SALE-LEASEBACK OF STATE OFFICE BUILDINGS

DON'T LET THE BEST BE THE ENEMY OF THE GOOD Experience in business and politics teaches that "the best is the enemy the good." Last August, faced with a record $22 billion budget deficit, Governor Schwarzenegger and two thirds of the legislature approved a plan to help close the deficit and protect vital services; it is not the best plan. Its objective is to sell and leaseback 17 office buildings on 11 state properties in five cities, three buildings are in San Francisco. Today some Republicans and Democrats oppose the plan; this is understandable. It rarely is best to sell a capital asset to pay for operating expenses. Most individuals, families, businesses, and states sell and leaseback properties for one reason; THEY NEED THE MONEY! The eight largest of all economies in the world cannot pay its bills. California has a record $22 billion budget deficit and the worst credit rating of fifty states: It needs the money! I accepted appointment to the San Francisco State Building Authority and serve as president to oversee the sale and leaseback of three office buildings because it is a good plan—not the best plan. It can help close the deficit and protect vital services for youth, the elderly and disabled. Californians pay some of the highest taxes in the nation; they expect the state to provide services -not manage property. The state must use some assets; it cannot balance a $22 billion deficit solely with more taxes and cuts in services. This sale- leaseback plan is not a fire sale; the bids must ensure the best interests of tax-payers according to the Department of General Services that oversees sale of state property. It is projected to produce $2 billion to retire bond debt on the buildings and lock in favorable long-term leasebacks for the state- and also net $660 million for state services. These buildings are attractive to investors; there is a limited supply of fully leased, energy efficient buildings certified by the U.S. Green Buildings Council. In San Francisco three are: The Hiram Johnson State Office Building on Golden Gate Avenue, the Earl Warren Building on McAllister where the Supreme Court meets, and the Edmund G. Brown Building on Van Ness which houses the California Public Utilities Commission. Some who question the sale–leaseback plan should first question their own silence and assent to a decade of irresponsible spending in Sacramento that exceeds inflation and population growth and has caused the deficit crisis. Those who have worked for fiscal responsibility need to do more than oppose the plan because it is not the "best plan." That's easy; the harder task is to prepare, present and enact practical solutions to close the budget deficit for fiscal 2010-2011. The best plan will be for Republicans, Democrats and independents to elect responsible legislators who will not sell out to special interests and the state employee unions that plunder the treasury and take vital services from the needy. The best plan will be to end safe seats and to elect a part time legislature at half pay- that cannot take contributions from state employee unions in return for supporting unsustainable state pensions that bankrupt the state. Mike DeNunzio