Jerry Brown nixes state buildings’ sale/leaseback

Gov. Jerry Brown announced this morning that he’s deep-sixing former Gov. Arnold Schwarzenegger’s already-in-motion plan to sell and then lease back 11 state office buildings, saying it would fleece taxpayers in the long run.

Among the state buildings that had been on the sale block were the Elihu Harris Building, at 1515 Clay St. in Oakland; the Earl Warren/Hiram Johnson complex that houses agencies including the state’s Supreme Court, at 350 McAllister/455 Golden Gate Ave. in San Francisco; and the Public Utilities Commission Building, at 505 Van Ness Ave. in San Francisco.

The nonpartisan Legislative Analyst’s Office had panned the plan last April.

“We estimate that the sale of buildings would result in one-time revenue to the state of between $600 million and $1.4 billion, but that annual leasing costs would eventually exceed ownership costs by approximately $200 million. Over the lives of these buildings, we estimate the transaction would cost the state between $600 million and $1.5 billion,” the LAO reported at the time. “In our view, taking on long-term obligations—like the lease payments on these buildings—in exchange for one-time revenue to pay for current services is bad budgeting practice as it simply shifts costs to future years.”

Brown apparently took that to heart, saying today that the plan “was short-sighted and would have cost taxpayers billions of dollars in the long-run. Selling and leasing back the state’s buildings for one-time gains is not prudent.”

State Controller John Chiang quickly agreed. “While the sale of these buildings would have provided immediate cash for the state, it would have cost Californians more over the long haul. Selling low and renting high would not have served taxpayers’ interests,” he said. “This decision shows Governor Brown is serious about ending the budget gimmicks and sideshows. Only real, on-going solutions will improve our balance sheet and solve our annual fiscal problems.”

The Legislature approved a 2009-10 budget that authorized the sale, and the 2010-11 budget assumes $1.2 billion in revenues from it. But Brown said he’ll propose amending his budget proposal to include borrowing $830 million from special fund reserves, to be paid back by FY 2013-14, so program budgets won’t be affected by the sale’s cancellation. He said that’s all that needs to be borrowed because of other new revenues and cost savings including $90 million more from the Medi-Cal managed care tax and $100 million less in prison infrastructure project costs.

The new owners – California First LLC, a partnership led by a Texas real estate firm and an Irvine-based private equity firm – were to take over the buildings Dec. 15, but that was scuttled by a November lawsuit filed in San Francisco by former state building officials whom Schwarzenegger had removed for questioning the deal. A judge’s emergency stay pushed the deal’s closing beyond Schwarzenegger’s term in office, and put the ball in Brown’s court.

UPDATE @ 11:58 P.M.: State Senate President Pro Tem Darrell Steinberg, D-Sacramento, is down with Brown’s “wise decision,” too. “The proposed sale and lease-back of state buildings was a fiscally irresponsible idea conceived by the former administration as an alternative to an honest budget proposal,” he said. “Governor Brown’s plan preserves the state’s assets and is fiscally responsible.”


John Chiang to audit redevelopment agencies

As debate rages over Gov. Jerry Brown’s proposal to raid local redevelopment agencies’ coffers to help close the state budget deficit, state Controller John Chiang today announced his auditors will review 18 redevelopment agencies – including five in the Bay Area – to see how they spend their money.

“The heated debate over whether RDAs are the engines of local economic and job growth or are simply scams providing windfalls to political cronies at the expense of public services has largely been based on anecdotal evidence,” Chiang said in a news release. “As lawmakers deliberate the Governor’s proposal to close RDAs and divert those funds to local schools and public safety agencies, I believe it is important to provide factual, empirical information about how these agencies perform and what they bring to the communities they serve.”

Chiang’s office said the 18 RDAs selected for the reviews – to be done by early March – represent urban, suburban and rural communities, are spread around the state represent a mix of populations. Auditors will review, among other things, how the RDAs define a “blighted” area, whether they are appropriately paying for low- and moderate-income housing as required by law, whether they are accurately “passing through” payments to schools within their community, and how much RDA officials, board members and employees are being paid.

On the audit list are:
Redevelopment Agency of the City of Fremont (Alameda County)
Richmond Redevelopment Agency (Contra Costa County)
Hercules Redevelopment Agency (Contra Costa County)
Redevelopment Agency of the City of Pittsburg (Contra Costa County)
Redevelopment Agency of the City of San Jose (Santa Clara County)
Redevelopment Agency for the County of Riverside
Community Redevelopment Agency of the City of Los Angeles (Los Angeles County)
Redevelopment Agency of the County of Sacramento
Pasadena Community Development Commission (Los Angeles County)
Redevelopment Agency of the City of Fresno (Fresno County)
City of Palm Desert Redevelopment Agency (Riverside County)
Placentia Redevelopment Agency (Orange County)
Parlier Redevelopment Agency (Fresno County)
Anderson Redevelopment Agency (Shasta County)
Community Redevelopment Agency of the City of Citrus Heights (Sacramento County)
Community Redevelopment Agency of the City of Calexico (Imperial County)
Community Development Agency of the City of Coronado (San Diego County)
City of Desert Hot Springs Redevelopment Agency (Riverside County)

UPDATE @ 5 P.M.: As our West County Times’ Tom Lochner reports:

The Hercules, Pittsburg and Richmond redevelopment agencies are among seven in California that, as of December, had not paid their obligations to the Supplemental Educational Revenue Augmentation Fund, part of a statewide $1.7 billion shift of redevelopment agency property taxes to schools in the 2009-10 fiscal year. Hercules owed $4.9 million, Pittsburg owed $17.4 million and Richmond owed $10.1 million. Two of the other seven non-payers — Parlier in Fresno County and Placentia in Orange County — also are among the 18 agencies targeted by the statewide review.

