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Schwarzenegger Unsuccessful In Bid To Sell State Buildings

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The Cow Palace is seen through a chain link fence in Daly City, California. In an effort to raise cash to help California's financial woes, California governor Arnold Schwarzenegger is proposing to sell some well known State properties. (Getty Images)

The Cow Palace is seen through a chain link fence in Daly City, California. In an effort to raise cash to help California’s financial woes, California governor Arnold Schwarzenegger is proposing to sell some well known State properties. (Getty Images)

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SACRAMENTO (AP) — The California Supreme Court on Tuesday denied Gov. Arnold Schwarzenegger’s last-minute plea to let him complete the sale of 11 state government properties before he leaves office next week.

Acting Chief Justice Patricia Benke issued a one-sentence ruling denying the Republican governor’s petition to allow the transaction to go through before Jan. 3. The ruling means the decision to sell the buildings will fall to Gov.-elect Jerry Brown.

Brown has not said publicly what he wants to do, and a spokesman said the incoming Democratic governor will review the proposal after he is sworn in. As the state’s attorney general, Brown declined to represent Schwarzenegger in the case.

“We’re disappointed with the court’s action,” said Eric Lamoureux, a spokesman for the Department of General Services, the state agency in charge of the sale. “This isn’t about Schwarzenegger or Brown. The Legislature passed this, and the governor signed it. We intend to carry out the intent of the Legislature when the courts will allow us to do that.”

Three former members of the state building authority had sued to stop the sale, saying it amounted to an unlawful gift of public funds and illegally bypassed the state Judicial Council, which has authority over some of the buildings that Schwarzenegger wants to
sell.

Schwarzenegger last year proposed selling the state-owned buildings to raise more than $1.2 billion to help close the state’s general fund budget deficit. Under the deal approved by lawmakers, the state would continue to use the space by entering into a 20-year lease with the new owners.

Earlier this year, the governor ousted the building authority members after they questioned the long-term consequences for taxpayers and asked the state to perform a cost-benefit analysis.

Tose building authority members sued, and an appeals court on Monday barred the sale until it hears arguments Jan. 23.

Anne Marie Murphy, one of the attorneys representing the building authority members, said the suit will continue in an effort to reveal the investors trying to buy the properties.

“What you’re seeing here is the absolute intersection of money and power,” Murphy said. “We’re going to pursue discovery in short order. We want to find out the real names of the investors, both people who have been involved and will be involved going
forward.”

The Schwarzenegger administration awarded the sale of the buildings — including the Ronald Reagan building in Los Angeles and the San Francisco Civic Center — to California First LLC, a consortium of investors led by a Texas real estate firm and a private equity firm based in Irvine, for $2.3 billion.

The state would net $1.2 billion after outstanding loans on the buildings are paid off.

During a deposition of State Treasurer Bill Lockyer, it was revealed that Santa Ana Mayor Miguel Pulido stands to receive a $500,000 “finder’s fee” if the sale went through to California First. It’s not clear who would pay Pulido and whether he would be paid.

Benke and six other judges were appointed to the case after the entire Supreme Court recused itself. The high court is housed in the Earl Warren Building at the San Francisco Civic Center, one of the state properties that would be sold.

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

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