Former Cabinet Member Disavows Ties to Group Poised to Buy State Buildings
Former HUD secretary's firm was named in documents as an investor, but he denies any involvement
Henry Cisneros, the former U.S. Secretary of Housing and Urban Development and current chairman of the commercial real estate firm CityView, on Monday disavowed his association with a mysterious consortium of investors who are poised to snap up 11 premier state office complexes, including San Francisco’s massive Civic Center.
The group, California First LLC, bid $2.33 billion for state office complexes that include the California Public Utilities Commission building in San Francisco, the Elihu M. Harris building in Oakland, the Attorney General building in Sacramento and other high-profile sites.
California would pocket about $1.3 billion after debt is paid off, but the state agencies would then be market-rate paying tenants in the same buildings for many decades. California First would own the buildings and the land beneath them.
The transaction had been scheduled to close on Dec. 15, but two prominent Bay Area lawyers sued to halt the sale, and the state appellate court issued a stay on Dec. 13. Private attorneys hired by the Department of General Services and departing Gov. Arnold Schwarzenegger are working furiously to get the stay lifted before Schwarzenegger leaves office on Jan. 3.
However, as The Bay Citizen reported Saturday, opponents argue that the deal would be one of the worst, financially, that the state has ever struck. The nonpartisan Legislative Analyst’s Office in November estimated that the sale would cost the state’s taxpayers an extra $6 billion over the next 35 years.
Helping to fuel the controversy is the fact that California First won’t disclose where the money is coming from or even who is involved. The consortium identified a shifting roster of equity partners in numerous offer letters it submitted to the DGS. None of the firms listed on the California First documents responded when queried about the deal by The Bay Citizen.
A man answering the phone at Belgravia Capital in Costa Mesa last week said that his firm was no longer involved. When asked his name, he hung up. In a June 7 letter to DGS, Belgravia Managing Director Nik Chillar wrote that his firm had made an “equity commitment” to California First for about $200 million.
CityView, Cisneros’s 10-year-old firm, also did not respond to inquiries from The Bay Citizen about the deal last week. The commercial real estate firm is based in Los Angeles and is listed as a partner in California First in three documents submitted to the DGS.
The most recent document naming CityView as a partner was dated May 21. In mid-June, California First was selected as the winning bidder, according to Eric Lamoureux, a departmental spokesman.
But in a statement issued Monday, Cisneros and CityView denied any involvement in the increasingly controversial deal.
“This past summer, CityView did consider making an investment in the proposed sale of state office buildings and participated in the State’s initial bidding process,” Victor Miramontes, CityView’s vice chairman, said in an e-mailed statement. “However, CityView is not an investor with the winning bidder, has no agreement regarding the winning bid and will not be a party to this transaction. We have not received any compensation in relation to this transaction and will not receive any compensation going forward.”
A spokeswoman wrote in an e-mail that Cisneros was not available Monday to speak further about CityView’s role in the deal or specify when his firm withdrew its participation.
Michael Bustamante, former deputy chief of staff to Gov. Gray Davis who was hired as a spokesman by California First in September, said in an interview last week that he did not know who California First’s partners were, and he declined to attempt to find out.
“There are other investors,” Bustamante said. “I don’t know their names.”







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