The State of California needs to do what regular people do – when you’re in trouble, sell assets to generate cash.
from sddt.com
The city of Del Mar is considering a bid to buy the Del Mar Fairgrounds so that coastal property can remain in the public domain.
The Del Mar City Council voted unanimously on Monday to send a “letter of interest” to Gov. Arnold Schwarzenegger about the 400-acre fairgrounds, racetrack and nearby horse park.
Schwarzenegger has placed the property on a list of surplus sites that could be sold to raise cash for the financially strapped state. City officials are worried that a developer could buy the property, making it off-limits to the public.
The cost of the fairgrounds is estimated between $400 million and $700 million.
Speaking of the track, the 2Q09 contest is almost a wrap, and as of today there are 5,844 closings for the second quarter of 2009 – here’s a link:
https://www.bubbleinfo.com/2009/07/2q09-contest-preview/
On July 23rd one of these guessers will be the winner of six tickets to the track:
| 5,840 | Happs |
| 5,846 | mybleachhouse |
| 5,900 | Genius |
| 5,950 | Erica |
| 5,955 | Strider |
| 5,983 | CA renter |
| 5,991 | osidebuyer |
| 6,000 | doughboy |
9 days of deficit.
I *hate* it when they want to sell good pieces of public property; it’s a one-time gain, but a permanent loss. OTOH, it would definitely be nice if the city could buy it, since they have a vested interest.
p.s.: I must admit it would not bother me if they went ahead and sold the LA coliseum.
Sell semi-permanent structures or thumb their nose at powerful unions. You can see which one they decided.
Besides, it’s quite a liability to own so many places in a land riddled with earthquake faults. Honestly. Sometimes it’s better to hand over properties to deeper pockets so they can redevelop them into more sustainable uses. God knows California is more or less bankrupt.
We can all vacation to the Mojave National Forest parks then. Nobody wants them. I wonder why.
Chuck
when you’re in trouble, sell assets to generate cash.
There is another thing that they should do…
eliminate 90% of all welfare programs.
Here is a great example of a program that is costing the taxpayers $5-10B (don’t have exact numbers), where the state was trying to reduce pay for workers of this program, which was blocked:
U.S. District Judge Claudia Wilken halted the wage cuts on June 25 in response to a lawsuit by the Service Employee International Union (SEIU) on behalf of 250,000–out of a total of 440,000–home care workers that it represents in California.
…
However, according to a California Senate Office of Oversight and Outcomes report this year, the IHHS program “lacks sufficient oversight and suffers from fraud and abuse.”
hoocoodanode
Cash rules everything around me, cream get the money….
Still pleunty of fraud out there:
http://www.azcentral.com/business/realestate/articles/2009/07/14/20090714biz-catherine0715.html
I would like to see the state sell the fair to Del Mar and we can once again go to the Del Mar Fair, like it was for decades.
come on 6000!!!!
Great. Del Mar will consider the fairgrounds to be beach property and ban drinking, loud music and install parking meters in every parking space with a 2 hour limit.
Not the people you want to manage the fairgrounds, huh?
The state should sell. It needs the money. But the current deficit and fiscal needs of California are so enormous, it’s hard to see how one time shots of 400 million or 700 million are going to make a difference.
If they city can do it, they should. Saving coastline from over development is a great thing.
Here in Georgia, about 95% of the coast is pristine, from south of Savannah to the Florida state line. Some of the wealthiest families in America once owned large parts of the Georgia coast, until the Great Depression. After that, large parcels were sold to the State, which established a trust, which controls it to this day.
Needless to say, the 1995 to 2007 period, saw private developers do everything they could to build on these public lands. With a couple of small exceptions, surprisingly, through Democratic and Republican governorships, the politicians held firm. People want access to the water and natural beauty.
So go for it California. Your kids will thank you.
I think selling San Quentin makes more sense as it’s an oceanfront/bayfront prison. They can sell and build inland.
Happs cannot win it, mybleachhouse is already closer.
When you’re in a hole most quit digging right???
‘When you’re in a hole most quit digging right???’
Either that, or start digging faster hoping to come out the other side!
