The Beverly Hills Unified School District Board of Education voted 5-0 at its regular meeting Tuesday evening to proceed with its purchase of a $1.54 million home on North Doheny Drive with the hope of leasing it to Superintendent Gary Woods and his family.
"For me the investment is first and the superintendent is second," board President Brian Goldberg told Patch. "For others [on the board] it is superintendent first and an investment second."
The resolution before the board to buy the residential property at 220 N. Doheny Drive was initially put forth as a "real property" investment, but board member Noah Margo requested Tuesday that a clause be added to the resolution to state that an additional reason for the purchase was to house the district superintendent.
Board members indicated during the meeting that the clause was added in an effort to stabilize the superintendent post, which has changed numerous times over the past decade. Woods has not been involved in any of the discussions regarding the property.
The two-level, 2,665-square-foot home has four bedrooms, five bathrooms and sits on a 5750-square-foot lot. It will be 100 percent financed through a zero-down municipal loan at a fixed interest rate of 3.7 percent over 15 years, Goldberg said.
According to legal counsel attained by the district from Best, Best & Krieger (BB&K), investing in residential real estate, as well as acquiring housing for the superintendent, are both legal for the school district to do.
"My hope is the superintendent will rent the home from us, but if not this is an investment for the district," Goldberg . "We will be able to use it to offset some of our obligations for our required reserve."
As a district, the BHUSD needs to maintain of at least 3 percent of its overall budget. Once the North Doheny Drive property is paid off, it can be used as leverage for that reserve amount, freeing up about 3 percent of the district's working capital in the general budget, Goldberg said.
When Patch that the school board had voted at its June 12 regular meeting to move forward with the home purchase, the decision drew criticism from residents who alleged that negotiations surrounding the investment had not been conducted with enough transparency.
On May 23, BHUSD Chief Administrative Officer Dawnalyn Murakawa-Leopard signed a residential purchase agreement for the North Doheny Drive property, six days before the board first discussed the investment publicly at its May 29 regular meeting. The district put down a deposit of $46,050, which it would have lost if the board voted against going through with the purchase. (To view the purchase agreement, click here.)
Members of the board acknowledged Tuesday that the general concept to invest in residential real estate was first discussed during a February closed session, but that the idea was put on hold while the board dealt with its over the Metropolitan Transportation Authority's plan to build a subway tunnel under Beverly Hills High School.
"When they first determined that they wanted to acquire a piece of residential property, they should have put it on the agenda and discussed the reason and the philosophy behind what they wanted to achieve. That way the community would have been put on notice that that was their intent," District Finance Committee Chair Herb Young told Patch. The committee is tasked with advising the board regarding the district's financial interests. "Because of the process they used, it came as a surprise to people."
Former school board President Myra Lurie that she was "shocked and dismayed at the secrecy surrounding this action."
"California law requires the district to post specific information in order to notify the public about any property that is the subject of closed board negotiations," Lurie wrote. "These requirements are spelled out in very specific detail in a portion of the government code known as the Brown Act."
The Brown Act is a law meant to "facilitate public participation in local government decisions and to curb misuse of the democratic process by secret legislation by public bodies." The act pertains to California city and county government agencies, boards and councils.
Representatives from BB&K have advised the board that the Brown Act does allow school districts to discuss in closed session the acquirement of real estate to ensure that costs aren't inflated based on the involvement of a public entity.
"It is absolutely clear to me...upon our counsel's recommendation, that we were under no obligation to bring that kind of dialogue to a public forum in the event that it would be to the detriment of our bargaining position with whomever we might be negotiating with," board member Jake Manaster said during the regular meeting. "That being said, I certainly don't believe, nor did I experience, any sort of subterfuge or a goal of not sharing with the community for purposes that were inappropriate."
The board was also criticized for not involving the District Finance Committee with negotiations for the home purchase until it had already gone into escrow. Goldberg said the reason for not consulting the committee was because the purchase will cost BHUSD $133,225.56 annually for the next 15 years, an amount that "represents .0024 percent of expenditures of a $53 million annual [district] budget for 2013."
The board did meet with the committee Tuesday afternoon in a study session to discuss the investment before making its final decision on the purchase later that evening.
"The reaction to this idea totally caught me off guard," board member Lewis Hall said at the regular meeting. "There was no intention from me to hide anything and I have not witnessed or seen anything from my colleagues to hide any of this."
Hall said he supported purchasing the home because it was priced below market value and the district did not have to make a down payment, does not have to pay property taxes and is locked into a fixed, low-rate interest fee. He also added that it was an opportunity to keep Woods in the district for the long run.
As discussion on the home purchase ended at the regular meeting, Goldberg said the board "could have and should have done a better job in communicating this idea and our plans."
"I too will pledge to do a better job in thinking about how things are perceived in the community and ensure that we error on the side of more transparency, not less, as long as that does not inhibit our ability to negotiate and do the best possible job for the district," he said.
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