In Sacramento, it’s known as the “MTV party house.”

The state-owned property, on a Malibu bluff overlooking the ocean, occupies 11 acres straddling the L.A./Ventura county line.

Built in the 1960s, the two-story house was acquired by the state in 1978 for what now seems like a song: $1.6 million. And when it’s not being rented out for filming including a stint as the “MTV Beach House” one summer it serves as an administrative office for the State Parks agency.

It’s also one of 37 surplus properties that a state panel has singled out for possible sale, to bring in as much as $1 billion to help the state balance its even larger budget deficit.

But like most of the other properties on the list, the home, complete with a built-in automatic toaster and coffeemaker, is a long way from being sold. Instead, it’s caught up in a limbo of red tape, bureaucratic maneuvering and inertia. There has also been some legislative bungling by the administration of Gov. Arnold Schwarzenegger, whose California Performance Review commission came up with the list as part of a broad plan to restructure state government.

“It’s a no-brainer. Here’s a billion dollars in extra revenue you can obtain without raising taxes which satisfies Republicans and without cutting services, which satisfies Democrats,” said George Passantino, the public affairs director for the libertarian Reason Foundation, who chaired the California Performance Review.

The Malibu house is one of the smaller properties on the list, which also includes 165 acres of agricultural land on the campus of California State Polytechnic University in Pomona; up to 90 acres at the Lanterman Developmental Center, also in Pomona; portions of two state Youth Authority sites and part of a state mental hospital in Norwalk.

(Another dozen state properties, including the California Science Center/Los Angeles Memorial Coliseum complex, could generate up to $3 billion if sold, but they were deemed too difficult to sell in a short time frame.)

The house could be sold for $11 million, according to the commission’s conservative estimate. Local real estate agents said the property could fetch up to $20 million on the open market, if it had environmental approvals for development or renovation plans.

“What’s so great about these three dozen properties we identified is that very little effort must be made to dispose of them,” Passantino said. “They’re low-hanging fruit.”

Slow progress


Under Proposition 60A, approved by voters last year, the sale of any surplus properties must be used to pay off the $15 billion in deficit financing bonds the state sold last year.

The sell-off also carries other advantages: It returns the properties to local tax rolls, and projects built on them can be used to jump-start economic development projects.

But one year after Schwarzenegger issued his executive order to identify and sell off surplus state properties, only a handful have been sold, generating a mere $135 million. And $108 million of that total comes from the sale of one huge property in Chino that was in the works since the administration of former Gov. Gray Davis.

Bureaucratic turf wars, legislators reluctant to sell off prize parcels in their districts, and the Schwarzenegger administration’s own mistakes have all slowed the process.

Under state law, state agencies cannot unilaterally sell surplus properties; they must first get legislative approval and then offer it to other state agencies or local governments.

Last August, with just one week left in the legislative session, the Schwarzenegger administration hurried a list of 39 parcels onto a surplus properties bill being carried by Sen. Jim Battin, R-Palm Desert.

Not surprisingly, the Democratic leadership rejected the list and after some legislative maneuvering gutted it from the bill, leaving just the two surplus properties originally in Battin’s bill.

“It’s very, very difficult to sell any state properties because members in those districts want to protect those properties,” Battin said. Even if the properties are vacant, members often want to build political points by arranging to have state properties in their districts sold to other government agencies at discount prices, he said.

Battin said he’s become so fed up with the process that he’s sponsoring a bill this year to take the decision on which properties to sell out of the hands of the Legislature and turn it over to a special commission, which would in turn present a final list to the Legislature for an up-or-down vote. The federal government is now using a similar procedure with its Base Realignment and Closure Commission that’s now determining the fate of scores of military bases across the U.S.

Meanwhile, the Schwarzenegger administration is trying again this year to get legislative approval for a list of 29 surplus properties, except this time they got Democratic Assemblywoman Gloria Negrete-McLeod of Chino to carry the bill and they have allowed slightly more time for negotiations.

Big plans


However, the Malibu property is not included on that list.

State Parks plans to turn it into a visitors’ center have kept it in bureaucratic limbo even though there’s virtually no money for the transformation, and little hope for the funds to materialize.

The state first bought the beach house from Beverly Hills developer Lee Mansdorf, who in the late 1970s was facing seized property proceedings. It was converted into an administrative office for State Parks, and a few ancillary buildings were added. In 1993 it became the Malibu Sector office for State Parks, covering 3,000 acres of parkland from Will Rogers State Beach to Point Mugu.

“It’s an ideal location, right next to some of the most visited parkland in the region,” said Lynnette Hernandez, a park superintendent.

Hernandez acknowledged that this office space might only be temporary, but not because the state might sell off the property. Rather, state parks officials have long-term plans to turn it into a visitor’s center for the nearby Leo Carrillo State Beach. The unfunded plan calls for the beach house to either be torn down or completely overhauled.

It’s tentative plans like these that lie at the heart of the difficulties in selling off state properties. State agencies are often reluctant to part with properties, even those that aren’t currently being used at all or aren’t being put to their highest and best use.

State and Consumer Services Secretary Fred Aguirre said that his Department of General Services has looked at all the properties listed in the California Performance Review report. Some of those are being brought forward in the McLeod bill; others will come in subsequent bills, he said.

“It’s one thing if a state agency knows with certainty that in two or three years they will need a certain piece of property for a specific purpose,” Aguirre said. “But it’s different with some state agencies that have the attitude, ‘I’m going to keep the property just in case.’ If there are no definitive plans for the property in the next five years, then it should be declared surplus and disposed of.”

Real life


In the meantime, life at the beach house goes on, with nary a hint that it might ever be put up for sale.

Besides filming for the MTV series, the house was featured in the 2000 film “Cast Away” starring Tom Hanks, and in the television series “Melrose Place.”

Hernandez said the site is not being actively marketed as a filming location. One reason might be that a state law designed to keep production in California waived permit fees for any filming done on state park premises. Park administrators can only charge parking fees.

The rest of the time, the beach house functions like a small office, with fax machines humming and computers both upstairs and downstairs. Despite having spectacular ocean views, the converted offices usually have their shades drawn to keep out the sun’s glare.

If it were sold, the property would likely be in high demand. Irene Dazzan-Palmer, a Coldwell Banker realtor in Malibu, said beach houses on much smaller footprints nearby have are selling for $3 million to $5 million each, she said.

Developing the site, though, might prove difficult. As it sits on the beach, it falls under the jurisdiction of the California Coastal Commission. Anything but the smallest of upgrades would likely take at least a couple years to get commission approval, if at all.

Nonetheless, Battin said the beach house should be sold off.

“It’s definitely not the highest and best use of the property,” he said. “We should move the park rangers off their multimillion-dollar ocean view property and put them in office space somewhere.”