It’s all part of the plan, GOLDMAN SACKS-USA:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Wall Street to privatize US infrastructure
http://www.globalresearch.ca/index.php?context=va&aid=9736
Roads, airports on the block as budgets tighten
Fri Aug 1, 2008 12:37pm EDT
By Jonathan Stempel
NEW YORK (Reuters) – Cash-strapped U.S. state and city governments are likely to sell or lease more highways, bridges, airports and other assets to investors desperate for stable returns after being frazzled by the credit crisis.
The trend is set to pick up speed given worsening budget deficits in state capitals and city halls nationwide.
It will also be welcomed by Wall Street bankers hoping to help create and market so-called “infrastructure” transactions at a time many debt markets remain paralyzed, and after major U.S. stock indexes fell into bear market territory.
“When you are nervous about everything else, you put your money in a toll road,” said John Schmidt, a partner at the law firm Mayer Brown LLP in Chicago. “That’s the logic of infrastructure. Returns are stable and predictable. You won’t get fabulously rich, but you’ll get stable cash flow.”
The latest enthusiasm for at least partially privatizing infrastructure assets came on July 30 from New York Gov. David Paterson, who is trying to plug a budget deficit caused in part by lower tax revenue as Wall Street retrenches.
“We’re just looking at ways to be more efficient and that’s why I used the term public-private partnerships — trying to find some creative solutions,” Paterson said. “The reason I’m avoiding taxes is because I think taxes are addictive.”
Bankers and others in the industry say there is pent-up demand from dedicated infrastructure funds and public pension funds to invest in hard assets — perhaps $75 billion to $150 billion of equity capital — but not enough supply.
“Economic conditions are tough, and are going to be very harsh on the performance of state budgets in 2008 and 2009,” said Greg Carey, co-head of infrastructure banking at Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz). “States are looking for long-term solutions in running businesses. A public-private partnership is a tool in their toolboxes.”
A high-water mark came in May, when a group led by Spain’s Abertis Infraestructuras SA (ABE.MC: Quote, Profile, Research, Stock Buzz) and Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) agreed to pay $12.8 billion to lease the Pennsylvania Turnpike for 75 years. The total could reach $18.3 billion, including promised improvements. Legislators must approve the lease.
Other transactions have included the $1.8 billion lease of the Chicago Skyway toll road bridge in 2005, and a $3.8 billion lease of the Indiana Toll Road the next year. Chicago Mayor Richard Daley is preparing to lease Midway Airport this year.
For Wall Street, infrastructure can be a bright spot at a time of deep job cuts and expected declines in bonuses.
“We’ve seen an unprecedented number of headhunters recruiting for positions on the buy and sell sides,” said Rob Collins, head of Americas infrastructure banking at Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz). “Infrastructure investing can be counter-cyclical to economic trends.”
John Ma, the other Goldman infrastructure chief, added: “We’re very committed to this space. Our business activity has increased dramatically, even this year.”
ALTERNATIVE TO TAX HIKES
According to the nonprofit Center on Budget and Policy Priorities, 29 U.S. states plus the District of Columbia may face a combined $48 billion of budget deficits in fiscal 2009.
But politicians might be loathe to cut spending or raise taxes at a time mortgage debt, $4-a-gallon gas and rising food prices leave consumers — of whom many vote — dispirited. Tapping public debt markets might also be too costly.
Meanwhile the American Society of Civil Engineers estimates $1.6 trillion is needed over five years to raise the often aged U.S. infrastructure to “good” condition.
Pennsylvania Gov. Ed Rendell in July called for the United States to establish a capital budget to pay for such repairs. It was a year ago August 1 that the Interstate 35W bridge in Minneapolis plunged into the Mississippi River, killing 13.
Critics say some infrastructure transactions are short-term budget fixes that deprive governments of steady cash streams from taxpayer-funded assets. There is also the risk that private operators won’t do their jobs well.
Advocates of privatization say entities might do better managing assets than a government answering to voters.
Politicians could also get a boost if they can take credit for reinvesting sale or lease proceeds in needed projects.
“The argument for a public-private partnership is the private sector is a lot smarter about paying attention to costs, and because it has skin in the game will be more attentive to maintaining an asset over its life,” said Joseph Giglio, a privatization expert and professor at Northeastern University’s College of Business Administration in Boston.
