California Holds Garage Sale to Get Rid of Surplus Property

The State of California is looking for some extra revenue, so it is doing what any cash-strapped family would do: clear out its unused items and hold a garage sale. As described in this L.A. Times article today, the state’s garage sale will take place this Friday, August 28 (8 a.m. to 6 p.m.) and Saturday, August 29 (7 a.m. to 12 p.m.), with a preview of the state vehicles for sale on Thursday, August 27 (8 a.m. to 4 p.m.), in Sacramento. Items have also been put up for sale on eBay and Craigslist. There is everything from adaptors to Zip drives, with plenty of Blackberries, bookcases, cameras, desks, file cabinets, hard drives, laptop computer bags, monitors, routers, and tables available. There are even baseball bats, binoculars, a ceramic cat, fake plants, a golf club, a massage seat, Sacramento Kings memorabilia, a surfboard, a tennis racquet, VCRs, and an Xbox game console (with instructions!). (See here for a complete list of items for sale.) Gov. Schwarzenegger is even autographing the visors of some of the vehicles for sale to up the offers. For more information on the state’s surplus property blowout, see the Great California Garage Sale Web site.

All sarcasm aside, the state absolutely should get rid of all its unused or underused property. That’s just good asset management. When private companies come upon tough times, they get even more aggressive about divesting themselves of assets they don’t need, or are not core to their business, and the government should do the same.

Unfortunately, the state’s efforts to get rid of surplus property have been disjointed and piecemeal at best. The watchdog Little Hoover Commission has repeatedly criticized the state for not effectively managing its real property assets (see here, here, here, and here). In 2004, the California Performance Review Commission made several recommendations to improve the state’s asset management. (See, for example, recommendations INF 11: Tapping Surplus Property Assets (pp. 757-74) and INF 19: Better Management Needed for California’s Real Estate Assets (pp. 823-29) in Chapter 4, and SO 26: Implement a Statewide, Automated Asset Management Tool (pp. 1435-38) and SO 80: Using Innovative Techniques to Enhance Sale of State Surplus Property (pp. 1805-09) in Chapter 7.) In a separate report, the CPR detailed nearly 50 high-value, urban properties owned by the state that it estimated could fetch a combined $1.6 billion to $4.3 billion. (Given today’s real estate market, the sales prices would likely be lower, but they would still be significant.) That report was made possible by a Schwarzenegger executive order, which also directed all state entities to review all their real property assets. These assets are recorded by the Department of General Services (DGS) in the Statewide Property Inventory.

That is not to say that there have not been successes, though. In 2001, the state sold surplus real estate in Silicon Valley for $149 million. According to a July 2008 DGS report about state surplus property, during the five years from FY 2002-03 to FY 2006-07, California sold, transferred, or exchanged 43 surplus properties with a combined value of over $218 million. But much more needs to be done. Earlier this year, Schwarzenegger proposed selling some of the state’s high-value entertainment venues (entertainment is hardly a core government function)–including the Del Mar Fairgrounds and Race Track, Orange County Fairgrounds, Los Angeles Coliseum and Sports Arena, Ventura Fairgrounds (Seaside Park), and Cow Palace–but even this modest idea of divesting what should be low-hanging fruit has thus far failed to gain much traction.

The Great California Garage Sale may not generate enough revenues to plug the kind of massive budget holes California has experienced in recent years (and likely will be forced to tackle again in the near future), but it is a start, and it’s the kind of thing government should be doing anyway as a good asset management practice. Besides, as Jon Coupal, president of the Howard Jarvis Taxpayers Association, asserts, “if this is the beginning of taking a . . . thorough review of our property management practices, it’s a good thing.”

Other resources:

” See the discussion of asset divestiture and procurement reforms in Reason’s California Citizens’ Budget study (pages 69-84).

Reason’s California-related research

” Stay tuned to for policy analyst Anthony Randazzo’s forthcoming how-to guide on government asset management and privatization.