Sunday, August 01, 2004

4LAKids: A Beaudry Update — Daily News Editorial

LAUSD's FISHY DEAL "...the deal seems difficult to fathom."

Sunday, July 25, 2004 - A grand jury investigation is not an indictment, and an indictment is a far cry from a conviction. So it would be premature to conclude that anyone did anything wrong in the Los Angeles Unified School District's $180 million deal for its new headquarters.

But let's be honest: The deal smelled wrong from the beginning, and it's encouraging that three years after it was cut, a federal grand jury has found enough questions to open an investigation.

Let's revisit the history: The 20-year-old, 29-story monstrosity had not once, but twice won the Lemon Award by a downtown business group. It had sagging concrete floors, poor ventilation and seismic vulnerabilities. Some folks called it a "walking dead building."

Yet despite the many obvious problems, in 2001, LAUSD Superintendent Roy Romer agreed to buy the building for a whopping $74.5 million. And that was just the beginning. Fixing up the place would cost $80 million, more than doubling the original price.

The district's own inspector general, Don Mullinax, raised questions about the purchase, and school board member David Tokofsky voted against it, but he was alone. By a 4-1 vote and on Romer's recommendation, the board approved the deal.

All in all, between the purchase price, renovations and moving costs the district took out $180 million in bonds to pay for the Beaudry building — bonds that are repaid with funds from the LAUSD's operating budget, money that would otherwise pay for teachers, educational services, books and other classroom necessities.

Why such a heavy investment for such a problematic piece of real estate? That's what the federal grand jury is investigating.

The stated explanation at the time -- that the district needed to evacuate its old headquarters to make room for a new school -- always seemed dubious, given the cost and hassles involved. Some speculated about another possible explanation: Dirty dealing.

The Beaudry building's previous owners were Beaudry 1 Investors, a Connecticut-based company once represented by attorney Cole Finegan, a friend of Romer's from back during his Colorado days.

Given politicians' penchant for buying property from well-heeled friends and supporters, it certainly seems plausible that such a connection could carry some weight in the LAUSD. After all, Romer's above-and-beyond enthusiasm for the deal seems difficult to fathom.

But the LAUSD's own counsel ruled there was no conflict of interest, and although District Attorney Steve Cooley launched a snail-paced investigation of his own, the public is still awaiting his findings.

So perhaps the federal grand jury can find out once and for all whether any wrongdoing took place. Tellingly, the school board withdrew plans to spend $40 million more to make the headquarters functional, this for facilities to maintain the free parking for 2,800 members of the bloated bureaucracy.

Smart move. The public has all the reason it needs to be suspicious of LAUSD property dealings. The board is better off resolving old controversies before creating any new ones.