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Two state building appointees removed by Gov. Arnold Schwarzenegger filed suit Tuesday to block California's sale of appellate court buildings, alleging that the deal is unconstitutional because the administration has not received approval from the state Judicial Council.

Lawmakers and Schwarzenegger authorized the sale of 11 state properties as part of the 2009 budget agreement to raise more than $1 billion for state coffers, including buildings in San Francisco and Los Angeles that house state courtrooms. Schwarzenegger officials settled on a bid this year from a consortium of investors that will net the state about $1.3 billion, with an agreement to lease them back for at least 20 years.

But the deal has been panned in recent weeks by Democrats, including Treasurer Bill Lockyer, Controller John Chiang and Democratic budget leaders. The nonpartisan Legislative Analyst's Office last week said the deal would cost the state $6 billion in nominal dollars over 35 years or $1.4 billion in present-value dollars. The LAO said it was the equivalent of paying 10.2 percent interest on the $1.3 billion in immediate cash.

Plaintiffs in the suit are Los Angeles businessmen Jerry Epstein and Rusty Doms, both of whom Schwarzenegger dismissed from the Los Angeles State Building Authority this spring after they voiced their concerns over the deal. The building authority, which oversees long-term financing of the state properties in Los Angeles, was required to sign off on the transaction, which its replacement appointees did earlier this month.

Democratic trial lawyer Joseph Cotchett filed the suit Tuesday in San Francisco Superior Court. Schwarzenegger officials have been working to complete the deal before the governor leaves office Jan. 3. The lawsuit asks the court to block the sale immediately.

Update (3:30 p.m.): Post updated to reflect fact that Schwarzenegger removed Epstein and Doms from the board, though their original appointments predated the governor.


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