Billions to Spend: Part 1
Waste throws wrench into Los Angeles community colleges' massive project
Poor planning, frivolous spending and shoddy work dog the sprawling system's bond-financed construction program.
Larry Eisenberg, head of the construction program, right, at a meeting. In an April 2009 e-mail, he told his construction chief that quality control was "horrible," adding: "We are opening buildings that do not work at the most fundamental level." (Christina House / For The Times / May 24, 2010)
In 2001, leaders of the Los Angeles Community College District decided to take action. With support from construction companies and labor unions, they persuaded voters to pass a series of bond measures over the next seven years that raised $5.7 billion to rebuild every campus.
Billions to Spend: Complete Coverage
The money would ease classroom crowding. It would make college buildings safer. New technology would enhance learning. And financial oversight would be stringent.
That is what was promised to Los Angeles voters.
The reality? Tens of millions of dollars have gone to waste because of poor planning, frivolous spending and shoddy workmanship, a Times investigation found.
Bond money has paid for valuable improvements: new science buildings, libraries, stadiums and computer centers. But costly blunders by college officials, contractors and the district's elected Board of Trustees have denied the system's 142,000 students the full potential of one of California's largest public works programs.
This picture emerges from scores of interviews and a review of thousands of pages of district financial records, internal e-mails and other documents.
At East Los Angeles College, construction of a grand entry plaza with a clock tower degenerated into a comedy of errors. Heating and cooling units were installed upside down, inspectors found. Concrete steps were uneven. Cracked and wet lumber had to be torn out. A ramp for the disabled was too steep for wheelchairs, and the landmark clock tower listed to one side.
Fixing the problems helped drive construction costs from $28 million to $43 million.
A new health and science center at Valley College was marred by defective plumbing, cracked floors, leaky windows and loosely attached ceiling panels that threatened to crash down in an earthquake.
The district paid a contractor $48 million to build the complex, but had to hire others to correct the problems and finish the project — for an additional $3.5 million.
At least those buildings were finished, eventually. At West Los Angeles College, officials spent $39 million to design and begin construction of four major buildings, only to discover that they didn't have the money to complete them.
Just as crews were starting work last summer, the projects, including a $92-million athletics center, were abandoned.
"This is astounding," said David Beaulieu, president of the District Academic Senate. "How could this have happened?"
At Valley College, workers renovated a theater complex, installing new seats, lighting and sound equipment in time for a 2009 student production of "Alice in Wonderland." But even before the $3.4-million job was done, officials decided to build a new theater complex. The renovated one is slated for demolition.
"I think it's obscene, given what's going on in this economy," said Pete Parkin, former chairman of the theater department. "It's mind-boggling."
At L.A. City College, architects were hired to design a five-story fitness center with a glassed-in dance studio on the top floor. Before construction began, the college president decided to move the fitness center to the other side of campus. There, it would need to be short and wide, not tall and narrow.
The $1.8-million design was suddenly worthless. The district paid architects $1.9 million to draft a new one.
The waste has not been limited to construction. Bond money that was supposed to pay for new buildings has gone to public relations, travel and promotional videos.
The videos alone cost more than $350,000 and include aerial footage shot from chartered helicopters. "Upbeat music and graphic effects" were added at the request of district officials, who wanted the productions to be "more lively and entertaining," a video producer wrote in an internal e-mail.
Some of the videos illustrated the progress of the program. But one was a biography of Larry Eisenberg, the district official in charge of the program; it included childhood photos of Eisenberg set to a soundtrack of piano music by French composer Erik Satie.
The district paid still photographers up to $175 an hour to take pictures of trustees at construction award banquets.
It hired an expert in feng shui, for $250 an hour, to give advice on harmonizing new buildings with their surroundings.
To oversee wind energy projects, officials hired a public relations specialist with almost no experience in renewable power, at an annual salary of $135,000.
In an e-mail to a colleague, Tony Fairclough, a consulting engineer on the district's energy projects, shared his dismay over the hiring. He wondered why managers of the construction program would "employ people and then dump them in a position for which they have no qualifications."
"It makes me angry," he wrote, "that we waste money like this."
An unwieldy system
Many share responsibility for the waste, starting with the seven members of the district's Board of Trustees, part-time elected officials with no expertise in construction.
The board relies heavily on guidance from contractors that stand to profit from its spending decisions. A management consultant urged the trustees last year to hire an independent construction advisor to identify the public's best interests; they rebuffed the idea.
Complicating matters is an unwieldy system of power-sharing that dilutes accountability.
Eisenberg oversees the construction program for the board and the college system's chancellor. But the presidents of the nine colleges wield tight control over bond money allocated to their campuses. They can veto projects and switch plans, and often do.
