Distressed Properties

The state's quick budget fix of selling off public buildings is a horrible idea.

Donald Casper seems an unlikely leader for a social protest. He's a former chairman of the San Francisco Republican Central Committee, a former member of the state Republican Central Committee, and a member of San Francisco's Civil Service Commission as well as a laundry list of local civic groups. As a lawyer, he represents businesses in lawsuits.

But Casper took a stand resembling a 1960s-style sit-in to oppose what he sees as the state government's irresponsible plan toraise $2 billion by selling off 11 office buildings, including San Francisco structures that house the state Supreme Court and the PublicUtilities Commission.

Until March 3, he sat on the San Francisco State Building Authority, a three-person panel that controls repayment of bonds issued to fund construction of the California Supreme Court building at 350 McAllister and the Public Utilities Commission offices at 505 Van Ness. On Feb. 26, in an item that ran on SF Weekly's news blog, the Snitch ("Ex-S.F. GOP Boss Seeks to Halt Sale of Supreme Court, PUC Buildings," Matt Smith), Casper vowed to use his authority in an attempt to block the sale. "People who worship the market will snicker at this, but whatever arguments could be made for not selling the state Capitol can be made for not selling the headquarters of the California Supreme Court," he was quoted as saying. "It is of paramount importance that all three branches of state government maintain every shred of independence."

On March 3, he and fellow member Stan Moy were fired from the building authority.

"I want to take exception to the word 'firing,'" said Jeffrey Young, spokesman for the state Department of General Services, which is conducting the sale and carried out the firings. "Their services ceased to be required."

Casper, who was appointed by Governor Pete Wilson in 1993 to the volunteer position, believes he was fired for his stance against the selloff. "Where a public official, even a very minor public official, is fired for his or her viewpoints, that can only mean that the appointing authority can't deal with those viewpoints," he said. "If an appointed member of a quasi-independent government body, no matter how minor, feels that he or she has to toe a company line, it's not democracy."

Moy did not return two calls requesting comment. Young wouldn't say why the men's services suddenly "ceased to be required." Casper's stand may have turned out to be more Don Quixote than Rosa Parks: As of March 4, more than 200 registered bidders had signed up for the state offering, which has proceeded apace despite his short-lived protest.

But in the same way that noble principles lay under Quixote's futile quests, Casper was tilting in the right direction. The selloff is a dressed-up way to laden California with more financial obligations, grant tax relief to private investors, and benefit the politically connected financial services firm handling the sale. Worst of all, this kind of dishonest, irresponsible privatization deal tarnishes the very concept of government asset sales, which, if done properly, can make the public and private sectors work together more effectively. This selloff looks even worse when we compare it to ripe California possibilities for privatization done right.

The great California government real estate fire sale, which began Feb. 26, is being touted by Governor Arnold Schwarzenegger as a way for the state to get out of the real estate business and let private-sector property experts take charge. Legislation authorizing it was approved last summer by a near-unanimous state Legislature vote and signed by the governor.

"He's trying to change the relationship the state has with buildings," is how Young described Schwarzenegger's glorified borrowing spree. "The state supplies services to the citizens: roads, schools, health care. We're not in the business of providing real estate. Let people who want to be in the real estate business do that."

That sounds like a great idea.

And it might be, if only the selloff were truly designed to make government more efficient.

But far from restructuring government to provide better services, it's actually budget smoke and mirrors epitomizing the worst of California's political dysfunction. It's a glorified scheme to borrow money to fill the current budget gap, akin to homeowners selling their mostly-paid-off houses and then paying a premium in rent.

The deal aims to raise $2 billion, part of which would pay off bonds that were issued to construct the buildings in the first place. The $660 million left over would go toward closing this year's budget gap. The state would then pay the new owners billions of dollars in rent over the next 20 years.

It's a sop to the politically connected. It turns out that the deal involves around $25 million in fees to firms involved in paying off bonds and conducting the sale, including $1.6 million to CB Richard Ellis Group, where Senator Dianne Feinstein's husband, Dick Blum, sits on the board of directors, and whose employees have donated generously to politicians, including Schwarzenegger.

It is a quiet way to lay off a small town's worth of government employees. "There are between 600 and 1,000 state workers currently employed in those buildings," Young said. "It's possible there may be some layoffs if the owners decide to go that way."

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