California Struggling with Asset Sales

Ironically the same week Reason releases a new report about how state and local governments can better manage the property they own, and sell off what they don’t need to own, this fascinating article comes out in the LA Business Journal. California is attempting to do a sale/leaseback of some buildings it owns. But one of the short listed bids is a state agency. As I am quoted saying in the article, this clearly appears to be a way for the state to essentially take out a mortgage on the buildings, rather than actually privatizing them, in violation of the Prop 58 limits on state borrowing for current operations.

So at a minimum there is something fishy going on. The many bids received for standard sale/leaseback deals that would provide net benefits to the state and taxpayers show these buildings can be privatized. California needs to avoid shady self-dealing and more debt, and just get on with selling the buildings.