An arbitrator has ordered the Los Angeles Unified School District to pay more than $17 million for breaching contracts with the developer, contractor and architect of the unfinished Belmont Learning Complex, officials said Friday.
In a stinging rebuke, arbitrator Steven A. Arbittier called the district's failure to pay its outstanding bills "indefensible." He said the district harmed "innocent subcontractors" when it decided to suspend construction in August 1999 amid concerns about environmental contamination at the site, which sits atop a former oil field.
The district stopped paying its bills in July of that year even though work crews spent several more months finishing up jobs and securing the site. The Board of Education decided to abandon the project altogether in January 2000.
At the urging of Supt. Roy Romer, the board has since changed course and is now seeking bids from the private sector to either finish building the school--which so far has cost about $175 million--or buy the property from the district.
The award hits at a difficult time for the district, which is struggling to close a $153-million deficit that resulted from a recently approved pay increase for teachers.
But the developer, Temple Beaudry Partners, applauded the arbitrator's decision.
"In its rush to abandon Belmont, the school district didn't care who was harmed," said Marvin Suomi, president of Kajima Urban Development, the managing member of Temple Beaudry. He said the decision "confirms that we fulfilled every obligation on this project and that the school district acted inappropriately."
The arbitrator ordered the district to pay $13.5 million in damages to Temple Beaudry; the contractor, Turner/Kajima; the architectural firm, McClarand Vasquez & Partners; and 49 subcontractors. The district also must pay the firms' attorney fees and arbitration costs.
The arbitrator denied the district's counterclaim alleging that the construction firms had overbilled and failed to complete work paid for by the district. Arbittier said he found no evidence that the companies had acted inappropriately.
Romer and other top district officials said the ruling was partially a victory for them, too.
They said Arbittier significantly reduced the amount of the damages from an original request of more than $21 million. Romer and others acknowledged the district's debt, but believe it is less than the amount of the award.
Even so, the decision allows the district to move on, Romer said. "It opens the door for a rational solution to Belmont. That's refreshing and hopeful."
Despite the ruling and the district's professed desire for a resolution, the dispute appeared to be far from over. The two sides continue to feud over what happens next.
Romer said the money owed to the architectural firm would be paid immediately so the district can obtain the architectural drawings, which have been withheld during the dispute. The district needs the drawings so outside bidders can evaluate the site.
Complicating matters, Hal Kwalwasser, L.A. Unified general counsel, said the district might challenge a portion of the arbitrator's decision. Kwalwasser said the district's allegations of overbilling should be decided in court rather than by an arbitrator.
L.A. Unified is considering withholding a portion of the award ordered by the arbitrator, but a spokesman for the developer said the district will not be able to sell the property or finish the school until the arbitrator's ruling is completely carried out.
Separately, the district has sued the developers and the others involved, accusing them of excessive billing and design errors. It was unclear how the ruling would affect that case.
Meanwhile, the allegations of overbilling have attracted the attention of Dist. Atty. Steve Cooley, who is investigating.
He is also probing whether district officials broke environmental laws in the planning and construction of the school.