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Thursday, April 15, 2010

Report: Plan to Sell off State Buildings Will Cost Taxpayers Billions

Posted By on Thu, Apr 15, 2010 at 9:45 AM

click to enlarge But there are many bad ideas to go 'round...
  • But there are many bad ideas to go 'round...

Investigation reveals plan to patch budget shortfall by selling California buildings includes hidden deal-sweeteners that gouge taxpayers

In March we reported that the state of California fired a San Francisco official who protested a plan to raise money selling off state buildings. Dismissed Republican apparatchik Donald Casper seemed to be the only person complaining that the deal would further drown the state in debt.

Now the Associated Press has weighed in with an investigation revealing the plan to sell two dozen buildings as a short-term budget solution is even costlier in the long-term than it initially seemed.

Until March, Casper was a member of the San Francisco State Building Authority, which oversees the financing of local structures that house the state California Supreme Court and the Public Utilities Commission. When he complained on to The Snitch that this was shortsighted and expensive, he was canned. Shortly thereafter a state official in Los Angeles demanded a study of whether the sell-off was really a good deal for the state, and he, too, was canned.

Today's AP report suggests many reasons why Gov. Arnold Schwarzenegger didn't desire such a study. The proposed sale, which is being handled by CB Richard Ellis -- a firm chaired by Sen. Dianne Fieinstein's husband, Richard Blum -- includes small print that penalizes taxpayers, the report said. Once the sale goes through, California would pocket $660 million.

But, according to the report:

The state would then rent space in the buildings from the new owners for 20 years. Over that period, it would pay $5.2 billion in rent, according to documents prepared for potential buyers.

The terms of the proposed leases also say the state would have to pay a monthly fee for nearly 3,500 parking spaces it now controls, adding $138 million to the state's costs over the next two decades. California taxpayers would even cover increases in property tax assessments once the buildings are sold.

The report examined the San Francisco end of the deal, coming up with details that suggest Casper was right all along:

Other properties up for sale include the San Francisco Civic Center, which houses the state Supreme Court, the Public Utilities Commission building in San Francisco and several buildings in downtown Sacramento, including those that house the attorney general's office and state Department of Education.

Estimates for the first year after the proposed sales are completed illustrate the cost to the state.

The Schwarzenegger administration projected the state will spend $192 million in bond payments, maintenance and repairs for its buildings in the fiscal year that begins in July. By comparison, CB Richard Ellis estimated the state would pay $238 million in rent and utilities alone during its first year as a renter -- a $46 million increase in costs to state taxpayers.

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