Faculty and staff unions also have a say on every project.
Further undercutting fiscal discipline is the sheer volume of money at the district's disposal — nearly $6 billion. Officials changed plans, discarded designs and killed projects in midstream in part because they could. There was more than enough money to paper over mistakes.
Eisenberg once joked about the challenge of spending up to $31 million a week.
"There was a movie some time ago about someone giving money, and they had to spend it in a certain amount of time," he told a business group in downtown Los Angeles in 2009. "Well, they didn't know us."
Still, the district can point to many benefits from the $2.6 billion spent thus far. At East Los Angeles College in Monterey Park, students work at banks of shiny iMac computers in a new science building. At Valley College in Valley Glen, the swim, diving and water polo teams practice in a new Olympic-size pool.
On every campus, crews in hard hats are bulldozing debris and pouring concrete. By 2015, the district hopes to have opened more than 80 new buildings and to have renovated dozens of others.
Of the seven trustees, only one — board President Georgia Mercer — was willing to discuss the program in depth.
"I'm really proud of what we've been able to do," said Mercer, a public relations consultant long active in San Fernando Valley politics and a trustee since 1998.
She defended decisions such as the planned theater demolition at Valley College, saying the goal of the districtwide program when it began, with $1.2 billion in hand, was to "keep the place glued together."
"What do you do when you only have a limited amount and your house is falling apart?" she asked. Only later, she said, did the board decide to seek billions of dollars in additional bond funding.
Mercer described the trustees as laypeople who try to "hire the best people and not interfere in management." As to the waste The Times uncovered, she said, "Believe me, we take it very seriously."
Eisenberg conceded mistakes in the management of the program, among them a failure to police sloppy contractors aggressively.
"We can't just sit back and let them do their thing," he said. "We need to be on them."
But overall, he said, the construction has supplied many jobs, and the district has spent the money "in a very effective and very efficient way."
In private, Eisenberg has been more critical, indeed unsparing, about the program's faults.
In an April 2009 e-mail, he told his construction chief that quality control was "horrible," adding: "Our new buildings are fundamentally flawed.... We cannot control lighting systems, HVAC [heating, ventilation and air conditioning] systems, security systems, building management systems, etc. We have buildings that leak....
"We are opening buildings that do not work at the most fundamental level," he wrote.
'Strict oversight' vowed
Money for the building campaign comes from everyone who pays property taxes in the 882-square-mile community college district, home to 5.2 million people. An owner of residential property assessed at $400,000 paid $714 in extra taxes for college construction over the last nine years and will pay several times that much over the next four decades.
The district runs the largest two-year college system in California. It trains students for careers in nursing, law enforcement, entertainment and other professions. Its diverse resources include a 200-acre farm and equestrian center at Pierce College in Woodland Hills and fashion and culinary programs at Trade-Technical College just south of downtown Los Angeles.
Prominent people who got their start in the system include architect Frank Gehry, author Charles Bukowski and film star Morgan Freeman.
By the 1990s, however, many campus buildings had fallen into disrepair. So in 2001, the board placed before voters a $1.2-billion bond measure, followed by another for nearly $1 billion in 2003.
Both passed by wide margins.
In one respect, trouble was inevitable: Voters had put $2.2 billion under the control of seven of the region's most obscure elected officials. They would be spending it with almost no public scrutiny — despite their promise of "strict oversight" by a citizens committee.
Nearly all of the trustees are longtime players in local politics. To fund their election campaigns, waged largely by mail, they typically solicit donations from college administrators, unions and contractors.
Voter approval of the construction program opened a spigot of new campaign money by turning the trustees into powerful figures in the world of California public works. All but one of the trustees — Tina Park — have accepted donations from builders, architects and engineers who have won contracts from the board, records show.
In 2003, the trustees hired Eisenberg to run the program. A San Fernando Valley native, he had overseen smaller public building programs in Oregon and Wisconsin.
The trustees also hired a private construction company to handle day-to-day management under Eisenberg's guidance, a role now filled by URS Corp. of San Francisco.
Nine other firms coordinate projects, one company at at each campus. Like URS, they have all been major donors to the trustees and to campaigns to pass the bond measures.
By 2007, it was clear that the $2.2 billion in bond money would run out long before the district had finished all the projects on its list. The trustees decided to go to voters once more, this time with the biggest bond measure of all — a $3.5-billion proposal, Measure J, on the November 2008 ballot.
Contractors put up nearly two-thirds of the $1.9 million raised for the ballot campaign. Measure J passed with 70% of the vote, more than doubling the size of the construction program.
Taxpayers will be repaying the debt until at least the 2050s. With interest, the bill is likely to exceed $11 billion.
