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Who Poisoned the Well?

Photo by Debra DiPaolo

Last Friday found L.A. school-board member David Tokofsky standing in a dirt lot, gazing upon the massive, exposed steel girders of the Belmont Learning Complex, the giant high school project he had long fought to block, when his cell phone rang. On the line was the last person on earth Tokofsky could have expected to hear from.

The caller was retired district administrator Dominic Shambra, the man most responsible for Belmont, the state’s most expensive high school ever. Shambra has used every expletive he can think of to paint Tokofsky as Public Education Enemy No. 1. "Amoral," "irresponsible," costs taxpayers "millions," pursues "personal vendettas," were examples from a recent fax to the press. In private conversation the terms are decidedly more choice. But now Shambra was seeking common ground: He wanted to suggest other people that Tokofsky also could blame for Belmont.

Shambra had himself been enduring mounting denunciation thanks to the latest round of Belmont revelations. Methane gas and toxic chemicals have been measured at the construction site, and a state agency as well as a new team of consultants has concluded that the district failed to conduct needed and legally required tests, an easily avoidable oversight that could cost the district millions.

The most likely scenario is a budget hit of several million in cleanup costs. The worst case is that portions of the halfway-finished $200-million-plus complex might be torn down. Or that the site would never be certified for a school at all.

Shambra was the obvious target for censure because he commanded a high-flying, highly paid and virtually autonomous development team that included a private development expert with a history of conflict-of-interest problems, a consulting architect who raised eyebrows by later signing on with the developer that was awarded the project, and a onetime state school-building official who later became Shambra’s girlfriend. The team’s top legal counsel was David W. Cartwright, a partner at the prestigious O’Melveny & Myers firm who handled a variety of school-district real estate projects.

The team has since been disbanded, and by last Friday, the exasperated Shambra had nowhere to turn except to his longtime nemesis. He suggested that Tokofsky cast a wide net for responsible parties. Tokofsky later agreed: "This project had to pass through way too many hurdles to be the sole responsibility of our Ollie North."

Legislative hearings on Belmont are tentatively scheduled for March 18 and 19 in Los Angeles, and judging by the anger in some quarters, Shambra will need any ally he can find. "I am very concerned that the state was defrauded when it released millions of dollars to purchase the Belmont site," declaimed state Senator Richard G. Polanco at a press conference this week. "Retirement is not immunity."

In fact, Shambra has a point — through all the years Belmont was being negotiated, he sent copies of scores of memos and reports to senior administrators across the district. People ranging from the district superintendent to staffers at state agencies gave Belmont the thumbs up. And a school-board majority shut its ears to every critic, interpreting all opposition as political.

In those days, it was always the view of Shambra and Cartwright that carried the day. As with other difficulties, both men minimized environmental concerns at the site — and thereby achieved one of their finest strategic victories. They made their case about the safety of the site so well that even project critics tended to look past toxic risks to other issues.

Cartwright and Shambra never intended to put children at risk, but they were determined to keep environmental costs from sinking their grand designs, and in hiding these potential expenses, they shielded the issue itself from full scrutiny. Of course, neither Cartwright nor Shambra was an environmental expert, but they assumed that role and made all the guiding decisions. They particularly didn’t want interference from district staff, and they didn’t get much either, even from officials and departments directly responsible for school safety.

In retrospect, the environmental crisis was a time bomb lying in plain sight. Everyone who ever examined the site knew it was an old oil field. And though people do build on oil fields in Los Angeles, the Belmont acreage presented daunting challenges. The location and extent of all the old wells was unknown. Ground-water pollution was never fully determined, nor was the presence of toxics from oil production, gas stations and an auto-body shop. Then there was the construction plan itself, which required slashing into an 80-foot slope and erecting an enormous concrete base for the school, a massive overlay that could trap methane vapors, allowing them to accumulate in explosive concentrations. In addition, the once-spent oil field appeared to be repressurizing with crude and water, another hard-to-gauge dynamic.

The problems were so obvious that two outside experts proposed that the district maintain an active oil well that stood above where second base would sit on the planned baseball diamond. Eventually, that well was plugged, and a new well was slant-drilled into the old hole from just beyond center field.

 

In the end, however, it wasn’t the site itself that provoked the emergency, but how Shambra and Cartwright dealt with it — and how a regiment of staffers and officials stood idly by.

In early 1994, the school district couldn’t get hold of this property fast enough. It had a willing seller, the Japan-based Shimizu corporation, which was anxious to take advantage of expiring tax breaks in Japan. With property values plummeting in downtown L.A., Shimizu wanted to cut its losses.

And the buyer was motivated as well. L.A. Unified intended to use $30 million in state funds once intended for a high school project at the Ambassador Hotel site, but time was of the essence, because the Ambassador’s owners — a group led by New York mega-developer Donald Trump — were organizing a court challenge to block the transfer of funds. Cartwright was able to outwit Trump’s lawyers by closing the transaction earlier than the announced date.

