Gov. Arnold Schwarzenegger’s office was ordered this afternoon to show cause of the $2.3 billion sale of 11 state buildings in a hearing scheduled for December.
The order comes after two former state officials sued the governor on Nov. 16 for trying to sell the buildings, which include San Francisco’s Public Utilities Commission Building and Civic Center buildings, and Oakland’s Elihu Harris Building.
“We think the judge did the right thing today,” Anne Marie Murphy, an attorney suing the governor, said. “This is no different than our state Capitol building being put up for sale to the highest bidder.”
The lawsuit claims the sale to a group of private investors, due to be completed in mid-December, is illegal and unconstitutional. It alleges the sale will cost taxpayers at least millions and possibly a billion dollars in the long-term.
Schwarzenegger’s attorneys will have to show cause of the building sales in a hearing on Dec. 10.
Officials at Schwarzenegger’s office today said that the building sales would bring in substantial revenue for the state.
“Once the sales close we’ll generate more than $1 billion to support the state budget,” said Eric Lamoureux, spokesman for the state Department of General Services.
He said he could not comment on the lawsuit, but said that the state was moving forward with escrow on the buildings, which is expected to close on Dec. 15.
The plaintiffs in the case are former Los Angeles State Building Authority President Jerry Epstein and authority member Redmond Doms, who were reportedly fired by Schwarzenegger this spring after they objected to the sale.
Their lawsuit has two legal claims.
First, it 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 court buildings are the San Francisco State Building, which houses the headquarters of the California Supreme Court and a regional appeals court, and the Ronald Reagan State Building in Los Angeles, which contains a Supreme Court courtroom and an appeals court.
The second claim is that the sale amounts to an unconstitutional gift of public funds.
The suit cites a report in which the Legislative Analyst’s Office said earlier this month that the sale-leaseback plan, while providing a one-time infusion of cash, will result in a net loss to the state of $644 million in 20 years and $1.4 billion in 35 years.
The state Department of General Services, using a different method of calculation, estimated the sale would produce a gain of $2 million in 20 years and a loss of $253 million in 30 years.
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