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California Selling Buildings Only To Rent Them Back

December 11, 2010

It seems the State of California in their infinite wisdom is selling off several state buildings. In the short-term this is a good thing it could raise a couple billion dollars maybe. The downside to this idea is that these are not unused property sales these are buildings that the state will be using to do their business for the forseeable future. So the plan is to rent them back from the new building owners. I think the saying goes penny wise and pound foolish. How many landlords do you think would sell their properties and then rent them back. Not too many I’m sure. How many of you out there having a fully paid off house would gladly sell it to someone and then rent it back.

The other side of all of this if you look at California they are not like the homeowner with the fully paid of house. That is not a good analogy of California they are more like the homeowner who has refinanced and taken out so much cash from their house that they are doing whatever they can to get their finances in order. They are selling the cars, boats, rv’s and heck even the good china just to make those payments instead of looking for a side job to raise income in California’s case that means raising taxes. The other option for that homeowner is to cut all nonessential bills satellite tv, internet, ride your bike more etc. In California’s case that means to reduce spending. I personally don’t know the answer to the problem whether it’s cutting spending or raising taxes I would assume it would be some of both really. But this plan to sell these buildings and then rent them back and watch the rents go up two to three percent every year is not going to solve this problem only prolong it. Hard decisions need to be made that will affect all of us. That is hard in California whatever group is affected sues and sues again but cuts need to come and taxes need to be raised at some point maybe not now with the downturn. Maybe next time we have all this excess cash from the next dot-com bubble or housing bubble or what have you we will buy these building back or put the money in savings for a rainy day. I doubt it but maybe we can all hope.

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