Shimizu helped out by providing a required environmental analysis — it was hasty and did not conform to school-district standards, but it satisfied the state, which released the money. And L.A. Unified sweetened the deal by accepting the property "as is": Any environmental problems with the site would be the sole responsibility of LAUSD.

The 24-acre Shimizu property was then combined with an adjacent, recently acquired 11-acre property, and the Belmont plan was ready to roll.

The district again gambled on environmental fortune during negotiations with the Kajima Corp., the eventual builders, when it looked as though Shambra could not deliver on his promise to build a school faster and cheaper. The snag was over who would clean up the site. The district originally required that the builder take responsibility and include the cost in price projections. No one knew the tab for sure, but one of the losing bidders had estimated environmental cleanup at $8.5 million. Kajima didn’t want to agree to a low figure for cleanup, then get stuck with the tab if the actual cost came in higher.

Kajima’s position was explained by development-team member Art Gastelum in an interview with researchers for Assemblyman Scott Wildman (D-Glendale), a project critic. "The environmental documentation that had been before was not the best," said Gastelum, according to a transcript. "And [we] were afraid that there were some unknowns there."

District negotiators had a corollary dilemma. If they included a realistic amount for dealing with contaminated soil and other issues, the price of the learning complex would soar. And Shambra already was taking heat for an escalating price. His early scenarios, after all, had projected $45 million to $60 million in costs that would be recovered through a combination of state funding and Shambra’s hoped-for inclusion of a profit-making retail development.

As costs ballooned, Shambra shifted a variety of expenses outside of the price that was touted as a "guaranteed maximum." Off-budget items included legal and consulting fees, the speculative retail component, and the developer’s multimillion-dollar professional fees. It was only natural for the uncertain and potentially troublesome environmental costs to join the list.

Said Gastelum: "The school district was trying to, you know, cap their costs in terms of Kajima because of all the criticism, you know. They were afraid that even though it was not going to be anybody’s fault, right, if the costs went up on an item like environmental work . . . nobody wanted to take that risk."

So a deal was struck that served the purposes of everyone at the table. Kajima would have no responsibility for environmental remediation or its costs. And the district got to take that expense entirely out of the project budget. Both sides agreed that the district would ultimately foot the bill, whatever that turned out to be.

Of course, if school-board members suspected a major environmental problem might arise, they’d be more likely to question that "win-win" arrangement. So Shambra and Cartwright assured everyone that there was nothing to worry about. More than once, Cartwright reassured reporters and school-board members that the district had $2 million in state money to clean the site, an amount that should be more than enough.

It turns out that the $2 million figure was misleading. Cartwright and project Administrative Coordinator Ray Rodriguez recently acknowledged that these funds were actually a reserve left over from the purchase of several of the lots, covering about five acres of the 35-acre site. The money was available only to remedy problems in evidence on those lots before grading began. The remainder had to be paid to the former owners. In the end, only $700,000 of that funding could even be spent.

 

The school board got a glimpse of the issues when it was asked to certify an environmental-impact report for Belmont in November 1996. The general risks of the site were laid out by Richard K. Baker, a district deputy for the state’s Division of Oil, Gas and Geothermal Resources. He noted the dangers of exploding methane: "That’s what you don’t want to happen in any buildings in L.A., especially a school." The L.A. Oil Field was a particular hazard because "it was drilled at the turn of the century, and we don’t have all the locations of all the wells. We’re constantly finding wells that we didn’t know were there."

Cartwright quickly reassured board members that "We have a plan for what we’ll do when and if we hit [unknown wells] when we’re grading." He added, "This is not even close to being one of the most dangerous sites." And he reminded the board, "I cut my teeth as an oil and gas lawyer. So I’m not exactly unfamiliar with this topic."

It’s worth noting that the oil-and-gas division has a standing policy opposing construction on oil wells. It assisted L.A. Unified, as it does other builders, because people will build on oil fields whether the agency approves or not, particularly given the dearth of open land in urban Los Angeles.

The district’s strategy was basically to deal with problems as construction crews came upon them. Cartwright later defended this approach by asserting that the complex so altered the natural topography that a thorough review of the site in advance had limited value.

And to the layman, the Belmont site does not appear all that problematic. The known oil wells are concentrated on small portions of the site; the Belmont team located the buildings away from these wells. That way, methane could vent naturally through the grounds and playing fields. Cartwright was more or less satisfied that he’d addressed the matter.

But that’s not the view of the school district’s recently hired environmental experts, nor the state Department of Toxic Substances Control. Yes, you want to avoid oil wells, but the distinction between locating over an oil well and merely near one is meaningless in terms of the need to gauge risks, said Hamid Saebfar, chief of the Southern California Cleanup Operations Branch.