Gee, I wonder if that had anything to do with their selection for the audit?


Brown and Boxer get out the vote in Oakland

Several hundred Bay Area Democrats chose to forego the start of the fifth game of the World Series this evening in favor of packing into a section of Oakland’s Jack London Square for a final get-out-the-vote rally with most of the Democratic slate of statewide candidates.

Cynthia Rapak, 62, of San Francisco, wore a Giants cap as a sign of her torn allegiances; she said she wanted Democratic gubernatorial nominee Jerry Brown “to see that I’ll make the ultimate sacrifice.”

“The Giants might win tonight, but civic duty comes first – I always vote,” said the retired Oakland Unified School District teacher, noting she believes the campaign’s endgame bodes well for Brown. “Meg went 11 places, and Jerry is 72 and he went to 12. He talked about civic dialogue and she talked about managing; she doesn’t have a clue.”

She and the rest of the crowd heard from Kamala Harris, the Democratic nominee for attorney general; Dave Jones, the Democratic nominee for insurance commissioner; John Chiang, the incumbent state controller; and Debra Bowen, the incumbent secretary of state before the top of the ticket began to take the stage: incumbent U.S. Sen. Barbara Boxer, D-Calif. By then it was the bottom of the fifth inning, but the cheering, sign-waving crowd no longer seemed to mind.

“You’re the key to sending me back to fight for the middle class, to fight for jobs … to fight against the special interests,” Boxer said, exhorting the crowd to get everyone they know to the polls tomorrow.

Then, backdropped by Port of Oakland cargo cranes and a Bay sunset, Brown took the podium and thanked the Democratic slate for “making this a real team victory. We’ll win tomorrow, we’ll win for you.”

He noted the crisply uniformed Oakland Military Institute students lining the back of the stage, and said the Democrats’ goal is to make sure all California students have the resources and opportunities they need to achieve solid educations.

“Victory brings even more challenges – in fact, the campaign is a piece of cake (compared) to fixing the budget,” he said. “I didn’t make this mess, but I sure want to fix it.”

Just as Republican gubernatorial nominee Meg Whitman has claimed in her ads, California was working well when she arrived her 30 years ago, he said – and he was governor at the time. “And you know what? It’s going to start working again for everybody.”

In a final jab at his opponent, he directed supporters seeking details of his platform to his campaign website. “Whitman’s plan is mostly pictures, but I have more respect for you,” he said.

And then, by partway through the top of the sixth inning, it was over.


Dunn leads Bowen in fundraising for Sec’y of State

Campaign finance reports are due today, and incumbent Secretary of State Debra Bowen filed her report saying she raised more than $60,000 and spent more than $12,600 from May 23 through June 30, leaving her with more than $113,000 cash on hand at mid-year. She’s lagging behind Republican nominee for Secretary of State Damon Dunn, a former NFL player turned businessman, who reported raising more than $126,500 and spending more than $81,000 during this period, leaving him with cash on hand of almost $176,600.

In other statewide races, state Treasurer Bill Lockyer’s re-election committee reported having a mammoth $8.52 million cash on hand as of June 30, even after having spent more than a million in the first half of this year (including almost $258,000 from May 23 through June 30); that spending includes the more than $676,000 his committee has given to his wife’s campaign as she seeks a seat on the Alameda County Board of Supervisors. Meanwhile, Republican nominee for state Treasurer Mimi Walters, the state Senator from Laguna Niguel, reported raising $36,455 and spending $26,505.42 from May 23 through June 30, leaving her with cash on hand of almost $350,000.

Incumbent state Controller John Chiang’s re-election campaign reported raising $125,000 and spending more than $31,000 from May 23 to June 30, leaving almost $1.28 million cash on hand at midyear. Republican state Controller nominee Tony Strickland, the state Senator from Moorpark, reported raising $173,000 and spending almost $38,000 during this period, leaving him with almost $309,000 cash on hand as of June 30.

Still awaiting full readouts on the races for attorney general, lieutenant governor and insurance commissioner…


Oil spill shapes California’s drilling debate

Democrats are doing their happy dance now that Gov. Arnold Schwarzenegger, in reaction to the epically disastrous Deepwater Horizon oil spill in the Gulf of Mexico, has withdrawn his support of the proposed Tranquillon Ridge oil drilling project off California’s coast.

From state Controller John Chiang:

“I am pleased the Governor has withdrawn his support for what would have been the first new oil lease off the coast of California in 40 years.

