Last September, I discussed the strange bidding war for a federal property called “the ziggurat”. At the time, the bids had risen to $154 million. A few weeks later the property sold for $177 million, despite failing to achieve a single bid in a previous auction where the minimum price was $75 million, but where buyers were forbidden to demolish the property.
So all’s well that ends well? Not quite. At the time, I was worried that the new developer would face lots of red tape, and that it would take years to get approval for any sort of project. But even I didn’t anticipate what came next:
A U.S. government agency has canceled the sale of the iconic Ziggurat federal office building in South Orange County to the original auction winner and awarded it to Hoag Memorial Hospital Presbyterian, which had submitted the second-highest offer, Hoag and the other bidder said Wednesday, April 2.
Hilco Development Services of Long Beach, which made the winning $177 million bid last fall, issued a statement Wednesday saying the General Services Administration decided last month to rescind its purchase after Hoag sought an injunction to stop the sale. . . .
Hoag had complained in its lawsuit that a Hilco partner violated terms of the auction by seeking to collude on the price of the sale.
Hilco argued in court filings that no collusion occurred and that nothing improper took place during the auction.
Hilco attorney Todd Theodora said in a statement that the firm will challenge the GSA’s decision, saying the firm “is confident that, ultimately, the GSA will be held to its original determination.”
That’s right, six months later the auction remains unresolved.
Our legal system is one of the biggest obstacles to new development. Even after this particular case is finally resolved, the developer will be required to jump through all sorts of hoops to get approval for any sort of new development. When that approval is finally granted, local community groups will immediately sue to block the development.
There are reasonable arguments as to whether elected representatives or the courts should determine what gets built. (I’d prefer neither—let property owners make the determination.) But the worst possible system is one where no single layer of government can effectively approve a project, and multiple layers of government can block it.
There is one legislative proposal that would at least slightly reduce the barriers to construction:
A new bill by Oakland Democratic Assemblymember Buffy Wicks would exempt most urban housing developments from the 55-year-old California Environmental Quality Act.
If it passes — a big if, even in today’s ascendent pro-building political environment — it would mean no more environmental lawsuits over proposed apartment buildings, no more legislative debates over which projects should be favored with exemptions and no more use of the law by environmental justice advocates, construction unions and anti-development homeowners to wrest concessions from developers or delay them indefinitely.
This won’t completely solve the problem–many other barriers to construction would remain–but it would at least slightly reduce the so-called “Nimby” problem in California, which largely explains why people are leaving the state.
PS. There was one time where California sort of lucked into an effective housing policy. Then look at what happened:
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