The deal would sell the building that houses the California Supreme Court

Arnold Schwarzenegger was quite keen to get the sale of buildings through before he left office.  That’s no surprise, considering that Jerry Brown was never really a fan of the deal.  His latest statements have been somewhat ambivalent, essentially saying that he wants 30 days to review the deal before he does anything.

But the deal is now rapidly losing investors, and the Bay Citizen (a website you should be reading), notes that in addition to the shrinking pool of investors, there is also the question of who the investors are that are left paying the up-front costs.  Well, turns out it isn’t that easy to find out:

Most of the members of a shadowy investor group that agreed to finance the sale of tony state office buildings last year appear to have dropped out of the deal, and those that remain are tight-lipped about their involvement in the transaction, which is being challenged in court as an illegal gift of state assets to a group with political pull in Sacramento.

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The identities of the people and companies behind California First LLC have been a mystery. And the increased public scrutiny and court challenges have done little, thus far, to shed light on them. The group declined to participate in the legal battle to close the deal, a stance that Renne finds “extraordinarily unusual. I think, frankly, they cannot stand to see the light of day on their transaction.”

The Bay Citizen reporter continued to follow the trail of money, but ended up with more questions than answers.  People avoided her calls, said they weren’t really helping, merely advising, and generally being unhelpful.  That being said, the three “main partners” in the deal have long history in government and ties to past administrations.

Even if you were to look at this deal from a totally outside perspective, without this information, the deal would look like a bad one.  We aren’t really getting enough money to make this worthwhile.  It’s a short-term fix for a long-term problem. Oh, and it leaves us with a huge pile of debt to deal with over the next generation.  Adding on the mysterious and rather shady nature of this deal, you really have to question Schwarzenegger’s motives for this deal.

We still have a while before we get a decision from Gov. Brown, but one hopes that we can once and fully put this stinker of a deal behind us.

Well, and the ball is officially in the Governor (Once and Future) Jerry Brown’s court.  In a brief, one sentence ruling, the California Supreme Court (well, actually some appellate justices sitting in for the Supreme Court), left the stay from the lower court in place.

“The petition for writ of mandate and request for immediate relief from stay are denied.” (Document here

So, Governor Schwarzenegger will now have to see how Jerry Brown feels about this particular gimmick. It is worth pointing out that Brown refused to defend these sales, take of that what you will.

Arnold Schwarzenegger has been pressing pretty hard for the sale (and subsequent lease-back) of state buildings.  He thinks it nets us $1.2 Bn in short term dollars, and that’s true.  But long term? Well, the other side is a business, so they understand that it is a long-term win for the corporate interests financing this little ploy.  So, needless to say, Schwarzenegger was miffed when the California Court of Appeal, Sixth Appellate District blocked the sale from going forward.

Well, the administration has now filed an appeal, and clearly they are worried that Governor Elect Brown will not be nearly as interested in this gimmick:

Schwarzenegger’s attorneys, in a legal brief filed Monday, asked the high court to step in “because time is of the essence and the transaction must close by year end or probably be lost forever.”

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The state Legislature approved the sale in 2009, and Schwarzenegger has vigorously pursued it since.

“For those who say that California is ungovernable, this litigation should serve as Exhibit A,” Schwarzenegger’s lawyers wrote. “This court must act now to prevent this abuse of the legal process by those who put their own petty grievances above the will of the people and the needs of this state.” (LA Times)

If the Supreme Court does not remove the stay from the appellate court, the sale will have to be ultimately concluded by the Brown administration. Brown has previously declined to defend the actions in court, so he’s obviously not a big fan of the plan.  As to whether he wants to dig out another $1.3 billion of debt, well that’s a good question.  However, Brown now seems inclined to stare headlong into the abyss of the budget, and completing this sale seems pretty much the opposite of that.

Expect a ruling from the CA Supreme Court very soon.