Dick Schmidt / Sacramento Bee file

A flower blooms in this 2003 file photo outside the Capitol Area East End Complex, one of 11 buildings included in a 2010 plan sell state buildings and lease them back.

Capitol Alert: Lawsuit over sale of California state office buildings moves forward

Published: Tuesday, Jul. 23, 2013 - 3:39 pm

Remember that plan to sell 11 state office buildings to raise cash during the Gov. Arnold Schwarzenegger administration?

The state may no longer be interested in the sell-leaseback arrangement, but the lawsuit from the severed deal lives on.

An investor group sued in 2011 alleging Gov. Jerry Brown improperly pulled the plug shortly after taking office. The $2.3 billion deal included $1.2 billion to assist the then-cash-starved state. At the time, the Legislative Analyst's Office criticized the deal as "poor fiscal policy" due to significant long-term lease costs.

Attorneys for the investor group, California First LP, say they scored a pivotal ruling Monday in their attempts to force the sale. A judge denied the state's motion to dismiss and will allow California First LP to seek monetary damages equal to the amount the group would have earned had the deal gone through.

"This is the most important development in this case to date," said Angela Agrusa, counsel for California First LP.

The state is "considering our options," said Eric Lamoureux, spokesman for the state Department of General Services. "We are evaluating the judge's ruling and determining our next steps."

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Read more articles by Melody Gutierrez

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