California Sell-Off May Cost Taxpayers Billions

SACRAMENTO (AP) — California’s nonpartisan legislative analyst estimates it will cost taxpayers $1.4 billion over 35 years if the state moves ahead with plans to sell 11 properties, then lease them back.

The analysis released this week says the state will pay an effective interest rate of 10.2 percent to lease back the parcels, which include 24 buildings. That’s about double what the state pays
on existing bonds used to build its offices.

Department of General Services spokesman Eric Lamoureux says the long-term trade-off was needed to help with the state’s budget problems.

The department announced last month it will sell the properties for $2.3 billion. That will generate more than $1.2 billion for the state’s general fund in the current fiscal year.

(© Copyright 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments

One Comment

  1. Dan Shapiro says:

    Long-term foolishness for a short-term solution. Really bad thinking.

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