Brown pulled the plug on a controversial plan to sell 24 state buildings then lease them back for at least 20 years. The transaction started under Gov. Arnold Schwarzenegger and included iconic offices like the Ronald Regan building in Downtown Los Angeles and the State Supreme Court building in San Francisco.
"It didn't make much sense because it, in effect, is a gigantic loan with interest payments equal to over 10 percent every year," said Brown.
Schwarzenegger pushed the sale last year because it could bring a one-time cash infusion of $1.2 billion at a time when there seemingly were no other answers to get rid of the budget deficit.
The non-partisan Legislative Analyst found after 35 years, the sale/leaseback plan would cost California taxpayers $6 billion more than outright ownership.
The plan became tied up in court after two former building authority members who were fired for opposing the deal sued and temporarily blocked the sale. Joe Cotchett is their attorney.
"I'm delighted, absolutely delighted that this governor saw the sham that was pulled on the public and stopped this outrageous sale of our beautiful public buildings," said Cotchett.
The private investors who bought the entire portfolio of buildings say they are disappointed.
"We had looked forward to assisting the state in addressing its fiscal crises and are available if our assistance is needed in the future," said Michael Bustamente of California First LLC.
"This is fiscally prudent," said Brown. "It's honest and it's the very opposite of kicking the can down the road."
By doing this, though, Brown just increased his budget problem by $1.2 billion. He plans to borrow from prison construction bonds and from special reserve funds to make it up. The governor projects he will be able to pay it all back in three years.
