An F in Business

Once thought a model of financial wizardry, Brea Olinda High looks like a flop

Photo by Keith MayIn November, OC Weekly published two stories detailing safety concerns surrounding the 10-year-old Brea Olinda High School. Though built atop a former oil field, the site was never tested for environmental toxicity. School-district officials who at first refused to speak to the Weekly, or even hand over a final environmental-impact report that might have shown what safety measures officials took, have finally started talking—to the high school's student newspaper.

Brea Olinda officials defended their project in an article published Nov. 10 in the high school newspaper Brea Wildcat. Speaking to student journalists, district officials maintained that their high school is the best thing that ever happened to the school district—or to the city of Brea, for that matter.

But officials who recently spoke directly with the Weekly revealed a dramatically different story. They acknowledged that the district is still so deeply in debt as a result of the high school project that they'll have to tap the district's reserve funds to keep up with payments on a project that was supposed to have already paid for itself.

This news should come as little surprise to anyone familiar with a year-old report by Assemblyman Scott Wildman (D-Glendale), the chairman of the California Joint Legislative Audit Committee (JLAC). According to Wildman's committee, the Brea Olinda project "faced considerable cost overruns, a significant reduction in the originally projected scope of the school facility, risk to the district's general fund and a great deal of local controversy"—characteristics almost identical to the highly publicized failures at Los Angeles Unified's Belmont Learning Center.

The lion's share of this controversy surrounded one person, consultant Wayne Wedin, who was hired by Brea Olinda School District in February 1981, just one month after Wedin formally retired after a 15-year career as Brea's city manager and executive director of the city's redevelopment agency. According to the JLAC report, however, Wedin was still working as a consultant for the city of Brea in the early phases of the high school project. Based on his role in the Brea school project, Wedin was later hired by LA Unified for the Belmont project. Amid that disaster, Wedin was fired.

Because his pay was in part based on his ability to raise money from the city for Brea Olinda High School, Wedin had a "financial interest" in pushing for the greatest amount of public funds to be expected, the report stated. "Arguably, this situation could conflict with Wedin's obligation to represent the school district's best interests."

From the looks of it, that's exactly what happened. Wedin's first contribution to the Brea high school project was to urge the school board to select Lowe Development Corp., an Orange County-based developer, for exclusive negotiations on the project. Instead of suggesting that they rebuild the old Brea Olinda High School at the same location, Lowe proposed a much more complex and expensive project: tear down the existing high school, develop the land commercially, and use the cash from commercial development to help pay off the cost of building a brand-new high school on a different site.

For his four years of work on the Brea project, Wedin earned $323,000 from the school district. According to the JLAC report, that money was "invoiced to the district and advanced by Lowe." In other words, even though Wedin was supposed to represent the school district in negotiations with Lowe, the latter actually paid his salary.

In September 1988, while construction on the Brea Olinda High School was still under way, Wedin's relationship with Lowe took an even stranger turn. That month, election records show Lowe's president, Robert Lowe, became a contributor to the City Council campaign "Committee to Elect Wayne Wedin." Lowe Development vice president Robert Macleod became Wedin's business-community liaison in that campaign and a member of his fund-raising committee.

Former Brea Mayor Melvin LeBaron told JLAC staff that Wedin's relationship with Lowe always seemed a bit too tight. "Lowe Development was always there and always won," he said. "It was the way in which they were presented by Wedin. He would say, 'There are four or five good developers, but Lowe Development has the whole concept here.' They knew too much and were too prepared."

Similar words came from former Brea Olinda school board president Dan Turner, who told JLAC investigators last year that the school district's deal with Lowe began to sour as quickly as it was signed. "When we started [negotiating], we thought it was pretty set, but almost immediately, it started deteriorating. It wasn't long," Turner said, before Lowe's projected revenue from commercial development at the old high school site "was below those of the other developers."

Turner told JLAC investigators that he urged the school board to suspend the deal with Lowe but failed. "[Then-Brea Olinda schools superintendent Ed] Seal and Wedin were calling me, saying that they had to have the school-board president onboard," Turner recalled.

Turner ultimately abandoned his opposition to the project, despite his concerns that Lowe's proposed development of the old school site would fail to generate the expected revenue. "Originally there was to be $50 million to build a new high school and refurbish other schools," Turner told JLAC staff last year. "The schools still haven't been refurbished."

School-district records obtained by JLAC investigators show that by 1994, the Brea district already expected to "receive between $56 million and $61 million less than initially projected" from the ill-fated deal with Lowe. Part of the problem was the fact that in 1991, Orange County real-estate values crashed, forcing Lowe to renegotiate many of its contracts with tenants. Lowe also failed to develop one portion of the old school site.

Moreover, the physical scope of the proposed high school was slashed even before the project broke ground in 1987. The size of both the auditorium and the swimming pool were reduced, the gymnasium received air blowers instead of an air-conditioning system, and student lockers were eliminated altogether.

Seal told JLAC investigators that "value engineering," along with construction modifications designed to meet a 30-year performance standard rather than 40 years, also played a role in keeping costs down.

The final price tag for the high school, $36 million, has yet to be paid by the Brea Olinda school district. Assistant superintendent Gary Goff acknowledged in a recent interview with the Weekly that the school district will continue to pay off its huge debts on the two bond issues for another 20 years—until 2018.

Fortunately for the district, Brea voters in June approved $27 million in bonds to help pay for badly needed improvements to the city's school system. Goff insisted the money will go where it's intended and not be tapped to keep up with debt payments on Brea Olinda High School.

"We're right at the point where our income is just slightly higher than our debt," Goff said. "We expected our income [from Lowe] to be higher today, and it isn't for a variety of reasons.

"Our project across the street has had some closures," he added, referring to the Lowe commercial site. "That lowered our income quite a bit."

The most recent of those closures occurred last month, when the United Artists movie theater finally shut its doors after struggling unsuccessfully to compete with the nearby Brea Marketplace "Big 22" Edwards Cineplex. Goff acknowledged that, in order to keep up with debt payments on the high school project, the school district will now have to dip into the high school project's reserve fund.

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