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» VISIT US ONLINE @ DSNEWS.COM 59 millions of dollars from the banks themselves was up for the taking. California was awarded $410 billion as part of the National Mortgage Settlement reached in February 2012 between federal and state officials and the nation's five largest banks. Homeowners in the state were to get $369 billion of the purse for counseling and other foreclosure prevention measures, but to date, they've seen $0 of the funds. Instead, Brown diverted the money to the state's general fund and used it for cleaning up California's finances and returning the state's books back to the black. Now that California is projected to enjoy a $4 billion surplus this year, both consumer advocates and housing organizations are calling for Brown to return the settlement money to struggling homeowners as it was originally intended. Several nonprofits in the state that work to assist homeowners have banded together and hit the governor's office with a lawsuit after requests to meet with Brown and resolve the issue outside of court went unanswered. "is is indicative of the corruption that rules California," according to Donnelly. He says diversion of funds is a common practice. "[T]hey claim that this tax or this fee is earmarked for this, that, or the other, and inevitably … it's just going to the general fund, and that's what they do with almost everything," he asserted. "[In] this particular example, given the fact that it was clearly earmarked … I would think the best use would be for nonprofits that specialize in financial literacy and/or add a component of real financial literacy to our high schools [because] the vast majority of students graduate without any understanding of how finance works." THE THREAT OF EMINENT DOMAIN Appropriation of the state's National Mortgage Settlement award isn't the only exploit by Brown that Donnelly believes his opponent mishandled. "I think that use of eminent domain is one of the greatest threats to our housing industry and to private property rights, period," Donnelly stated. He went on to describe the authority used by government to seize private property as "evil" and likened it to "stealing property from one group in order to give it to another group, many times, finding out that the beneficiary group—surprise, surprise—are supporters of the politician who's leading the charge." No doubt, Donnelly's response alludes to Brown's veto of AB 374 in October 2013, a bill that passed both houses of the legislature unanimously and would have applied uniform standards for determining "goodwill" compensation in cases where property owners must forfeit their businesses under eminent domain law. Brown's critics claimed motivation for the veto stemmed from his own aspirations to build a high-speed rail line through California's Central Valley. Actions taken by Brown earlier in his term, however, contradicted these pro-land-seizure theories. In 2011, Brown's budget abolished the state's 425 redevelopment agencies, which were used by city officials to carve out lucrative planning and development projects under the guise of combatting neighborhood blight; and in 2012, he pushed back against legislators' efforts to reestablish the property-pinching enterprises. Donnelly concedes that some people would consider eminent domain "to be a necessary evil," but he feels strongly that "it ought to only be used in cases where support of the public good is overwhelming and where all of the public will get something out of it." THE NEXT FOUR YEARS WITH DONNELLY So what can Californians expect over the 2015–2018 term under Donnelly's leadership? "ey should expect a return to the concept called laissez faire, which means 'hands-off.' It's what our country was founded on," Donnelly said. "I think the government should be as little involved in the affairs of business as possible because when that happens, prosperity is the result, and prosperity will fix almost everything that ails California. "More government, more regulation, more restrictions will only result in exactly what they've [accomplished] so far, which is an economy that is drowning, millions and millions of people out of work, and the fastest-growing industry in our state being the government," Donnelly continued. Government expansion, in particular, represents a great threat to the housing industry, according to Donnelly, because when it's accompanied by a lack of economic growth, state leaders begin to look around for new revenue sources. "Right now, they're looking at Proposition 13," Donnelly said, which caps taxes on real property. Such a move would have "a devastating effect on businesses, which will then translate into job losses, which will then translate into lower property value. And that's the complete reverse of the California Dream," Donnelly argued. A FOURTH TERM FOR BROWN If elected in November—which is almost certainly a sure thing, according to the public surveys conducted and local media personalities—Brown will be the only California governor to serve four terms. (He fulfilled back-to-back terms from 1975 to 1983 before the statute limiting California governors to two terms was put into effect on November 6, 1990.) Brown pledges more of the same should voters usher him to Sacramento for four more years—a balanced budget that reins in expenditures, continues to chip away at the state's debt, and establishes a rainy day fund to help ensure California doesn't again slip into financial turmoil should its patron constituency encounter tough times in the future. Brown also intends to disseminate certain state powers down to the local level, and with California struggling to overcome this season's drought, he's vowed to "achieve sensible, scientific, and sustainable water policies" for California's future. Editor's Note: Publication preceded California's June 3 primary election. Assumptions that Gov. Jerry Brown and Assemblyman Tim Donnelly make the primary cut are based on public opinion polls conducted by the Public Policy Institute of California in November 2013, January 2014, March 2014, and April 2014, as well as two surveys by Field Research Corporation in November 2013 and March 2014. "The bottom line is if we would get the government out of the way, then the markets will work out and correct themselves over time." —Tim Donnelly COVER STORY INDUSTRY INSIGHT MARKET PULSE DATA & RESE ARCH

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