Projects go astray
Overwhelmed by the program's scale, the trustees mostly let Eisenberg run it as he saw fit.
"He was in charge of everything, all the money," said former Pierce College President Thomas Oliver. "Because the district wasn't good at building anything, everybody kind of followed his lead."
Eisenberg played to the trustees' thirst for recognition, pursuing construction awards that they liked to publicize. Even after problems spilled into the open — such as the loss of several million dollars when a financing plan for solar power projects collapsed — the trustees rarely questioned his leadership.
Nor did they raise questions when college presidents spiked projects.
At Southwest College, the district spent $2 million on a parking lot shaded by solar panels. With the work half-finished, the project was abandoned, leaving rows of steel poles protruding from the fresh blacktop.
Why? The college president, Jack E. Daniels III, had decided that a performing arts center should be built there instead.
Daniels said his decision reflected the college community's preference for a signature arts and humanities building at the main entrance to the campus, rather than an array of solar panels.
"It was never the intent to waste dollars," he said, "and we monitor all costs closely."
Even modest projects have gone astray. At Pierce, the district botched a $1.8-million veterinary science project to build new shelters for cattle, pigs, goats and llamas, along with utility lines and a new road.
Among the errors: Enclosures were built at the bottom of a slope, exposing the cows to torrents of mud and manure in a heavy rain.
The chicken coop lacked sufficient ventilation. Summer heat would "cook the birds," said Leland Shapiro, chairman of the animal science department. And the water trough for Oliver, a potbellied pig, was set too high for his snout.
Eighteen months after construction crews packed up and left, some of the new facilities are still unusable. The trustees have hired an architect to redesign the project for $91,000. A full overhaul, with new features, will cost $264,000 more, said campus construction manager David Tsao.
More consequential was the foul-up at West L.A. College, where Eisenberg, URS and others approved more projects than there was money to pay for.
By July 2010, the college was on track to spend $132 million more than its $414-million construction budget.
The overrun forced cancellation of the $92-million athletics center, a $34-million theater complex and a $47-million maintenance building and parking garage. By then, the district had spent $39 million designing the projects and starting construction.
Why were they approved in the first place?
Lloyd Silberstein, a senior URS executive, said there were "things that broke down here" but insisted it was up to the college president, then Mark Rocha, and Turner Construction, the firm overseeing projects at the Culver City campus, to watch the budget.
In a memo to Eisenberg, a Turner manager said the trouble began when the college spent more than $50 million to buy land for a new road and worsened when Rocha ordered $53 million in project upgrades. Among other things, according to Turner, Rocha had a five-story building expanded to seven stories, even after being told the college could afford no more than four.
Rocha, who resigned to become president of Pasadena City College as the problem was coming to light, did not return phone calls seeking comment. Through his lawyer, Rocha said he did not approve any project unilaterally and rejected what he said were efforts to blame him for overspending.
College officials say they hope to salvage one of the canceled projects, the parking garage, by selling surplus land to raise money. That way, architectural plans already paid for would not be wasted. If the plan works, the college could cut its overall losses on the abandoned projects from $39 million to $27 million.
"Could it have been a more efficient process?" Eisenberg said. "Of course."
Relatives get jobs
By Eisenberg's account, the program has been "remarkably clean in terms of relationships and ethical behavior and those kinds of things."
But district leaders have not hesitated to help family members land jobs, The Times found.
A niece and nephew of trustee Sylvia Scott-Hayes are among those who benefited.
The niece, Monica Ramirez, sent Eisenberg an e-mail in January 2009 saying, "Sylvia suggested that I contact you." Eisenberg passed her resume to James D. Sohn, then a URS vice president.
"We found her a place on the program," Sohn wrote Eisenberg a few weeks later. "She starts next Monday."
Ramirez, 33, is a project coordinator. Scott-Hayes' nephew, Rick Ramirez, 36, has done public relations work for the program.
Scott-Hayes, a retired state college administrator, said her relatives did not get special treatment. "Whatever I did is what I would do for anybody else who asked me to forward their resume," she said.
College presidents also eased family members onto contractor payrolls. Ernest Moreno, president of East Los Angeles College, asked Pacifica Services Inc., one of the main construction supervisors on the campus, about a job for his son Derek, auditors reported.
Pacifica hired the younger Moreno in 2003 and put him to work on college district projects in 2008. When Tyree Wieder, then interim chancellor of the district, found out, she told Pacifica President Ernest Camacho that she saw "a significant appearance of impropriety by both Ernest Moreno and you."
In a February 2010 letter, she ordered Camacho to remove Derek Moreno from assignments under his father's purview and to let her know if any other district staff members approached him about jobs for family members.
