By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Ex-mayor is out to dump the renegade school-board member who tried to stop a project that benefited his law firm
Only one L.A. school-board member voted against a $107 million high school project put together by the law firm of former Mayor Richard Riordan. And that board member, David Tokofsky, has now been targeted for replacement by Riordan in his latest effort to install ”reform“ candidates of his choice on the school board.
Riordan’s maneuverings to oust Tokofsky burst into the news this month when the L.A. Times reported that Riordan and billionaire philanthropist Eli Broad tried to entice Occidental College president Ted Mitchell to run against Tokofsky. Riordan‘s interests in district affairs also include his law firm’s financial stake in a large school-construction project. A senior attorney at the firm has pitched doing other deals as well. Tokofsky voted unsuccessfully to thwart the first of these projects earlier this year at the site of an old dairy.
The Santee Dairy agreement governs the construction of a new high school just south of downtown. The Los Angeles Unified School District completed its purchase of the site in June. Instead of putting construction of the school out for competitive bidding, however, the school board voted in May -- over Tokofsky‘s dissent -- to let the former landowner build the high school. This developer, New York--based W.P. Carey, was represented in negotiations by Riordan & McKinzie, co-founded by Riordan in 1975. The amount earned by Riordan & McKinzie in the transaction is not clear; lawyer fees on the developer’s side are not subject to public disclosure. But the developer‘s fee for W.P. Carey is $5.5 million, with a potential $2 million bonus for early completion.
It’s impossible to pin Riordan‘s effort to oust Tokofsky on his opposition to the law firm’s business deal. Riordan, and Eli Broad for that matter, seemingly are far too rich to chase after contracts. But Tokofsky‘s independent style and his frequent support of the teachers union have long aggravated Riordan and his allies, and Tokofsky’s rejection of this contract fits right into the pattern. If Riordan, as expected, funds a candidate to oust Tokofsky, his own law firm‘s financial stake is certain to become a campaign issue. At the very least, Riordan’s financial ties to the outcome of a school-board vote threaten to tarnish his reputation as a principled catalyst of local school reform.
The Santee Dairy site sits at the corner of East 23rd and Los Angeles streets, just south of the 10 freeway in downtown Los Angeles. It‘s a find, given that it’s hard to locate 18.52 acres of relatively clean land that you can build on without destroying numerous homes and businesses. The site came into play in early 2000, after the school board voted to cancel the half-finished Belmont Learning Complex project. The former dairy was put forward as one of several options that could make up for the seats lost at Belmont. Later, district officials concluded that L.A. Unified needs both Belmont and the Santee site, and many other sites besides, to house the crush of students.
In September, district officials marked a milestone by busing dignitaries and reporters to two high school groundbreakings in one day -- at Santee and at the former Metromedia complex in Hollywood.
The Santee project is breaking ground in any number of ways, some of which clearly concerned Tokofsky. Notably, the Santee deal incorporates contentious elements of the Belmont Learning Complex contract, including the absence of traditional competitive bidding. And, as at Belmont, the contract is structured so the developer has primary responsibility for delivering the school from start to finish, including environmental review and cleanup. With the Belmont complex, critics blamed this approach for soaring costs. To date, Belmont remains half-finished, several years after its original completion date.
But similar difficulties won‘t arise at the Santee site, say district administrators. For one thing, because of Belmont, state safety officials now oversee environmental issues at all new school sites. And the district has expanded and upgraded its own supervisory staff for managing construction. ”I would not have recommended that we use this process in the past, because the school district was not a capable enough client to manage it,“ said Kathi Littmann, who heads the new-school construction division. ”Now I think the district has the expertise to do it.“
It’s easy to see why Tokofsky would be cautious. He and Julie Korenstein are the only board holdovers from the early days of the Belmont project, and both of them raised objections to the Belmont contract early on. Korenstein abstained on the Santee vote.
And even Littmann‘s own published strategic plan notes that this sort of non-traditional deal can cause delays and tack on development costs ”anywhere from 9 percent to 14 percent.“
”Anytime you do anything outside of design-bid-build,“ said Littmann, ”it requires armies of lawyers to pore over every comma and period.“ But Santee offered a unique opportunity to do something different, she added, because the owner of the site also was a capable developer, and taking advantage of that expertise allowed the district to put more of its management resources elsewhere.
Still, the project’s estimated cost has risen sharply since an April 2000 analysis that projected a price for the land of about $17 million. Under the contract approved in May, the actual land purchase will run about $24 million. The construction numbers have risen sharply, too. In September 2001, the estimated building cost was about $72 million. The current cost, including district expenses, is about $89.6 million.
