ARNOLD’S SHORT-SIGHTED BUILDING SALE PLAN WON’T DIE

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, OCTOBER 25, 2013, OR THEREAFTER

BY THOMAS D. ELIAS
    “ARNOLD’S SHORT-SIGHTED BUILDING SALE PLAN WON’T DIE”

    It was one of the most smartest and also one of the most obvious decisions Gov. Jerry Brown made after his latest term began in early 2011 – canceling the planned sale of 11 choice state office buildings to private investors.

           

          The only problem was that contracts had been signed and commitments made while muscleman actor Arnold Schwarzenegger was still governor, so this classic example of penny-wise, pound-foolish fiscal policy just won’t go away, even though it’s always been an awful deal for the state.

          Not surprisingly, lawyers for the private investors who would profit by billions of dollars over 30 years if the deal goes through insist that  a contract is a contract, even if it was signed by a governor who has now left office. Schwarzenegger made sure he signed as many papers on the deal as possible before Brown took over, since Brown had expressed great skepticism over the deal while campaigning in 2010.

          Now a judge in San Francisco has overruled state attempts to have the investor claims dismissed, so there will likely be years of litigation before the ultimate ownership of the red granite Ronald Reagan State Building in Los Angeles and several choice buildings in San Diego, Sacramento and the San Francisco Civic Center is determined.

          This lousy deal originated in late 2009, with Schwarzenegger desperately casting about for stopgap ways to raise some bucks to relieve the state’s chronic budget woes. When the package of buildings went out for bidding in early 2010, at the very bottom of the Great Recession’s real estate crash, even Schwarzenegger’s pet economists predicted a net loss for the state of $2.8 billion over 30 years.

          Yes, the sale would have produced about $600 million in immediate money – and if it eventually goes through, it would now generate almost $1 billion because some bonds that would have been paid off by proceeds from the sale have been paid down considerably in the meantime. But long-term losses would be far higher as the state pays rent on the buildings for decades.

          The deal also would bring about $16 million in commissions to the firm of Coldwell Banker Richard Ellis, whose executives contributed more than $79,000 over the years to various Schwarzenegger campaign committees.

          The sale drew little attention until this column in February 2010 exposed its short-sighted nature. Protests built after that, with a group of former state building officials eventually filing suit to stop the sale.

          Their action because moot when Brown nixed the deal shortly after moving back into the governor’s office, unwilling to tolerate the long-term losses. His contention was that Schwarzenegger’s purchase agreement merely began an escrow process, which could be stopped before it was finalized.

          The California First partnership that had won the 2010 bidding (its main partners include Irvine-based ACRE LLC and Hines Inc. of Houston, Texas) has never taken possession of any building.

          But the partnership won’t give up. “The state negotiated and signed a contract with California First and has no right to back out of the deal,” said one partnership lawyer. “Brown wanted to distance himself from the sale,” said another. “It was a politically motivated decision that left our client with a broken contract.”

          Brown explained his canceling the deal differently, saying he sought long-term solutions and not short-term Band-Aids that merely “kick problems down the road.”

          The bottom line is that this was one of the worst real estate deals ever negotiated by California officials, who could instead have sold off vacant state properties like a former CalTrans building near San Diego’s Maritime Museum. But that wouldn’t have a provided large enough short-term fix to satisfy Schwarzenegger.

           And so, almost 10 years to the day after he won office in the recall election that ousted Gray Davis from the governor's office, the ghost of his deal lives on, and no one knows if or when it will ever go away.

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    Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com. For more Elias columns, go to www.californiafocus.net

NEW LAW COULD THREATEN VOTE-COUNTING RELIABILITY

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, OCTOBER 22, 2013, OR THEREAFTER

BY THOMAS D. ELIAS

    “NEW LAW COULD THREATEN VOTE-COUNTING RELIABILITY”

          Suddenly this fall, a potential threat has emerged to the vote-counting reliability Californians have enjoyed for the last six years.

          This comes from a new law just signed without hoopla by Gov. Jerry Brown, who listed it among 30 signings and five vetoes in a routine press release.

          Here’s the possible threat: This measure will allow the California secretary of state to approve new electronic voting systems that have received no certification at all for use in actual elections. It also ends a long-standing requirement that all electronic voting systems be certified at the federal level before they’re used here and allows counties to develop their own voting systems.

          This bill cried out for a veto from Brown, considering the problems encountered by electronic voting systems during much of the last decade. Comprehensive testing demonstrated that many could be hacked, with the possibility that programming might be inserted so that – for one example – when a voter touched a screen favoring one candidate, the vote actually went into someone else’s column.

