*Brown drops plan to sell office buildings

State officials had been relying on the sale of 24 state government buildings, including the Reagan building downtown, as a way of helping close the giant budget deficit. But the idea, first hatched by former Gov. Arnold Schwarzenegger, never made much sense. In fact, selling off the properties, at an estimated $2.3 billion, would end up costing taxpayers more than whatever the state would net (it was equivalent to borrowing at 10.2 percent interest over 35 years). Brown said during a morning press conference that he canceled the sale because it "amounted to a gigantic loan." Now, of course, he must figure out how to make up for the lost proceeds. (Capitol Alert, AP)

*Sounds like the deal had already been showing signs of strain. The Daily Journal's Anna Scott reported last month that at least six investors financing the $2.3 billion purchase had dropped out.

A prominent California First investor was CityView, a real estate investment firm founded by former Secretary of Housing and Urban Development Henry Cisneros. However, Cisneros said during a real estate conference at UCLA this week that his company has dropped out of the deal. Cisneros' involvement helped garner accusations of a sweetheart deal for CaliforniaFirst. Six years ago, Cisneros was chairman of Schwarzenegger's After-School All-Stars Charity. Two other named investors, Capital Pacific Holdings in Newport Beach, led by a reported six-figure Schwarzenegger contributor, and PRP in Washington D.C., also have abandoned the deal.

The primary investors, Texas-based real estate firm Hines and international private equity firm Antarctica Capital, were still prepared to close the deal.