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County Skirts the Rules; Campaign Donor Profits Big

November 07, 1988|LYNN O'SHAUGHNESSY and TRACY WOOD | Times Staff Writers

Top Los Angeles County officials discarded the rule book governing public acquisitions in their eager pursuit of a luxury office tower and department store owned by a major campaign contributor, county records show.

On the part of the deal that went through, the campaign contributor, Alexander Haagen, made a profit of at least $9 million when the county last year bought the former Western headquarters of Sears, Roebuck & Co. on Fremont Avenue in Alhambra.

No laws apparently were broken, but because of the single-minded zeal with which the buildings were pursued, months were wasted in a vain search for a headquarters for the county's children's courts, millions of additional dollars were spent altering the tower for occupancy and at no time did the county advertise for a better deal.

Called Unsuitable

As it turned out, one of two buildings at the site was turned down as unsuitable by its intended tenants: the county's dependency courts, which determine the fate of abused and neglected children. The other building, the 12-story former Sears office tower, became the home of the county's huge Department of Public Works.

But even before the tower purchase was final last year, the county knew that that building, too, fell short of requirements. Officials said a parking garage was needed. So was a three-story computer center. Both are under construction. More surrounding land had to be bought and the tower had to be renovated.

When the tab was totaled, the county paid Haagen $53 million--$37 million for the former Sears tower that Haagen had bought less than a year earlier for $27.9 million, and the balance in the improvements and new buildings that he would provide.

Haagen, who served a stormy year as chairman of the Los Angeles Memorial Coliseum Commission, is most influential as a private force in the community, with close ties to public officials and city and county redevelopment agencies. He has created the largest retail development company in Southern California as the developer of 40 major shopping centers.

Concerns Raised

Early in the Sears deal, the swiftness with which officials acted to buy Haagen's building, the limited alternatives given the county's real estate experts and the refusal to advertise for the best available court site raised internal concerns.

Carlos Brea, the county real estate expert charged with checking out the suitability of the transaction, complained in writing to his superiors: "It appears (the chief administrative office) wants this department to go out on a limb" to endorse the Haagen property. The chief administrator's office continued to pursue the purchase as a site for the dependency court until it was stopped later by the refusal of court officials to accept it and vigorous opposition from Alhambra.

The purchase of the adjacent tower was approved in the spring of 1987 by the Board of Supervisors. Although it caused no stir at the time, the tower property became an issue in the current 5th District supervisorial election between Supervisor Mike Antonovich and former Supervisor Baxter Ward. The building is located in the 5th District.

Ward said the deal was a scandal, and has implied that Antonovich and other county officials favored Haagen because of the developer's generosity to campaigns. Since 1984, Haagen has donated $73,150 to the supervisors, including $28,900 to Antonovich, the most that Haagen gave to any of the supervisors.

Defended by Antonovich

Antonovich has strongly defended the purchase, saying that his support was not influenced by Haagen's donations. "Because a person has contributed doesn't mean that he or she is going to be disqualified," Antonovich said. "What you have to look at is the bottom line--will the taxpayers get a return on their dollar for this type of acquisition of property."

Examination of county records and interviews by The Times disclosed that the deal was initiated by former county Chief Administrative Officer James Hankla and Haagen. They had worked together when Hankla headed the county redevelopment agency.

When Hankla left office in March, 1987, negotiations were continued by the present county administrative officer, Richard B. Dixon, and Thomas A. Tidemanson, head of the Public Works Department.

Known to county staff as "Tom's Taj Mahal" or "Tidemanson's Tower," the new home for 1,500 public works employees is an impressive, towering glass-and-metal cube with sweeping entrances, a landscaped patio and fountain, mirrored elevators, an exercise room and magnificent views of the San Gabriel Mountains.

When the county buys or leases real estate, standard written procedures call for specific ways to acquire it. In the case of the former Sears tower and the adjacent windowless department store, the county bypassed several of these steps, a Times investigation of records showed. Some of the infractions were minor, not directly affecting a good or bad financial deal for the county. But two of the shortcuts may have made a major difference.

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