California Seal

By Joe Garofoli
Sunday, February 22, 2015 – Updated 8:20 pm

The state of California will pay $24 million to investors to end a legal battle over a proposed deal to sell $2.3 billion in state properties during the height of California’s fiscal crisis.

The Legislature approved former Gov. Arnold Schwarzenegger’s 2010 plan to sell 11 of the state’s most well-known properties — including the Ronald M. George State Office Complex in San Francisco — to a consortium of investors called California First LP. The deal would have raised $1.2 billion in short-term cash for the state when it was in dire fiscal straits.

But the Legislature’s fiscal analyst said the deal, in which the state would lease back the buildings, would have cost $1.4 billion over 35 years because of escalating lease payments for the state’s continuing use of the buildings.

But after Gov. Jerry Brown called the plan shortsighted and pulled the plug on the deal after he assumed office, California First sued in 2011.

A trial over the matter finally began in December, but the court ordered the parties into settlement talks. A settlement was reached Friday.

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