Citing $326,375 Leasing Error, Romer Orders Outsourcing

Los Angeles school officials wasted $326,375 in lease payments on a building that was to be a school for teenage mothers but eventually proved unusable, Supt. Roy Romer disclosed Tuesday.

Calling the deal a mistake that should never be allowed to happen again, Romer said he has decided to outsource the district’s lease administration.

“I did this when I was governor of Colorado,” Romer said. “It’s a better way to do business.”

Romer said he also ordered the district to invoke the termination clause in the five-year contract. He said that he did not know how much it would cost to break the lease, but that negotiations are underway.

Real estate Director Scot Graham said he will seek proposals from professional brokers to manage the district’s leases. The contract will include creation of a database of the district’s leased facilities, which cost about $37 million annually. He said he expected the change in procedure to cost little or nothing because the broker would receive commissions from the property owners.

Romer said he learned about the lease of the Koreatown building on Friday from district Inspector General Don Mullinax, who is conducting an audit of the district’s leases.

The district entered into the lease of the building at 2525 W. 8th St. in August 1998. It was to become a campus of McAlister High School for school-age mothers and a children’s center. At the time, school officials were in a dispute with McAlister’s landlord and expected to relocate the campus.

Nine months later, however, school officials and the landlord resolved their differences.

The district then decided to use the building for a special education facility, but after another 18 months concluded that the improvements required for that purpose would cost $700,000. That cost is deemed prohibitive.

Graham said the district’s leasing agent, who grossly underestimated the cost of the improvements, is no longer with the district.

Among a litany of mistakes, Romer said, were the failure to evaluate the need for the lease in the first place, the miscalculation of the improvement cost and the excessive time in design.

He used his disclosure of the mismanagement to demonstrate that the district is breaking out of an old mold of concealing problems, a culture Mullinax has characterized as “deny, defend and deflect.”

“My style of operating is when you make a mistake, correct it and be open about it,” Romer said.