Developer Offers His Loss as District's Gain

Times Staff Writer

A Santa Ana developer who spent millions renovating an office building for use as a charter arts campus is offering to sell it to the local school district because the intended buyer, the Orange County High School of the Arts, hasn't been able to raise the funds.

Developer Mike Harrah said he is in preliminary talks with the Santa Ana Unified School District to sell the building at 825 N. Broadway St. The previous owner of the former bank building was a nonprofit group whose board of directors once included Santa Ana schools trustee Nativo V. Lopez.

Santa Ana Unified trustees discussed possible purchase of the property during a closed-session meeting Jan. 14, but no action was taken. Harrah wouldn't reveal his asking price, but sources close to the discussions say it is nearly $10 million.

Lopez said he opposes buying the property because it doesn't meet state requirements for a public school campus and wouldn't qualify for state matching funds.

Moreover, Lopez said his former ties to the property would give any transaction the appearance of impropriety. He once was on the board of directors of Citizens in Action Community Development Corp., which sold the building to Harrah. Lopez also leads the immigrants' rights group Hermandad Mexicana Nacional of Santa Ana, which was headquartered in the Broadway building.

"We are not in the business of bailing out big developers when their projects have flopped," said Lopez, who is battling a recall effort in a Feb. 4 election.

Recall supporters say he is a divisive force in the troubled school district, Orange County's biggest; has encouraged Latino parents to seek exceptions to the state law banning bilingual education for their children; and has moved too slowly to build new schools to house its 61,000 students.

Lopez contends he is being targeted for the most part by homeowners in the upscale north end of town who oppose a new elementary campus in their neighborhood. Ron Unz, a Northern California businessman and architect of the anti-bilingual law Proposition 227, has donated $85,000 to the recall campaign.

The empty concrete structure being discussed by the Santa Ana school board now is draped with a banner proclaiming it the Elementary Arts Academy. It was a central piece in an ambitious plan to expand the charter arts high school's reach. It was to house a feeder arts elementary school, and another Harrah-owned building nearby was to be its middle school campus. That also sits empty.

Harrah said the arts high school has been unable to raise enough money to buy the campuses from him as originally intended.

Patricia McMaster, the high school's director of public and media relations, said plans to open the elementary and middle schools were on hold because of lack of funding but was unable to provide further details. Other arts school officials didn't return calls seeking comment.

The 1,000-student charter high school moved from Los Alamitos to Santa Ana in 2000. Charter schools are licensed by public school districts and receive state funding but operate independently.

Harrah said he bought the Broadway building two years ago for $3 million. Records show the seller was Citizens in Action. Last year, the federal government seized nearly $1 million of the sale proceeds in an effort to recoup what it said were illegally spent education grant funds. The supporting lawsuit filed by the U.S. Attorney's Office alleged it was bought by Los Angeles-based Hermandad Mexicana Nacional Legal Center with diverted public grant money and that its ownership later was transferred to Citizens in Action.

Lopez's Santa Ana Hermandad was a sister group to the Hermandad legal center. Both groups came under federal and state scrutiny in 1998 for allegedly diverting millions of dollars in education grants meant to pay for English and citizenship classes for immigrants. Lopez has denied any wrongdoing by his Santa Ana organization.

Citizens in Action, with which Lopez no longer is affiliated, settled the suit with federal prosecutors by agreeing to forfeit $640,000 of the nearly $1 million last year.

Harrah said that he vaguely recalled that the building had connections with Lopez and Hermandad but that he had never met with Lopez while trying to buy it. He said that the purchase was made through a broker and that he has since renovated it for use as a 500-student elementary school.

Santa Ana Supt. Al Mijares said the Broadway building is in good condition but doesn't meet state standards for a public school. It could be used as a charter school, however, because state regulations for them are less stringent.

Though they could put an existing or new district charter school in the facility, Mijares said, no state matching funds could be used to buy it.

"There are many issues," said Mijares, whose district is in the midst of a $300-million expansion effort to relieve campus crowding.

"We are not prepared to acquire a building without all due diligence to make sure it makes sense for the district."

Harrah downplayed the scope of his dealings with the district, saying, "We are only in the discussion phase right now."

The 51-year-old developer, credited by many with helping revitalize downtown Santa Ana, owns or co-owns about 50 buildings in the area.

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