by California First in September, said he did not know who California Firsts partners were, and he declined a request that he attempt to find out. [End excerpt]
From 2011-2012 you’re going to see cities and states go bankrupt and be bailed out by someone. There is too much welfare spending-even in conservative states-to cut out all of the fat without causing riots.
This plan will give Cali a one-shot cash infusion, which will be promptly WASTED on public union pensions! Then, Cali will be WORSE off than before! This is really quite a story of governmental INCOMPETENCE! But, nothing can stop THAT.
I remember on “ALF” the father told him he was part of the family. Alf replied, “Like Arnold Swartzenager is part of the Kenedy family.” He’s sure not a conservative and apparently not too good at math.
Maybe then they will have to cut staff so they can move out of some of those buildings and the investors can lease them to someone who can afford them. Might be the only bright spot on the horizon.
Would the State give them an IOU to pay the rent? LOL
Arizona has gone this path as well, selling the Capitol building, among others.
Balied out by someone? This country has the delusion now that states, business, people you name it can be “bailed out.” Thank TV for spreading this leftist bail out propaganda. The idiot public now thinks things can be magically “bailed out.”
Keep watch TV and Hollywood’s crap because by watching you support the left and their madness. This includes Prince Al Waleed’s Fox. The same Saudis financing Al Qeada to kill American troops and the same saudis who bought the the white hut.
This can be a smart move. The bank I work for sold our main building in Downtown Chicago to a real estate firm. Big building 37 floors half a city block by a full city block. This got the bank out of the renting, cleaning maintenance etc. The real estate firm was much better at renting out unused floors etc, keeping the place running smoothly. Personally I think the govt should get out of real estate, get those properties on the tax rolls etc.
Here’s an idea; sell the buildings, close the offices, fire the employees.
I agree. I don’t think the government functions effectively as a leasing office. Let’s see what these private investors, who have to turn a profit, can do with it. With that said, I hope the state government is not agreeing to pay super-high rents to these private owners. Being a resident of CA, I can tell you the state government has zero fiscal sense, so they would negotiate a bad deal.
We have a glut of so called trophy, good and nice buildings throughout this state that are vacant with no real prospects of good rentors and many more such buildings to become vacant next year.
Some of the vacancies are green BS companies that have gone belly up and will be bankrupt next year. No one wants those buildings (often specialized for the green bs.)
In our county, we are over wined, so many buildings previously used for bottling, storage and shipping of the wine are vacant. Some have been vacant going on 2 years.
Companies that got Sugar Daddy/counties/cities/state financial help re taxes and other expense have left relatively new buildings/sites with no real prospects of good rentors.
California could leave those premium buildings and rent the vacant ones throughout the state for much less money.
California would pocket about $1.3 billion after debt is paid off, but would then be a tenant in the same buildings. According to the nonpartisan Legislative Analyst's Office, the deal would cost taxpayers $6 billion over 35 years... Two prominent Bay Area lawyers sued to halt the sale, and the state appellate court issued a stay on Dec. 13, two days before the deal was scheduled to close. The plaintiffs are members of the state building authorities in San Francisco and Los Angeles who were ousted from their unpaid posts after questioning the plan. "This deal smells so bad. The more we get into it, the stronger the odor becomes," said Louise Renne, the former San Francisco city attorney who is among those working pro bono to scuttle the deal. "Even as of today, nobody knows for sure who is behind this sale."Awww, some lawyers got inconvenienced, that's too bad. I love that use of the phrase "non-partisan" about something in California too. Let's see, $6 billion divided by 35 years... $14,285,714.29 a month, or about $1.3 million per building per month. That's in California. In a situation where the state gubmint is going to have to trim state jobs and hence not need to carry some soon to be empty buildings. Thanks Cincinatus' Wife.