          No one ever proved that such hacking occurred in a real election, but the machines’ hardware and software could make this kind of cheating virtually undetectable. Some Democrats have long believed cheating of that kind occurred in Ohio in 2004. They note that the head of a firm called Diebold Election Systems co-chaired the Ohio campaign of Republican President George W. Bush and promised he would never allow 2004 Democratic challenger John Kerry to take that state.  Had Ohio gone for Kerry, he might have been president until early this year.

          This background led current California Secretary of State Debra Bowen to center her 2006 election campaign around the issue of voting machine reliability. Immediately after her election, she conducted a “top-to-bottom” review of electronic voting here, with one result being that every electronic voting system used in this state has had to get both federal and state testing -- until now.

          The voting machine troubles eventually led Diebold – still a prominent maker of ATM machines, safes, vaults and other security systems – to change the name of its voting machine subsidiary to Premier Election Systems and later sell it off to another voting machine company. Election Systems & Software Inc. bought Premier for just $5 million, tens of millions less than the firm’s apparent value before the 2004 election.

          Why tinker with voting machines now? Here’s what the new law’s legislative sponsor, Democratic state Sen. Alex Padilla of the San Fernando Valley portion of Los Angeles, an MIT graduate and once the youngest president of the Los Angeles City Council, said in press releases as his measure easily wended its way through the Legislature:

          “Most California counties purchase their voting systems from…private vendors. (This) has resulted in a patchwork of technologies throughout our state. The private vendors consider their technology proprietary…; Currently, state election officials and the public are completely dependent upon these vendors… Allowing counties to develop, own and operate voting systems will increase voter confidence in the integrity of our elections.”

          Padilla, who will be termed out of the Senate late next year, is a candidate for the Democratic nomination for secretary of state. If he wins the office, he would enjoy the new authority granted in his own bill.

          His press releases never mentioned the fact that experimental systems will now be usable in pilot programs in real elections. Nor the fact that counties already can develop their own voting systems.

          In other words, machines that might be as hackable as Diebold’s or even more corruptible may soon count the votes in some California elections.

          This has the potential of opening a Pandora’s Box filled with expensive recounts, legal challenges to election outcomes and deflated public confidence in the electoral process. That’s the very opposite of what Padilla’s press releases promised.

          Which is why this measure is a prominent entry in the unofficial sweepstakes to determine this year’s worst new state law, one that should be viewed skeptically by Californians of every ideological stripe.

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    Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com

TINKERING WITH STATE ELECTION SYSTEM NOT OVER YET

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, OCTOBER 18, 2013 OR THEREAFTER

BY THOMAS D. ELIAS
    “TINKERING WITH STATE ELECTION SYSTEM NOT OVER YET”

    Picture this happening in 2016, when California holds its next presidential primary election:

    The Democrats have already determined their candidate for the White House before the campaign arrives in the Golden State, but the Republicans have not. Now imagine that Democrats can vote for any presidential candidate they like, regardless of party. So millions of them vote in the GOP primary, selecting the candidate they think will be easiest to beat in November.

    Because the state GOP gives all its national convention delegates to whoever gets the most votes here, that means the candidate Democrats believe weakest now could get the single largest pot of convention delegates and become the prohibitive favorite to be the fall candidate.

    Sound unlikely? Well, it could happen if an initiative now in the works qualifies for next fall’s ballot and passes.

    Yes, it’s not quite two years since the first widespread trial of California’s “top-two” primary election system that sees the two leading candidates in any first-round election make the runoff, even if they belong to the same political party. It’s also not even two years since the initial crop of legislators and members of Congress were chosen from districts drawn for the first time by a nonpartisan citizens commission.

    But the tinkering with California’s election system goes on. The latest proposal is for a “blanket” presidential primary listing all candidates together, regardless of party, with voters of all parties – or no party – able to vote for whoever they like.

          This would be a major shift from the 2012 system, which let registered Democrats and Republicans vote only in the primary of their own party, while so-called “decline to state” voters who name no party could vote in the Democratic primary, but not the GOP’s.

          Those rules were decided on by the parties, not the state. They did not change with the advent of top-two. And the GOP’s decision to close its primary might be one of the reasons the party fared so poorly in that election, for studies show that once voters participate in a party’s primary, they become more likely to support that party’s candidates in the subsequent general election.

          The initiative creating the blanket presidential primary does not bill this major change as its central purpose. Rather, it has been advertised as an effort to end taxpayer funding of the various parties’ private elections. One major change it also seeks would be to take votes for the parties’ county central committees off the ballot, no longer compelling county election officials to print or count ballots for those offices.