Camacho replied that Derek Moreno, an engineer, "was hired on his own merit" and worked on Pacifica projects at schools other than East L.A.
Neither Camacho nor Derek Moreno responded to requests for comment.
Moreno's father said in a statement: "I never used any influence to obtain employment for my son Derek."
A similar case arose at West L.A. College. When he was president, Mark Rocha helped his wife land a job with the construction program. In an interview last year, Rocha recalled telling Eisenberg: "Hey, my wife is looking for a job. Is there anyone you know of you could refer her to?"
With a plug from the district, Rocha's wife, Nancy Rosenberg, 45, was hired as a construction manager by Jacobs Facilities Inc., a contractor at East L.A. College.
Notwithstanding his conversation with Eisenberg, Rocha said he "used no influence whatsoever to get my wife a job at Jacobs."
His wife referred inquiries to a Jacobs spokeswoman, who did not respond to requests for comment.
At Mission College in Sylmar, Gateway Science & Engineering, the contractor overseeing construction on the campus, hired a young man named Keith Hoefel as an intern. His mother, Karen, was then a college vice president who oversaw Gateway's work.
Karen Hoefel said she did not ask Gateway to hire her son. Keith Hoefel did not respond to requests for comment.
Illegal spending found
After Times reporters began asking questions about waste, construction errors and other problems, the trustees in November 2009 commissioned a special audit of the program by a management consulting firm, Capstone Advisory Group LLC.
Mona Field, then president of the Board of Trustees, worried about potential fallout from hiring an investigator as well-qualified as Capstone's chief auditor.
"The resume looks like overkill," Field wrote in an October 2009 e-mail to the district's interim chancellor. "Won't people believe that we suspect MAJOR fraud if we hire someone like her?"
The district has kept Capstone's findings secret, releasing only its March 2010 recommendations.
But it did follow Capstone's advice to create a whistle-blower program and a position of inspector general to investigate allegations of waste and corruption.
The board rejected applications for the position from accounting giants Deloitte Services LP and Ernst & Young and nine other firms.
Instead, it hired Policy Masters Inc., a newly formed company headed by Christine E. Marez, former director of construction policies at the Los Angeles Unified School District. Marez has no experience as an independent auditor or investigator.
From 1998 to 2003, she was a school construction manager for Gateway, a major contractor on the college district's building program. Gateway's owner, Art Gastelum, has been a leading campaign donor and fundraiser for the trustees.
In an interview, Marez said her ties to Gastelum would pose no conflict. "I would not discriminate," she said.
In addition to the Capstone audit, the district ordered a review of the program by its bond counsel, Fulbright & Jaworski. The law firm reported that millions of dollars in bond money had been spent in violation of state law.
The money went, among other things, to public relations, food, travel and aerial photography for promotional videos. The law allows bond spending only for construction and the purchase of property or furniture.
The law firm's review led officials to lay off at least 15 people, including a woman whose main job was to book speeches for Eisenberg and the trustees. Also dismissed was an avant-garde Swedish photographer hired to take what one official, in an internal e-mail, called "glamour shots" of new buildings.
In theory, such excesses should have quickly been flagged. In all three ballot measures, the district had promised that a citizens committee appointed by the trustees would rigorously monitor spending. But the panel was starved for money, staff and information and failed for eight years to file annual reports to taxpayers, as required by law, Fulbright & Jaworski found.
James Lynch, chairman of the committee from 2006 to 2009, said of the construction program: "Quite honestly, it was run so well that it would be a model for any place."
Lynch, a former chief executive of the Beverly Hills, Santa Monica and Century City chambers of commerce, said he had heard nothing about construction errors, misspending or nepotism. "It seemed like everything was pretty transparent."
The lack of oversight has allowed construction debacles to escape public notice. Among them was the rebuilding of the entry plaza and two adjacent buildings at East L.A. College.
President Moreno envisioned a New England campus atmosphere for the district's most crowded school. The entry plaza would be a showcase, complete with a modern clock tower, 77 feet high.
But the project fell behind schedule, and workmanship was poor. The district fired the prime contractor, Morillo Construction Inc., which has denied responsibility for the problems.
Officials brought in a second contractor to finish the project and a third to do a forensic study of everything that had gone wrong and estimate the cost of repairs.
The study, fiercely disputed by Morillo, cited faulty wiring and duct work, among other defects, and said $157,000 worth of welding and other steel work was needed to straighten the clock tower.
Moreno recalled his reaction when construction supervisors brought him the bad news. "The tower was crooked — my tower," he said. "They said, 'We have to straighten the tower.'"
His reply: "You're kidding me."
Times staff writer Doug Smith contributed to this report.