The upside of the Santee contract includes a potentially shorter construction period and a more quickly completed application for state bond money. The latter feature has already paid off, resulting in a state appropriation of $36 million for the project. To pull it off, the school system took the risk of paying W.P. Carey for environmental and design work. If the deal had later fallen through, considerable funds could have been wasted. ”We had to work this deal with a great amount of up-front risk,“ said L.A. Unified‘s head of facilities James McConnell, ”because we didn’t have the land in our possession yet.“ Added McConnell: ”I‘m proud of this deal.“
While McConnell focused on qualifying for state funding, Riordan & McKinzie attorney Thomas Harnsberger took it on himself to shore up the home front. Harnsberger met individually with most board members: ”We were asking, if the project could be done, would they be interested?“ He said he wanted to find out, on behalf of his client, if the deal was worth pursuing at all. ”There was no particular sales pitch.“
But that’s not exactly how Tokofsky remembers the meeting. He said it included Harnsberger, W.P. Carey representative Brent Carrier and James Acevedo, a well-connected Latino political consultant whom Carrier said he hired to introduce him to public officials. Acevedo‘s presence was especially interesting given that he’s spent much of his career getting Latinos elected to political office and that Tokofsky remains a prime target of ethnic nationalists who automatically oppose him as a non-Latino in a Latino-majority district. Acevedo also serves on the city‘s Harbor Commission for Mayor Jim Hahn and earlier had been a commissioner when Riordan was mayor. a Tokofsky said the discussion ranged well beyond the proposed Santee project. The trio asked him, he said, if he would support a land swap -- the Santee site for property that L.A. Unified owns in the garment district.
Administrators in the facilities division said they opposed the trade as legally problematic and economically foolish. For one thing, the garment-district property is worth more money than the Santee site, perhaps twice as much.
In an interview, Harnsberger said he could no longer clearly recall the discussion about swapping properties: ”It didn’t go anywhere. I can‘t remember why.“ Carrier, the developer’s representative, was more forthcoming, noting that he had a client he could have located at the district property if the swap had worked out. Carrier is currently setting up a local office for his multibillion-dollar parent company in Los Angeles, with a primary goal of pursuing other school-construction projects. Riordan & McKinzie has represented the W.P. Carey company for some 15 years and would likely get the legal work.
District officials already have had discussions about future projects involving Harnsberger and W.P. Carey. Said McConnell: ”They have lobbied board members and City Council members about doing additional work with the school district. We‘ve asked them to back off lobbying. We’ve made it absolutely clear to them that we want them to finish this high school.“
It‘s striking that it was McConnell, a recent import to the L.A. scene, who had the chutzpah to deliver this admonition, and not, for example, Richard Riordan, who could have been concerned about conflicts of interest. It’s also notable that a law firm representing the seller of a single school site could command an individual audience with board members. (It is certainly not lost on the board that Riordan withdrew his backing of board member Valerie Fields after Fields indicated that she would support a teachers‘ raise that Riordan concluded was 1 percent too high. Fields ended up losing her seat.)
Some school-board members and district sources presume a direct connection between the actions of Riordan and his law firm; others do not, including board president Caprice Young who has nothing but praise for Riordan’s efforts to help schools. In her case, said Young, she sought out Harnsberger: ”I meet with just about everyone I can if they have good insights on how to build schools more effectively.“
In an interview with the Weekly, Harnsberger insisted that Riordan is retired and that he severed all connections to the law firm that bears his name when he became L.A.‘s mayor in 1993. Private citizen Riordan, however, ”can come down and use space at the law firm if he wants to,“ as far as Harnsberger knows. He added that he has virtually no contact with Riordan.
Harnsberger appears to be underselling Riordan’s connection with a law firm whose Internet handle is riordan.com. Riordan has a phone line, an office and a secretary at Riordan & McKinzie, and his secretary said his proper title is ”of counsel.“ He‘s also rejoined his old venture-capital firm, which shares office space with Riordan & McKinzie.
Richard Riordan did not return calls from the Weekly, and he hasn’t recently clarified just what bothers him about Tokofsky. But it‘s not hard to figure out likely possibilities. First and foremost, Tokofsky has cultivated close ties to the teachers union: Tokofsky, too, voted for the teachers’ raise that Riordan judged too expensive. In a larger sense, both Broad and Riordan have been determined to weaken the clout of the teachers union in school-board elections.
Self-enrichment is not the issue with either Riordan or Broad. If Riordan and Broad simply wanted more money in their pockets, all they‘d have to do is give less of it away to charities and foundations that benefit children. Rather, both men have a sense that they know what’s best for the city, and they‘re not shy about using their financial resources to advance this vision. To Riordan, Tokofsky’s Santee vote, if he noticed it at all, presented one more example of Tokofsky‘s wrong-headedness.
Both Riordan and Broad are in periodic contact with schools Superintendent Roy Romer and board president Young, and each has expressed frustration with Tokofsky’s alleged obstructionism and micromanagement, which Tokofsky‘s supporters would term as independence and acting as a civic watchdog.
All told, the Santee episode is at least as telling about Riordan as it is about Tokofsky. Riordan has been habitually careless about business associations that could reflect poorly on him. And he has consistently overlooked how others might be taking financial advantage of his school-reform efforts. An earlier Weekly article recounted how the Dodgers’ ownership and businessman Bert Boeckmann each gave heavily to Riordan‘s Coalition for Kids. What the school district really wanted from the Dodgers, however, were vacant lots on the edge of Dodger Stadium for a school. And Boeckmann snapped up a potential school site in the Valley to use as storage space for his car dealership. As mayor, Riordan could have pressured his donors to play ball, as it were, and help the school district. Apparently, he didn’t. Nor has Riordan specifically dissociated himself from the jockeying of Harnsberger, who had the advantage of walking into board members‘ offices as a member of the law firm bearing the name Riordan.
Dennis Dockstader contributed research to this article.
riordan, Ted Soqui; David Tokofsky, virginia lee hunter