Renne Sloan Holtzman Sakai LLP announced today its involvement in litigation challenging the State of California’s proposed sale of eleven historic state buildings, including buildings in Sacramento, San Francisco and Los Angeles that house our Supreme Court, appellate courts, attorney general offices, and critical law enforcement and executive branch offices. As was widely reported in the press recently, the State’s Department of General Services has agreed to sell these iconic properties to a group of private investors for $1.3 billion in a lease-back deal. Under the terms of the deal, the State will pay rent on these buildings for 20 years and then may purchase the buildings back at market value.
The Firm’s client, San Francisco attorney Don Casper, intervened in taxpayer litigation filed recently by Cotchett, Pitre & McCarthy. Among the contentions of the petitioners/intervenor is that the sale constitutes an unlawful and unconstitutional gift of public funds, the underlying statute authorizing the sale was an unconstitutional delegation of authority, and the sale was not in the best interest of the State. Serious irregularities in the process of securing and deciding between bids present a further and compelling concern.
Petitioners/intervenor’s motion for preliminary injunction is scheduled for hearing in San Francisco Superior Court on Friday, December 10. Unless injunctive relief is granted, escrow on the sale will close on December 15.
Renne Sloan Holtzman Sakai typically defends governmental agencies against legal challenges, in order to help enable government to serve the public interest. However, the firm agrees with the petitioners/intervenor that the sale of the historic buildings that house essential State operations is illegal and is not in the best interest of the State of California. We are therefore pleased to contribute our expertise to this cause.
The $1 billion “gain” from the sale for the present budget year is nominally to help plug a structural deficit of more than $6 billion. However, under the terms of the deal, the State would then lease back the properties at an effective interest rate of over 10 percent annually for 20 years. While the State would have the opportunity to repurchase the property after 20 years, that purchase would be at market rates, leaving a further fiscal burden to the next generations of Californians.
To view the Complaint in Intervention and briefing in this case, follow the link.
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For more information about this important decision, please contact
Scott Dickey (415) 678-3827, firstname.lastname@example.org or
RSHS associate Steve Shaw (415) 678-3836, email@example.com.