"You need to know what you’ve got before you start construction," said Saebfar. "Or you may be surprised and you may be surprised in a bad way."

In fact, about two-thirds of the site never got more than a cursory environmental review, according to Angelo Bellomo, a former state toxics official now consulting for the school system. But there was more than enough information to set off alarms. Reviews going back as far as the late 1980s, when the site belonged to private developers, noted troubling spot concentrations of carcinogens and polluted ground water. "A reasonable technical person would say there’s a need to follow up," said Bellomo, a member of the recently formed school-safety team.

His colleague on the team, environmental attorney Barry Groveman, called it a "no-brainer."

The findings were enough to trigger state law requiring the district to notify the Department of Toxic Substances Control. But the district never did so. Cartwright apparently did not know of this notification requirement, and he was not alone in this regard. The toxics department only learned of problems at the site from researchers working for Assemblyman Wildman.

The toxics agency has recently begun working with L.A. Unified at nine school sites with pollution issues. Until recently, "the school district would not deal with us," said Saebfar. "All these school sites have come to our attention by accident, or someone else brought them to us." He also noted that construction on Belmont didn’t begin until well after problems began to emerge at another campus, Jefferson Middle School. "Why didn’t they learn from their previous mistakes?"

For this, both the school district’s structure and culture have to bear some responsibility. The district has an environmental-health-and-safety office, but the staff there lacked the expertise, attention or authority to discover the problems at Belmont and elsewhere. In addition — as noted by state Senator Tom Hayden — the review system embodies an inherent conflict: The person who heads the real estate branch, which pursues affordable, available school sites, also directs the district’s environmental-review process.

State officials also failed to exercise oversight at Belmont. The State Allocation Board approved Belmont’s land purchase despite the questionable environmental review provided by Shimizu. And an analyst from the California Department of Education also readily approved the site. This state staffer, Betty Hanson, would shortly thereafter join Shambra’s Belmont staff as a consultant, and later, after the death of Shambra’s wife, the two began dating.

 

In her role with the state, Hanson sometimes rejected school locations that had traffic problems, air pollution from freeways and insufficient space for P.E. classes. Her purview also included problems in the soil, though, like other state analysts, she lacked expertise in that area. By chance, she was forced to recount her methodology at Belmont in a lawsuit over the Ambassador Hotel site.

"There were environmental hazards on those sites, weren’t there?" queried an attorney, who was challenging her Belmont site approval.

"Not environmental. No, sir. Natural hazards."

"There is an oil field underlying those sites; isn’t that correct?

"Yes. That’s a natural hazard."

On behalf of the state, Hanson had apparently accepted the Belmont team’s view that toxic and safety issues associated with an oil field were entirely distinct from any other toxic issues. By this logic, it’s somehow more acceptable to endanger children through natural hazards, such as oil fields, as long as they’re protected from man-made ones.

(State law does define crude oil wastes as "nonhazardous," but Senator Hayden chalks this up to exemptions lobbied for by the oil industry. And environmental consultant Bellomo noted that being blown up by methane is just as valid a concern as inhaling benzene.)

Shambra’s development unit was disbanded when he retired a year ago, and the school district claims to be reformed. All school sites will now go through a review process overseen by the state toxics department. The bureaucracy has yet to yield to Tokofsky’s call for an inspector general, though it has strengthened some internal audit processes.

In the meantime, the district will have to be content with stanching Belmont’s hemorrhaging budget. A methane barrier under the buildings may suffice, but the experts say the district is now obligated to perform a pricey study first. This review will cost $700,000, much more than it would have if conducted earlier.

The school system already has been stuck with a $400,000 tab for hauling away contaminated soil.

It’s hard to say how the actual fix will cost out. One consultant guessed a range of $2 million to $10 million.

But that’s not the only expense. The district has gone a long way toward giving Kajima, the developer, a blank check to run up its tab. Already, Kajima has filed notice that it may charge the school system $3.4 million for environmental-related delays to date. Desperate to stay on schedule, district project managers have allowed contractors to keep building upward — since those areas are already covered — but not outward, pending soil tests. Kajima claims that every day of delay costs $10,000. District officials are now concerned that Kajima will use the environmental difficulties as a pretext for shifting its own cost overruns to the school system. Normally, Cartwright would take the district’s part in jousting with Kajima, but he’s been temporarily removed from the project by L.A. Unified General Counsel Richard K. Mason. And Cartwright’s law firm has asked him to refrain from all comment on Belmont.

No one is touting the guaranteed maximum price these days.

In fact, no one is guaranteeing anything.

"Maybe nothing needs to be done, maybe they have to spend a lot of money, maybe they need to tear down those buildings," said Saebfar of the toxics department. "Nobody knows."


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