          The measure is pushed by the bi-partisan San Diego-based Independent Voter Project, which challenges the legality of using tax money for any partisan activity.

          The measure also doesn’t compel a blanket primary, although that would probably be its outcome. The possibility, though, would remain for any party wanting to keep its primary open to no one but its own members to put up the money for separate tallies. Parties could also find other election systems – online voting might be one – that require no public funds.

          Both those systems would be expensive, and the cash-strapped California GOP wouldn’t be likely to pursue them. But it might again join with Democrats in a lawsuit to throw out the entire concept of a blanket primary, just as it did in the late 1990s, when the two big parties combined to get the U.S. Supreme Court to toss the blanket system California voters had opted to install for all their elections.

          The most likely outcome, though, would be a blanket primary, which both parties detest as much as they hate “top two,” which itself gets a first test next year in an election where statewide offices are at stake.

          One question arises from all this: Since party affiliation no longer is needed to vote in any state or local elections, what will be the point of party membership if that’s no longer required even for presidential primaries? And if there’s no point in membership, how long can the parties themselves survive?

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    Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net

TIME OF MAJOR TESTS FOR UTILITY REGULATORS

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, OCTOBER 15, 2013, OR THEREAFTER

BY THOMAS D. ELIAS

    “TIME OF MAJOR TESTS FOR UTILITY REGULATORS”

          No state agency over the years has so disregarded the interests of both ordinary citizens and business owners as the state Public Utilities Commission.

          Not only has it failed to adequately supervise safety of things like natural gas pipelines, but its decisions have consistently taken the side of large utilities over their customers.

    From secrecy about the costs of the huge new Mojave Desert solar power installations due to come online in the next two years to its dividing of more than $10 billion in restitution money paid by out-of-state electric generating companies that created the energy crunch of the early 2000s, the PUC has always favored the utilities it was created to regulate.

          But with four of its five current commissioners appointed by Gov. Jerry Brown, the commission now has several opportunities to change its ways.

          One key decision will come when it decides how to distribute $750 billion in cash and credits about to be repaid by Powerex Corp., a subsidiary of British Columbia’s government-owned BC Hydro, which gouged Californians during the crunch. If all or almost all that money doesn’t end up as credits on the bills of customers of Pacific Gas & Electric Co., Southern California Edison and San Diego Gas & Electric Co., you’ll know it’s the same old PUC, even if most of the members have changed.

          Then will come a key decision on how to penalize PG&E for its negligence leading to the 2010 gas pipeline explosion that killed eight persons and destroyed 38 homes in the San Francisco suburb of San Bruno.

          The PUC’s own staff has recommended fining PG&E at least $4 billion, partly because the company had collected money for pipeline maintenance from its customers for decades, but didn’t do an adequate job on it.

          But there may be complications if the PUC, as it should, goes through with the big fine. PG&E, pleading poverty, has told the regulators that if it has to pay the big fine – exponentially more than any penalty ever imposed on a California utility -- it will likely have trouble borrowing money for capital expenses.

          The company wants to pass any increases in the interest rates it pays through to consumers on their monthly bills for both gas and electricity. PG&E claims the fine would make its bonds less attractive to investors.

          That sets up yet another big test for the PUC: It can go along with PG&E according to the commission’s age-old pattern of always giving utilities at least the majority of any rate increase they ask for – and PG&E indicates it might seek as much as a 4 percent rate increase for added interest expense – or it can refuse and force the company and its shareholders to absorb that cost.

          The company says it will not pass along any direct costs of its fine to customers. But it says added interest costs would be an indirect cost and it feels entitled to pass that on.

          But why should consumers, who paid billions in maintenance money over several decades, pay anything for PG&E’s problems?

          As long as the company can absorb those costs and still remain solvent, there’s no way consumers should be charged even 1 cent for PG&E’s mistakes.

          It’s much the same question the commission also faces with Edison’s errors in replacing key parts of its San Onofre Nuclear Generating Station, now shuttered and about to be completely decommissioned and torn down as a result of faulty parts the company ordered and installed.

          No one has adequately explained why Edison and SDG&E customers, who paid the costs of building and maintaining San Onofre for decades – including hundreds of millions earmarked for the plant’s eventual decommissioning – should pay anything more for the teardown.

    Put these cases all together and this fall is plainly a time of serious tests for the PUC. Only if it decides all of them in favor of consumers can the new commissioners establish that they actually care about the interests of the people who pay all the rates and expenses of the state’s three big privately-owned utilities.

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    Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net