As the California economy roared in the 1990s and tax revenues poured into a treasury overseen by Gov. Pete Wilson, the state laid plans for a series of new office buildings in Sacramento to spare itself from paying rent to other landlords.
Barely a decade later, the Schwarzenegger administration is launching a process to sell many of the same buildings that were originally touted as long-term money savers for taxpayers. The goal today is more immediate: pay off debt and steer cash into the state's depleted general fund. It's among a variety of short-term crisis solutions that include selling surplus state property, moves also being undertaken in cash-strapped Arizona.
In California, 11 state-owned sites with an estimated value of almost $2 billion will be listed for sale in early 2010 to pay off about $1.4 billion in bonds and net another $600 million "to support other critical state government programs," said state Department of General Services spokesman Eric Lamoureux.
The state wouldn't move out of the buildings; it would continue to lease them from the new owners.
The sell-off has lit up the skies for brokers in an otherwise downcast office real estate sector, where few buildings are being bought, sold or even listed, especially in Sacramento. It's likewise called fresh attention to the state's battered finances and stirred banter about whether it's smart to sell long-term real estate assets for short-term goals in a weak market.
Many in the real estate industry acknowledge it's a close call, but believe "beautiful class A" state buildings with a single tenant will command premium prices.
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