A California appeals court in San Jose today set a Jan. 26 hearing on the disputed $2.3 billion sale of 11 state buildings and blocked the sale of the buildings for the time being.
A three-judge panel said a temporary stay to block the sale of the buildings that it issued on Dec. 13 “shall remain in effect until further order of this court.”
If the stay is continued through next week–and is not overturned by the California Supreme Court–it would take the sale out of the hands of Gov. Arnold Schwarzenegger’s administration and place it into the hands of incoming Gov. Jerry Brown, who takes office Jan. 3.
But Schwarzenegger filed an emergency appeal with the California Supreme Court last week, asking it to lift the stay before the end of the year.
“Unless the state can close escrow before year-end, the sale may well disappear forever,” Schwarzenegger’s lawyers warned in the appeal.
In the current schedule, the panel will hear arguments on Jan. 26 on a lawsuit that includes three former state building officials claiming the sale of the buildings to a group of private investors is an unconstitutional gift and waste of public funds.
Schwarzenegger maintains the sale is legal and urgently needed to provide cash to help close the state’s budget gap.
The deal would provide $1.2 billion in revenue after $1.1 billion in building bonds and sale expenses is paid off. The plaintiffs claim renting back the office space would cost the state millions and possibly billions in the long run.
The high court has not indicated when it may act on Schwarzenegger’s appeal.
The case was assigned to seven temporary justices, taken from state appeals courts.
The assignments were made because all seven members of the California Supreme Court disqualified themselves. The reason was presumably that one of the buildings to be sold is the high court’s headquarters at the San Francisco State Building.
Joseph Cotchett, a lawyer for the plaintiffs, noted there are only three more court days before Schwarzenegger leaves office.
“He’s got one more shot at it,” Cotchettt said, referring to Schwarzenegger’s emergency appeal to the state high court.
But Cotchett said he thinks the San Jose appeals court’s action in continuing the stay “bodes very well for what the acting Supreme Court may do.”
Cotchett said that while Brown has not publicly announced his position, “I’m very hopeful that the new administration will realize what a boondoggle and waste this will be to California taxpayers.”
Eric Lamoureux, a spokesman for the state Department of General Services, said, “We’re pleased the Court of Appeal agreed to act promptly” by setting the Jan. 26 hearing.
“We’re hoping the California Supreme Court will consider the case promptly as well,” Lamoureux said.
The 11 building complexes are in San Francisco, Oakland, Santa Rosa, Sacramento and Los Angeles.
The plaintiffs are former Los Angeles State Building Authority members Jerry Epstein and Redmond Doms and former San Francisco State Building Authority member Donald Casper. They were all fired by Schwarzenegger last spring after they questioned the sale.
Julia Cheever, Bay City News
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