Jim Wasserman
Though Gov.-elect Arnold Schwarzenegger campaigned against "special interests" and "politics as usual," one of his most formidable tests will come as he juggles the demands of powerful California home builders, commercial developers and real estate interests that lavished money on his campaigns.
Major development firms, who often duel with environmentalists and other activists to control how California grows, were the largest donors to Schwarzenegger, the first governor since Ronald Reagan to have significant personal experience in real estate investment and development.
Schwarzenegger has also appointed two veteran developers to his transition team - Rick J. Caruso, who builds upscale Southern California shopping centers, and Eli Broad, co-founder of KB Homes, one of the nation's most prolific suburban homebuilders since World War II.
While many in real estate say they backed Schwarzenegger as the best candidate to improve the economy, and thus, their own bottom lines, the rookie governor will quickly be in the cross hairs of their agenda to control water supplies for growth in a state that adds 600,000 newcomers a year, ease environmental restrictions and keep thousands of acres of land available for suburban growth in a house-hungry state.
Says Robert Rivinius, chief executive officer of the California Building Industry Association, "We're for protecting the environment, but the laws don't need to be so cumbersome, overlapping and complex."
The CBIA, a well-heeled player in Capitol politics, steered clear of the recall and anti-recall drives, and gave no money to candidates who sought to replace Gov. Gray Davis. Nor have its veteran lobbyists talked to Schwarzenegger about favored bills to lower legal liability for homebuilders on abandoned industrial sites and increase the land available for new subdivisions and shopping centers.
"He's been a little busy," Rivinius says.
But state campaign finance records show that CBIA members weren't shy about writing checks to the Republican candidate who campaigned with popular slogans to "clean house in Sacramento" and "bring California back." Despite Schwarzenegger's early promises to take no money from "special interests," he accepted more than $1.3 million in contributions from Central Valley and southern California homebuilders, coastal hotel owners, shopping center and distribution center developers, engineering and construction firms and mortgage lenders such as Irvine-based American Sterling Corp., which gave Schwarzenegger $150,000.
The donations come as the real estate industry wants more state money and bonds for highways and bridges, greater protection from homeowner lawsuits and a more efficient and less expensive workers' compensation system. Industry lobbyists also want to fend off statewide lower-income housing requirements, efforts of anti-sprawl activists to force growth boundaries around cities and moves to ban home building on the state's best farm land. They also oppose a bill sponsored by the state attorney general's office to make them identify water sources for their projects years earlier in the planning process.
Schwarzenegger's campaign literature promotes financial incentives to encourage growth in existing cities, but also the diversion of money from transit for more freeway lanes.
Pushing a solid pro-developer agenda could hurt Schwarzenegger, said Bruce Cain, a University of California, Berkeley, political scientist. "People will watch very closely. Environmental groups are very vigilant here."
Developers see multimillionaire Schwarzenegger, a part owner of projects such as Main Street Plaza in Santa Monica and the Easton Town Center shopping mall in Columbus, Ohio, as a businessman who can best steer the state back to prosperity, says Stuart Gabriel, director of the Lusk Center for Real Estate at the University of Southern Californiacolor>.
"At the end of the day, real estate development works if the economic fundamentals are strong. You don't make money building offices if the economy isn't creating jobs," he says.
But the developers that gave to Schwarzenegger also have a range of legislative priorities. In the first half of the year, development interests spent $3.2 million on lobbying in Sacramento, state records show.
Among them is the Allen Group, a Carlsbad-based developer of large San Joaquin Valley distribution centers, which gave nearly $20,000 to Schwarzenegger, and has lobbied on a bill to extend the life of enterprise zones which give tax breaks to developers. The firm didn't respond to a telephone call regarding its contribution.
California home builder and land developer Castle & Cooke, which gave $20,000 to Schwarzenegger, has lobbied the governor's office and Franchise Tax Board about a bill that makes it harder for companies to pay lower taxes by claiming they are small businesses. The firm is the real estate arm of fruit giant Dole Foods, which is owned by billionaire David Murdock, and contributed $80,000 to Schwarzenegger's pro-recall committee.
Among Schwarzenegger's largest contributors are Stockton builder and San Diego Chargers owner Alex Spanos, who wrote two $100,000 checks to Schwarzenegger's pro-recall campaign, and $21,200 more to his candidate committee. Spanos family members kicked in thousands of dollars more. The family's A.G. Spanos company has built 80,000 apartments nationwide since 1960 and a $1 billion, 3,000-acre residential and commercial community in Stockton. Company officials said Spanos was out of the country Thursday.
Newport Beach-based home builder William Lyon also gave $150,000 to the actor candidate's pro-recall committee and $21,200 to Schwarzenegger's candidacy. Lyon, who declined comment on the contributions, is one of the nation's largest home builders.