“As a member of the State Lands Commission who voted against the project last year, I am saddened that it took a tragic and massive oil spill in the Gulf of Mexico to remind us how important it is that we continue to protect California’s shores and our multi-billion dollar coastal and port economies.”

From Rep. John Garamendi, D-Walnut Grove, who chaired the State Lands Commission while serving as lieutenant governor:

“It’s unfortunate it took one of the worst ecological disasters in U.S. history for Governor Schwarzenegger to come to his senses, but today, friends of California’s coastline can breathe a sigh of relief. There will be no more new leases for oil drilling from platforms off the coast of Santa Barbara.

“When I chaired the California State Lands Commission, the independent commission responsible for approving oil leases in California, I made it clear that the risk of permitting new drilling from platforms in California is ecological and economic disaster. The Gulf Coast oil spill – which threatens 40 percent of U.S. wetlands and will cost fishing and tourism industries billions of dollars – proves my point. We don’t want to imagine what a similar spill would do to California’s coast.

“President Obama has proposed a temporary presidential moratorium on new offshore oil drilling, and that’s a good start, but Congress plays an important role as well. Our coast is best protected when both the President and Congress make it clear that new offshore drilling is not an option.

“An oil spill off the coast of Santa Barbara jumpstarted the modern environmentalist movement 41 years ago, helping to create the Environmental Protection Agency, Earth Day, and ultimately, offshore oil drilling moratoriums that served us well for 26 years. What will they say about our response to the Gulf Coast tragedy?”

Since I wrote Friday about the differing views on this, new information about the spill’s severity has elicited more powerful criticisms of off-shore drilling.

Greenpeace – never a friend to oil interests, of course – put out this map today superimposing a projection of the Deepwater Horizon spill’s extent upon California’s coast, to illustrate the effect a similar spill might have here:

Greenpeace's CA oil spill forecast

And the Center for American Progress – a progressive think-tank with a lot of connections to the Obama Administration – made its case today, too.

“We need to learn from this tragedy,” wrote CAP Senior Fellow and Climate Strategy Director Daniel J. Weiss. “Offshore drilling is a risky way to meet our energy needs. We have only 2 percent of the world’s oil reserves, yet we use one-quarter of the oil produced annually. It is a dangerous practice that puts American lives and livelihoods at risk while distracting from real solutions that can provide clean energy while creating jobs.”

But House Republican Leader John Boehner, R-Ohio, says domestic drilling still has to be part of the nation’s overall energy plan.

John Boehner“The Obama Administration is right to insist on a full investigation of the events leading up to this tragic, deadly, unacceptable accident and the oil spill that resulted. We must stop the leaking oil, and help the Gulf recover, but we also need to know how it happened, who is responsible, and how we can prevent future incidents. The White House must ensure that BP bears the entire financial burden to clean up this disaster. Not a dime of taxpayer money should be used to clean up their mess. Also, House Oversight Ranking Member Darrell Issa is asking important questions related to the Administration’s response to this incident and he should get prompt and complete answers.

“At the same time, this tragedy should remind us that America needs a real, comprehensive energy plan, like Republicans’ ‘all-of-the-above’ strategy, which includes more of everything: more clean and renewable sources of energy such as nuclear power, wind, and solar energy, more alternative fuels, more conservation, and more environmentally-responsible development of America’s energy resources. Our American Energy Act would use the funds generated by expanded American energy production to speed up the development of the next generation of clean-energy alternatives. It would also lower fuel costs, reduce our dependence on foreign oil, and – at a time when Americans are asking, where are the jobs? – it would create more than a million new American jobs.

“Now is not the time for new government-mandated limits on the production of American-made energy, as such limits will only make us more dependent on foreign oil, slow the development of clean-energy alternatives, increase fuel costs, and destroy American jobs. It’s time to get to the bottom of this tragedy, work to ensure it never happens again, and move forward in a responsible manner on an ‘all-of-the-above’ strategy to lower energy costs, expand the use of clean-energy alternatives, and create American jobs.”

UPDATE @ 4:41 P.M.: More Democratic praise for Schwarzenegger’s move, after the jump…
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Chiang got warning letter for campaign lapses

It seems state Controller John Chiang hasn’t always been so tidy with his bookkeeping.

The California Fair Political Practices Commission sent Chiang, who’s seeking re-election this year, a warning letter Jan. 25 regarding some campaign finance law violations from his 2006 campaign.

“(W)e found that out of the 165 late contributions received totaling $387,443, late contribution reports were not filed for two contributions received totaling $1,000 each and not timely filed for sixteen other contributions received totaling $31,200,” the letter said. “In addition, we noted that of the approximately $3.4 million in expenditures made, subvendor information totaling $500,378 for the semi-annual reporting period made June 30, 2006 was disclosed one year late.”

Although these are violations of the state’s Political Reform Act, the FPPC decided to close the case with only a warning because the rest of Chiang’s paperwork was timely filed, and even the late stuff ended up being disclosed before the election. Also, the letter notes, Chiang and his campaign treasurer amended the campaign statements and disclosed all the subvendor information of their own accord.