The Sixth District Court of Appeal in San Jose had blocked the $2.3 billion sale on Dec. 10 in response to a lawsuit claiming the transaction was an illegal gift of state funds to private investors. On Monday, the three-judge panel scheduled arguments Jan. 26 and left the sale on hold until then.
Schwarzenegger has asked both the appeals court and the state Supreme Court for orders that would let his administration dispose of the buildings before he leaves office Monday. Because the buildings include the Supreme Court's headquarters at 350 McAllister Street in San Francisco, all seven high court justices disqualified themselves and have been replaced by seven appellate justices, who have not yet acted.
Sale and lease-back of the buildings - which also include the state Public Utilities Commission offices in San Francisco and buildings in Oakland, Santa Rosa, Sacramento and Los Angeles - was approved by the Legislature in the latest state budget.
It would net $1.2 billion in short-term cash to reduce the state's mounting deficit, but the Legislature's fiscal analyst has projected a $1.4 billion loss over 35 years because of escalating lease payments.
'Big victory'
Opponents of the deal celebrated Monday's order.
"The public had a very big victory today, and I'm very hopeful that the acting Supreme Court will not reverse this court," said attorney Joseph Cotchett. He represents two of the three former members of the state Building Authority in Los Angeles who were dismissed by Schwarzenegger after opposing the sale.
Schwarzenegger's lawyers had stressed the urgency of the case in a filing to the state Supreme Court last week, saying any further delay could cause the buyer to back out. The sale "must close by year end or probably be lost forever," they said.
The administration's response was more sanguine Monday.
"The state is pleased the court has agreed to promptly hear the case," said Eric Lamoureux, spokesman for the state Department of General Services, which manages the buildings. "We have no reason to believe the deal will have collapsed by then."
Brown, the state attorney general, has not represented Schwarzenegger in the lawsuit and has said he will take another look at the sale if it is still unresolved when he becomes governor Monday.
The three former Building Authority members claim the sale to an investor group called California First violates laws against the waste of state funds and gifts of state assets. They argue that the Schwarzenegger administration ignored better offers in a secretive bidding process that favored buyers with political pull in Sacramento.
Advance approval
The suit also claimed that the sales of two court buildings, in San Francisco and Los Angeles, required advance approval from the state Judicial Council, chaired by Chief Justice Ronald George.
The governor's lawyers countered that the buildings are being sold for market value, the state would gain badly needed funds, and the Judicial Council does not own the court buildings and lacks authority to block their sale.
A San Francisco judge accepted those arguments in a Dec. 3 order that let the transaction proceed. The state's high court then transferred the case from San Francisco to the appellate panel in San Jose, which issued a stay a week later but has not yet explained its reasoning.
E-mail Bob Egelko at begelko@sfchronicle.com.
This article appeared on page C - 1 of the San Francisco Chronicle
Read more: News
No comments:
Post a Comment