Senators Say Surplus State Property Wastes Tax Dollars

Spring 2004


State Government

Senators Say Surplus State Property Wastes Tax Dollars

A glut of state-owned property is a waste of tax dollars, according to two state senators who have introduced legislation that they believe can produce at least $1 billion to help solve the state’s budget crisis. The properties that were found in a survey by the senators’ staff include such questionable holdings as a golf course and a massage parlor.

Senators Jim Battin and Jeff Denham announced March 11 that they have introduced a package of 10 bills to provide oversight and set up a system for determining whether properties should be sold or require leases with better terms for the state.

Senator Battin: “We cannot continue to waste taxpayer money maintaining properties that have no governmental value, especially when the Legislature is looking at more budget cuts. This is wrong and must be addressed immediately.”

Senator Denham: “Californians deserve to know that their tax dollars are not being spent on ridiculous real estate ventures at a time when the state is in dire financial circumstances. Our legislation addresses the problems that are inherent ion the state’s property procurement system.”

The senators cited Caltrans ownership of a nine-hole pitch-and-putt golf course in the Oakland Hills that they said is surrounded by million-dollar homes. The Department of Transportation owns the property, acquiring it in the 1950s when there once were plans to build a highway there. The golf complex, with a driving range and restaurant, is valued by Caltrans at only $25,000. And the state gets less than $3 a day from its tenant.

Senator Battin cited the Memorial Coliseum in Los Angeles, which was built for the Olympics in the 1930s. The state is getting about $80,000 a year from the property that is valued in the tens of millions of dollars. “It does not make sense to me that the state’s taxpayers own the L.A. Coliseum and get about $80,000 a year from L.A. If Los Angeles thinks it’s an asset, then Los Angeles should pay for it,” said the senator from Palm Desert.

California also owns a warehouse on prime downtown property in San Diego. It is vacant and was appraised in 1988 at $2.5 million, Senator Battin said. All the Department of General Services will say about the property is that it may be used for a future project.

Caltrans said it needed properties to add a highway lane, and in the meantime tenants of the San Rafael property include a massage parlor where there have been four arrests since 2001, the senators said. “They didn’t even know they owned (the massage parlor),” Senator Battin said. “It is certainly bad management to be a landlord of a massage parlor” where he said the parlor’s Internet advertisements indicate more than massages are available.

They also cited such expensive properties as the Cow Palace in South San Francisco, which is owned by the Department of Food and Agriculture. The University of California owns a $377,000 house in Hawaii and a Sausalito house on 1.75 acres with a bay view worth millions. The senators said the state should find out more about these properties. “If this is a good investment, tell us,” he said.

Senator Battin said he introduced a bill last year to try to get the state to look at surplus properties but it seemed the Davis administration wasn’t interested and did what it could to see that it died. As a result, he went to his colleagues in the Legislature and got more than 60 members, Republicans and Democrats, to sign a letter seeking more information on state properties. Still the information has been less than complete.

The senators said they have had more success getting data from various state agencies since the election of Governor Arnold Schwarzenegger, whom they said has taken a personal interest in their project. It fits in nicely with the governor’s performance review program, they said. According to the Los Angeles Daily News, Fred Aguiar, the governor’s State and Consumer Services Agency secretary, said dealing with surplus property and getting fair-market value on its leases are priorities. “This governor is committed to getting our arms around this problem and resolving it,” Mr. Aguiar said.

Among the bills is SB 1750 (Battin), which would establish the Commission on Asset Review and Divestiture to review a comprehensive list of properties and recommend efficiencies. Legislation also will require the Department of General Services to consider whether an item is really needed when a bureaucrat wants to purchase something. A database would be created for all purchases over $5,000. Other Battin bills are SB 1752, 1754, 1756 and 1758.

Senator Denham’s bills (SB 1751, 1753, 1755, 1757 and 1759) include a measure to ensure quick sales of land not being used efficiently, as well as a review of all motor vehicle purchases. Sales of Caltrans property would go into a fund for highway and road construction instead of being used for mass transit projects.