ALAMEDA, Calif. — California Gov. Jerry Brown said Wednesday that he’s killing the state’s plan to sell 11 state office buildings to private investors and lease them back.
The deal would have brought in $1.2 billion in one-time money to help balance this year’s budget. It would also have triggered the redemption or defeasance of $1 billion of tax-exempt lease-revenue debt issued in connection with the buildings’ original financing.
The sale-leaseback deal was negotiated by the administration of the previous governor, Arnold Schwarzenegger. In October the state announced an agreement to sell the 11 buildings to a consortium of investors led by privately owned real-estate firm Hines and private-equity firm Antarctica Capital Real Estate for $2.33 billion, while signing long-term leases to keep state agencies in the buildings.
“The sale of the buildings really didn’t make much sense because in effect it was a gigantic loan with interest payments in excess of 10% every year,” Brown said at a press conference this morning.
Opponents of the plan filed suit in November to stop the deal from closing and the case was pending in an appellate court.
