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State Could Raise $4 Billion by Selling Property, Study Shows

Region & State

November 05, 2004|Robert Salladay | Times Staff Writer

SACRAMENTO — A Malibu beach house once used by MTV, the aging San Quentin State Prison and Los Angeles Memorial Coliseum have been included on a list of properties estimated to be worth more than $4 billion that California could sell or remake into more profitable enterprises, state officials announced Thursday.

The list of nearly 50 urban properties contains some surprises, and includes an Oakland golf course which the state leases to the city for $840 a year and nearly 17 acres of Caltrans property in Newport Beach -- a half mile from the Pacific Ocean -- that could be used for parkland and new housing.

And there are some historically controversial properties on the list, such as the hundreds of properties purchased by the state more than two decades ago to extend the Long Beach Freeway from Alhambra to Pasadena. The project is now indefinitely delayed. The sales value of the scattered lots has been estimated at $175 million.

"This is the first step toward ensuring that California makes the best possible use of its real estate assets," said Chon Gutierrez, executive director of the California Performance Review, which drew up the list.

The survey of properties was ordered by Gov. Arnold Schwarzenegger as a budget-cutting maneuver, but it is far too early to predict if anything on the list would be sold. Many of the properties present huge obstacles to a transfer of ownership and sales could face potential opposition from state lawmakers, local officials and residents.

The release of the list comes two days after California voters approved Proposition 60A, which requires money from the sale of surplus state property to be used to pay off $15 billion in bonds secured in March to balance the budget.

California is a major landowner, with assets that include 33 Cal State and UC campuses, 50,000 miles of roads, 12,000 bridges, 32 million square feet of leased offices, 33 prisons for adults and about 500 parks and wildlife reserves covering 2.5 million acres.

Officials believe Schwarzenegger could order the sale of many of the properties through executive order, but they said local communities would probably have the biggest say in the fate of the land and buildings. But they stressed that the list was simply an inventory, not a recommendation for action.

"The idea is to identify and see if we can get the best use out of them," said Russ Heimerich, of the California Performance Review, which was created to search for savings. "In the case of some of them: Are we charging appropriate rent? Are we getting the maximum value? Has the use of the property aged beyond its life?"

The inventory of properties -- available at www.cpr.ca.gov -- is divided into two parts: a large group of properties totaling 2,216 acres and estimated to be worth $412 million to $961 million, and a smaller list of more high-profile properties, such as the San Quentin prison in Marin County, the Cow Palace exposition hall south of San Francisco and the Napa, Orange, Santa Barbara and Ventura county fairgrounds. The value of the second group of properties is estimated at $1.2 billion to $3.4 billion.

The report also suggests the 152-acre site that includes the L.A. Memorial Coliseum and Sports Arena could become an "unprecedented property sale" for the state, worth as much as $400 million. The state is negotiating to extend the lease on the property until 2055 with the Coliseum Commission -- but another owner could take over the property.

Pat Lynch, the Coliseum's general manager, said the stadium's appearance on the surplus list doesn't pose a problem in negotiations with the NFL to lure a football team to Los Angeles. "We have a long-term lease, so even if they wanted to sell it, our lease would go with it," he said.

In addition, the Coliseum is a national historic landmark, which means it cannot be used for any other purpose but as a stadium, Lynch said.

This first tier of properties already has been considered surplus and is closer to being sold. This includes a Newport Beach property -- which the Legislature has voted to sell to the city for $1.4 million. The report said the price was too low and should be reevaluated so the state is "adequately compensated."

Other "underutilized" properties include 165 acres of agricultural land on the campus of Cal State Pomona that has "high development potential." The report also said 30 acres of the Metropolitan State Hospital in Norwalk, which houses 900 patients, might be used for residential development.

"There would be strong demand from residential developers for this site. Expected average density would be 10 homes per acre -- allowing 25% to public/recreation space," the inventory said.

Among the properties listed on the more controversial second tier of properties is the Del Mar Fairgrounds in San Diego County -- 406 acres on the coast that state officials estimated could be worth as much as $1.4 billion -- the most valuable of all state urban land.

The report suggested a master plan could be developed to determine the best use for the property, which has a contract for thoroughbred racing until 2009.

Times staff writer Amanda Covarrubias contributed to this report.

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