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PROBLEM: The Getty said it relied on a 2004 report, provided by the seller, that declared this Beverly Glen home free of mold in its walls. Real estate experts say the trust should have had its own mold inspection done, especially after last yearรยs record rains. (Lawrence K. Ho / LAT) |
Already under investigation for questionable executive spending, the J. Paul Getty Trust recently purchased a $3.5-million official residence for its new museum director's use only to find that the house was contaminated with mold and uninhabitable.
Getty officials bought the house in Beverly Glen near UCLA in October after Director Michael Brand decided not to live in a home the trust already owned next to the Getty Villa near Malibu.
But shortly before he and his family were to move into the Beverly Glen residence, inspectors opened the walls and found so much mold that the house was considered unsafe to live in.
The Getty then made an offer on a $5.5-million house near Santa Monica. Spokesman Ron Hartwig said the trust pulled out of the deal Tuesday after inspectors found structural problems with the roof.
Meanwhile, the Getty is paying $15,000 a month to rent Brand a Holmby Hills home with five bathrooms and a swimming pool on a two-acre lot.
Nothing prohibits the Getty from buying an official residence for its museum director to use. In fact, many leading museums do so.
But under the tax code, nonprofit organizations must use their resources for the public good and provide "reasonable" compensation for employees. In Brand's case, the use of the house would be considered additional compensation beyond his annual base salary of more than $480,000.
The state attorney general is investigating spending by former Getty Chief Executive Barry Munitz — and at least one land transaction he was involved with — to determine whether any of it jeopardizes the trust's nonprofit status. Munitz resigned last week under pressure from the board.
At least one authority on nonprofit governance, U.S. Sen. Charles Grassley (R-Iowa), chairman of the Senate Finance Committee, said Monday that the Getty's spending on a home for its museum director seemed excessive.
"Apparently Getty officials didn't get the word that 'Lifestyles of the Rich and Famous' went off the air in 1995," said Grassley, whose committee oversees the IRS, which regulates tax-exempt organizations.
"Champagne wishes and caviar dreams still seem to rule the day there," he said. "It's hard to see how a nonprofit museum can justify spending millions of dollars for its director's house."
While acknowledging that they face a "short-term" loss over the mold-contaminated house, Getty officials say they are determined to get a refund and have consulted attorneys about a possible lawsuit.
"We're desperately trying to get our money back," said Getty board Chairman John Biggs. "That house is not going to work out, and I think we're going to essentially come out even."
Getty officials said they didn't order a mold report before closing escrow on the house, relying instead on a 2004 report that the previous owner supplied showing there was no fungus in the walls. The former owner's real estate agent, who spoke on condition that he not be identified, said that along with the report, his client provided a standard written notice urging the Getty to conduct its own mold investigation.
Los Angeles attorney Joel B. Castro, who has represented wealthy home-buyers as well as won multimillion-dollar court awards over construction defects, said the Getty has only itself to blame.
"If someone had come to me and said, 'Gee, Mr. Castro, we had a mold inspection a year and a half ago,' my answer would have been: Are you out of your mind? Do you know how fast mold grows?" he said.
The costly saga over finding a museum director's residence started with the talks to lure Brand from the Virginia Museum of Fine Arts. With the blessings of the Getty board, Munitz offered to buy a home for the 47-year-old administrator's use.
Hartwig said the board set a spending limit of $5 million to $6 million but asked Getty staff to try to keep the purchase to $4 million. He said the intent was to buy a Westside home close to the Brentwood museum and big enough to host community meetings, fundraising events and other museum functions.
Providing such homes is not unusual for major museums. Until last year, the Metropolitan Museum of Art provided a Manhattan residence for Director Philippe de Montebello. The Los Angeles County Museum of Art's new director, Michael Govan, will live in a home owned by a museum-related foundation.
Getty officials bought the house in Beverly Glen near UCLA in October after Director Michael Brand decided not to live in a home the trust already owned next to the Getty Villa near Malibu.
But shortly before he and his family were to move into the Beverly Glen residence, inspectors opened the walls and found so much mold that the house was considered unsafe to live in.
The Getty then made an offer on a $5.5-million house near Santa Monica. Spokesman Ron Hartwig said the trust pulled out of the deal Tuesday after inspectors found structural problems with the roof.
Meanwhile, the Getty is paying $15,000 a month to rent Brand a Holmby Hills home with five bathrooms and a swimming pool on a two-acre lot.
Nothing prohibits the Getty from buying an official residence for its museum director to use. In fact, many leading museums do so.
But under the tax code, nonprofit organizations must use their resources for the public good and provide "reasonable" compensation for employees. In Brand's case, the use of the house would be considered additional compensation beyond his annual base salary of more than $480,000.
The state attorney general is investigating spending by former Getty Chief Executive Barry Munitz — and at least one land transaction he was involved with — to determine whether any of it jeopardizes the trust's nonprofit status. Munitz resigned last week under pressure from the board.
At least one authority on nonprofit governance, U.S. Sen. Charles Grassley (R-Iowa), chairman of the Senate Finance Committee, said Monday that the Getty's spending on a home for its museum director seemed excessive.
"Apparently Getty officials didn't get the word that 'Lifestyles of the Rich and Famous' went off the air in 1995," said Grassley, whose committee oversees the IRS, which regulates tax-exempt organizations.
"Champagne wishes and caviar dreams still seem to rule the day there," he said. "It's hard to see how a nonprofit museum can justify spending millions of dollars for its director's house."
While acknowledging that they face a "short-term" loss over the mold-contaminated house, Getty officials say they are determined to get a refund and have consulted attorneys about a possible lawsuit.
"We're desperately trying to get our money back," said Getty board Chairman John Biggs. "That house is not going to work out, and I think we're going to essentially come out even."
Getty officials said they didn't order a mold report before closing escrow on the house, relying instead on a 2004 report that the previous owner supplied showing there was no fungus in the walls. The former owner's real estate agent, who spoke on condition that he not be identified, said that along with the report, his client provided a standard written notice urging the Getty to conduct its own mold investigation.
Los Angeles attorney Joel B. Castro, who has represented wealthy home-buyers as well as won multimillion-dollar court awards over construction defects, said the Getty has only itself to blame.
"If someone had come to me and said, 'Gee, Mr. Castro, we had a mold inspection a year and a half ago,' my answer would have been: Are you out of your mind? Do you know how fast mold grows?" he said.
The costly saga over finding a museum director's residence started with the talks to lure Brand from the Virginia Museum of Fine Arts. With the blessings of the Getty board, Munitz offered to buy a home for the 47-year-old administrator's use.
Hartwig said the board set a spending limit of $5 million to $6 million but asked Getty staff to try to keep the purchase to $4 million. He said the intent was to buy a Westside home close to the Brentwood museum and big enough to host community meetings, fundraising events and other museum functions.
Providing such homes is not unusual for major museums. Until last year, the Metropolitan Museum of Art provided a Manhattan residence for Director Philippe de Montebello. The Los Angeles County Museum of Art's new director, Michael Govan, will live in a home owned by a museum-related foundation.
