Court blocks Schwarzenegger's plan to sell 11 state buildings—for now

Lawsuit claims sale to private investors would be illegal, unconstitutional

Gov. Arnold Schwarzenegger's office was ordered Monday afternoon to show cause of the $2.3 billion sale of 11 state buildings in a hearing scheduled for December.

The order comes after two former state officials sued the governor on Nov. 16 for trying to sell the buildings, which include San Francisco's Public Utilities Commission Building and Civic Center buildings, and Oakland's Elihu Harris Building.

"We think the judge did the right thing today," Anne Marie Murphy, an attorney suing the governor, said. "This is no different than our state Capitol building being put up for sale to the highest bidder."

The lawsuit claims the sale to a group of private investors, due to be completed in mid-December, is illegal and unconstitutional. It alleges the sale will cost taxpayers at least millions and possibly a billion dollars in the long-term.

Schwarzenegger's attorneys will have to show cause of the building sales in a hearing on Dec. 10.

Officials at Schwarzenegger's office Monday said that the building sales would bring in substantial revenue for the state.

"Once the sales close we'll generate more than $1 billion to support the state budget," said Eric Lamoureux, spokesman for the state Department of General Services.

He said he could not comment on the lawsuit, but said that the state was moving forward with escrow on the buildings, which is expected to close on Dec. 15.

The plaintiffs in the case are former Los Angeles State Building Authority President Jerry Epstein and authority member Redmond Doms, who were reportedly fired by Schwarzenegger this spring after they objected to the sale.

Their lawsuit has two legal claims.

First, it alleges the sale of two court buildings violates a law giving the California Judicial Council authority and control over state appeals court facilities. The second claim is that the sale amounts to an unconstitutional gift of public funds.

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