A San Francisco Superior Court judge today refused to block the planned $2.3 billion sale of 11 state buildings to a group of private investors.
Judge Charlotte Woolard said she was standing by a tentative ruling issued Thursday in which she said the sale did not violate state law and was not an illegal waste or gift of public funds.
The sale, due to be completed on Dec. 15, would contribute $1.3 billion to closing the state’s budget gap after $1 million in bonds on the 11 buildings is paid off.
But Woolard, referring to appeals, told lawyers for three former state officials, said, “I encourage you to seek any remedies you want to seek.”
Attorney Joseph Cotchett, representing two of the plaintiffs, said they will ask the state Court of Appeal in San Francisco on Monday to block the Dec. 15 sale.
“We are going to the Court of Appeal on Monday,” Cotchett said.
“It’s not too late to show that this transaction is a stealing of taxpayers’ money,” he said.
He said that even if the plaintiffs don’t win an order blocking the sale, they will pursue their case in a later trial.
Cotchett’s clients are former Los Angeles State Building Authority President Jerry Epstein and member Redmond Doms, who were fired by Gov. Arnold Schwarzenegger this spring after they objected to the sale.
Former San Francisco Building Authority member Donald Casper, who was also fired after raising questions about the transaction, has also joined the case.
He is represented by former San Francisco City Attorney Louise Renne, who told Woolard during a two-hour hearing, “This case is not in the best interests of the state and it is not a transparent deal.”
“I think the deal has been rushed through for no good reason because it is a deal that cannot stand to be reviewed in public,” Renne said.
Andrew Stroud, representing the governor, argued that the sale doesn’t violate any laws and is not unconstitutional gift of public funds because the $1.3 billion in revenue will benefit the state.
Outside of court, Eric Lamoureux, a spokesman for the state Department of General Services, said, “The judge’s ruling confirmed the direction the department received from the governor and the Legislature to proceed with the sale to obtain desperately needed revenue.”
The structures include the San Francisco State Building, which houses the California Supreme Court and a state appeals court; the Public Utilities Commission Building in San Francisco, the Elihu Harris Building in Oakland and the Judge Joseph Rattigan Building in Santa Rosa.
The other seven buildings are in Sacramento and Los Angeles.
Offices in the buildings would be rented back to the state for 20 years.
The lawsuit claims the sale will cost taxpayers at least millions and possibly more than a billion dollars.
The suit cites a report in which the state legislative analyst said the sale-leaseback plan, while providing a one-time infusion of cash, will give the state a net loss of $644 million in 20 years and $1.4 billion in 35 years.
In addition to claiming that the sale is a waste and gift of public funds, the lawsuit alleges the sale of two court buildings violates a law giving the California Judicial Council authority and control over state appeals court facilities.
The two buildings are the San Francisco State Building and the Ronald Reagan State Building in Los Angeles, which contains a Supreme Court courtroom and an appeals court.
Woolard said in her brief ruling that the Judicial Council’s “authorization is not required” for the sale.
The council filed papers in the case arguing that it should be consulted before the sale is made final.
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