Lt. Governor Eleni Kounalakis Leases Office Buildings to the State

The gubernatorial campaign of Lt. Governor Eleni Kounalakis confirmed on Friday that she would put some of her properties, including those that lease out to state agencies, into a blind trust should she be elected Governor next year.

Amongst other properties, Kounalakis currently owns or is a part of a partnership with three buildings nearby the state capitol building. According to February 2024 financial disclosures, AKT Investments owns Meridian Plaza, an office block of two buildings on L street across from Capitol Park and less than 1,000 feet from the state Capitol Building. In addition to the Department of Public Health and the Department of General Services, the buildings hold dozens of lobbying groups, trade organizations, groups that provide services to the state, and major companies with a large California presence including tobacco company Altria and software company Microsoft.

The third building nearby the Capitol, One Capitol Mall, sits on the main street heading from the Capitol and sits right by the Sacramento River across the street from the Tower Bridge. Rather than be owned by AKT investments, rental income instead goes to the Tsakopoulos Family Partnership, which is her family’s organization started by her father. Here other tenants with close ties to the California government reside, including the University of California’s governing board.

While she is an owner of these locations and does receive some of the rental money, she has not been closely involved with any of the properties following her being elected as Lt. Governor in 2018. She has also not worked directly for AKT Development Corporation since 2010, when then-President Barack Obama selected her as Ambassador to Hungary.

Despite this, the fact that she has been tied to the properties has been seen as something of a conflict of interest since she was elected in 2018. In total, Kounalakis makes around $1.39 million a year according to an analysis from CalMatters. However, with Kounalakis now in the midst of a run for Governor, the fact that she is an owner of those properties could lead to even higher scrutiny and would likely cost her votes in the election. As a result, her campaign announced on Friday that all buildings that could present a conflict of interest would be put into a blind trust.

Blind trust

“If elected governor, the Lt. Governor commits to placing any assets that may present a conflict of interest into a blind trust,” explained David Beltran, a Kounalakis campaign spokesman and former Communications Director for Kamala Harris, in a statement on Friday. “The lieutenant governor has taken measures to ensure that any assets she owns do not impede her work as Lt. Governor. She will do the same as Governor.”

While the announcement on Friday quelled some conflict-of-interest fears, it also renewed current ones, with many now asking why she didn’t put the properties in a blind trust when she was elected Lt. Governor. While not a legal requirement as Governor, previous Governors have put their businesses in blind trusts early.

In 2018, Governor Newsom put his winery business, PlumpJack, into a blind trust. This action actually caused him scrutiny despite the trust last year when it was found that a restaurant partially owned by the company was giving under $20 wages despite Newsom signing into law and being a major advocate of AB 1228, which instituted a $20 fast food minimum wage. Arnold Schwarzenegger did the same with his large number of holdings as well. At the national level, lawmakers almost always enter blind or revocable trusts. President Donald Trump, for example, opted for a revocable trust once he became President, with his sons taking over management of his properties.

The fact that she didn’t do so beforehand, and only announced now that she would only enter into a blind trust once Governor, could hurt her once the race begins in earnest. Refusing to enter a blind or revocable trust has hurt candidates in the past. Jim Gilmore nearly lost the 1997 Virginia Governor’s race when it was found that he didn’t put his tobacco stocks in a blind trust as Attorney General of the state. And in 2012, Mitt Romney’s campaign was struck a blow in the summer of 2012 when the Obama campaign pointed out that he did not put his holdings into a trust.

The same could now happen to Kounalakis. As there is such a big field of candidates in the race so far, and others like Kamala Harris possibly on the way, Kounalakis’ delayal in not having a trust as Lt. Governor just gave her opponents a sizeable issue to focus on. They’ll all also likely learn from this and either announce similar promises soon should they have conflict of interest assets, or point out that they already have blind trusts.