In the face of California‘s $17 billion budget deficit, some lawmakers are pushing to sell the state‘s surplus land to generate new revenue.
The California Senate Committee on Governmental Organization held an informational hearing May 13 to evaluate the potential benefits of selling government-owned land. Committee members heard from the state auditor and representatives from Caltrans, the department of General Services and the University of California.
“I can no longer tell the people of my district that they‘ve got to subsidize San Quentin, the Cow Palace, the L.A. Coliseum, golf courses around the state,“ said Senator Jeff Denham (R-Merced) at the meeting. “I‘m going to push to sell every property that‘s not utilized to the benefit of taxpayers…. We‘ve got to push throughout the state – we‘re under a huge deficit right now.“
Denham, who sits on the committee, has been an outspoken supporter of the sale of government lands. He has introduced a bill in the senate to sell the Los Angeles Memorial Coliseum, which is home to University of Southern California‘s football team. The site has twice served as the site of the Summer Olympics, in 1932 and 1984.
State auditor Elaine Howle reviewed a report compiled by her office in 2000 that evaluated the state‘s real property assets. The report found numerous obstacles blocking the sale of surplus land, including a lack of incentive for state agencies to dispose of their surplus land, she said.
“The reason for that is once that property was sold, the funds that the state of California received would be deposited in the state‘s general fund, so agencies weren‘t able to retain any of the funds that were obtained from the sale of surplus property,“ she said at the hearing. “In the agencies‘ minds … that was a disincentive for them.“
Howle also said attempts to catalog all surplus property owned by the state have been incomplete and plagued by inaccuracy.
An additional challenge that such proposals face is constitutional restrictions. California‘s constitution requires that all proceeds from the sale of surplus property go toward paying down the principal and interest on bonds authorized under the Economic Recovery Bond Act. Only after those bonds have been paid off can the funds be directed toward other uses.
Regardless of the obstacles, legislators are still frustrated that lands are not being sold.
“What happens in my experience is some of the departments have this property but they‘ve had it for 30 or 40 or 50 years and it‘s gone up significantly in value,“ said Senator Tom Harman (R-Huntington Beach). “It would be appropriate in my opinion to dispose of that property, bring in some money, and [then the state agency] could go to some other location to perform the function that they‘re performing with substantial savings to the state.“
Harman gave an example in his district: a plot of land on the coast that was purchased in 1943 for $3,000. The site is used to do water quality testing, he said, but is now worth $2 million.
The tactic of selling surplus property appears to have bipartisan support. Senator Dean Florez (D-Shafter) said at the meeting that the state should focus on its tangible assets when looking at how to resolve the budget crisis.
“Sell our surplus property before we sell the lottery,“ he said. “I mean let‘s talk about tangible assets here that we have on the books today.“
Surplus property sales are nothing new, but they have happened less frequently in the past four years.
JEREMY OGUL can be reached at email@example.com.