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Cheap Los Angeles Foreclosure List Prices Affect City Funds

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By : John Cutts    99 or more times read
Cheap Los Angeles foreclosure list prices have been affecting city and state finances in at least two ways.

Lower-priced foreclosure properties have cut down the values of taxable properties, thereby cutting down revenues from real estate taxes. Lower property prices have also made more complicated the plan of state officials to sell two state buildings in Los Angeles in order to raise funds to help plug the state budget deficit.

The two state-owned Class A office complexes being considered for sale are the 431,856-square-foot Junipero Sierra and 739,158-square-foot Ronald Reagan buildings. They are two of the 11 state office complexes being considered for a sale-leaseback scheme that could help the state raise money to finance its operations.

Legislative analysts in California have criticized the planned sale of the buildings, saying that the short-term effect of the sale might be positive, but the long-term effects are not. They explained that the expected revenue of up to $1.4 billion from the proposed sale would not be useful as the $200-million annual leasing cost would add up to about $1.5 billion in just 20 years.

Moreover, critics of the plan cite the weakness of the property market. Residential and commercial foreclosure listings have pushed down property values, making it hard for state officials to sell the state buildings at the price they want.

State officials, however, insisted that they would not approve the sale of the buildings at bargain prices. They said the sale prices for the buildings would not be based on value levels pushed down by Los Angeles foreclosure list prices.

The sharp price effects of foreclosure are not only occurring in Los Angeles or the state of California. Every foreclosure list in Florida has been dragging down prices. Based on the first quarterly-released foreclosure list by state, Florida ranked third in foreclosure rate, behind Nevada and Arizona. One in every 57 of homes throughout the state was put into distressed status in the first quarter.

Meanwhile, to close the $485 million budget deficit of the city of Los Angeles, the mayor proposed drastic job cuts and furloughs and increases in revenue collections. In his $4.34 billion budget plan for the fiscal period 2010-2011, he proposed cutting down 3,546 jobs, almost 10 percent of the city work force.

Expecting criticism, the mayor explained that the budget crisis occurred because of the economic downturn, the double-digit unemployment rate and falling property values arising from record numbers of Los Angeles foreclosure list properties.

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