Schwarzenegger says California got ‘best’ offer to sell state office buildings amid downturn

Schwarzenegger: State got best offer for buildings

SACRAMENTO, Calif. — While there are good reasons to own, Gov. Arnold Schwarzenegger said Friday that California has received solid offers to sell 24 state office buildings to private investors and then rent that space back.

“It went through the bidding process … so let me tell you, we got the best offer,” the Republican governor told a news conference shortly after the Legislature passed a new spending plan that relies on $1.2 billion from proceeds of the government sell-off plan.

Schwarzenegger and lawmakers are moving ahead with the sale to help fill the state’s $19 billion deficit despite warnings that it may end up being more costly for taxpayers in the long run.

The state is offering to sell the Ronald Reagan state building in Los Angeles, the San Francisco Civic Center and other properties to a private investor and agreeing to rent the office space back for at least 20 years.

The governor said prospective buyers already have submitted their bids, which came in higher than expected amid the economic downturn. He said the state can generate $1.2 billion in immediate proceeds for the budget deficit, far greater than his initial $660 million estimate.

“Even though I put it in my budget because we have to make ends meet, I was never a big fan of selling off real estate because I’ve always been a believer (that) in real estate you buy. You just acquire, you don’t sell it,” the governor said. “But the other side of the coin is should California, the government, be in the real estate business?”

Schwarzenegger said legislative leaders who negotiated the budget want the sale to go through.

On Thursday, before the budget was to be voted on, Shannon Murphy, spokeswoman for Assembly Speaker John Perez, D-Los Angeles, said the speaker thought the sale was bad policy.

“However, it’s more irresponsible not to get a budget than to get a budget that we’re uncomfortable with,” Murphy said. She said she stood by that statement Friday.

The Associated Press reported earlier this year that the deal would end up costing the state $5.2 billion in rent over 20 years, perhaps saddling taxpayers with costs beyond whatever the state would net from the sale.

The AP also reported that Schwarzenegger quietly removed appointees from two oversight bodies that must sign off on the sale. The appointees had questioned whether the administration’s plan was in the best long-term interests of California taxpayers.