“Elected officials often shortchange funding of maintenance because they don’t want to increase user fees or taxes to pay for it,” Giglio added. “Their election cycle is four years. They can pass it on to someone else’s watch.”
Collins, who also advised Pennsylvania on the turnpike, said infrastructure can also go beyond roads and airports. He said Morgan Stanley is advising Akron, Ohio, on exploring the leasing of its wastewater system, and Indiana on the possibility of private management for its state lottery.
“Lotteries have infrastructure characteristics in that they have stable cash flows and high barriers to entry,” he said. “They could even attract private equity investment because they are self-financeable and require minimal capital expenses.”
BIG NAMES
At Goldman, Carey and Ma replaced Mark Florian, who is moving to First Reserve Corp, a private equity firm specializing in energy, a person close to the matter said.
Goldman itself raised a $6.5 billion infrastructure fund in 2006, and is reportedly trying to raise a $7.5 billion fund.
Morgan Stanley raised a $4 billion fund in May. Global Infrastructure Partners, a joint venture between Credit Suisse Group AG (CSGN.VX: Quote, Profile, Research, Stock Buzz) and General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz), raised a $5.6 billion fund the same month. Private equity firm Carlyle Group CYL.UL last year raised a $1.15 billion fund.
And Kohlberg Kravis Roberts & Co KKR.UL, which is preparing to go public, in May lured George Bilicic from Lazard Ltd (LAZ.N: Quote, Profile, Research, Stock Buzz), where he led power, energy and infrastructure efforts worldwide, to run its own infrastructure investments.
Two of the largest specialists in the area are Australian: Macquarie Group Ltd (MQG.AX: Quote, Profile, Research, Stock Buzz) and Babcock & Brown Ltd (BNB.AX: Quote, Profile, Research, Stock Buzz).
Schmidt, the Mayer Brown partner, said if the Midway transaction succeeds, other airports could also go private, perhaps leading to “lower and more predictable landing fees and terminal rentals for airlines, which certainly aren’t flush.”
That, he said, could bring the value of roads, bridges and airports that could be privatized to half a trillion dollars.
(Additional reporting by Joan Gralla in New York and Elizabeth Flood Morrow in Albany, New York, editing by Dave Zimmerman)
“Sell semi-permanent structures or thumb their nose at powerful unions. You can see which one they decided.”
Chuck I agree with you 100%. The CA unions are out of control. My husband runs a nursing home and belongs to a company that owns over 60 nursing homes. They are one of the only companies in the industry that don’t belong to the Union. His company pays higher salaries and has one of the lowest turnover rates in the nation. The unions are CRAZY. I could write pages on the money they spend to bully his company into joining. Paying under cover nurses to spy? I mean really.
I understand why they were created years ago. But we live in a different time,they have become corrupt and they are controlling our government.
“There is another thing that they should do…
eliminate 90% of all welfare programs.”
Tyrone is dead on as well. My newest neighbor just bought a $565,000 house. She asked me if we went on welfare while we were in school? I was kind of shocked and simply said, “No”.
She told me they were on welfare for the last three years while her husband finished dental school. It was about $1,000 a month for food including WIC etc. Are you kidding me? $1,000 a month to spend at the grocery store. My shock turned to annoyance as I thought about working full time jobs, and scrimping and saving to make it through.
The beauty of it is…. State/City/County etc. can always SUE for EMINENT DOMAIN to get it back when they’re finacially capable of paying for it.
So it’s never really gone – it’s just being held by someone till the state wants it back.
Looks like the state has figured it out. Saw this over at Calculated Risk:
Details emerging from the talks suggested that the deal will require extraordinarily deep cuts to school systems and local governments, and … substantial cuts to health care and other social services.
Above, I said:
eliminate 90% of all welfare programs
When you don’t have the money, you can’t help. It’s just that simple.
Drop of my first donation to Children’s Aid. We need school supplies and back packs
A while back I got into a semi-heated political debate regarding gov’t spending. I simply said, one needs to learn how to swim before jumping in the ocean to save somebody from drowning. My colleagues looked at me and had no idea what I was talking about and coouldn’t make the connection between fiscal conservatism and generous ‘welfare’ payments.