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Tuesday, March 15, 2011

State Audit of Sale of MLK,Jr. Building to First AME Church Requested

Updates:  first, I was wrong about the grant money for the purchase of MLK, Jr. bldg to First AME Church as partially coming from the Department of Commerce (where Fred Stephens now works).   I had gone off of a news report and did not double-check it myself.  It turns out it is a state fund that formerly had "commerce" in its name (not the federal Department of Commerce) and there was my confusion.  My apologies.  

Also, the KING 5 story says that someone in the community is going to the Auditor.  As of this date, only I have filed a request for them to look into it.  If you want an audit of this sale, fill out the form here at the State Auditor's website.  Keep in mind, I feel certain the sale is a done deal BUT it may be a good idea to make sure everything was done properly. 

We don't know precisely how Fred Stephens recused himself, if it was just something verbal, then he may have felt justified in receiving update e-mails on the progress of the sale.  Did Don Kennedy ask for the recusal in writing?  Unknown.  Having the Auditor examine it may give the district a nudge about how important it is for fidelity to a process it is to make sure there is no appearance (or real) conflict of interest. 

End of update.


I read the Seattle Weekly story on the questions about the sale of the MLK, Jr. building to First AME Church but it didn't register.  Now there's another story.

I missed this story last week but according to KING 5 news:

Parents and community leaders are asking for a State audit of a bid process, in the wake of the Seattle Schools financial scandal.  The questions surround the 2010 sale of the mothballed Martin Luther King school in Seattle’s Madison Valley.

The questions have come up because Fred Stephens, former SPS Facilities Director, has deep, close ties to First AME.  I understand that his father was a former pastor there, his son's funeral was held there and Mr. Stephens is still a member.

From the story:
“Mister Stephens formally recused himself as Executive Director of Facilities at the very beginning of the process,” says Board Member Michael DeBell.  “He did not participate in any of the briefing sessions, discussions, or public workshops.”
DeBell says the process took a year and a half, and the board approved the sale.  But he also acknowledges none of the bidders made a formal presentation before the school board, and relied of senior staff recommendations.
Bailey believes Stephens was involved in some capacity.  She points to several emails, which show Stephens copied in on discussion and developments in the process.
“If he’s still being put on that email there still has to be some internal communication going on,” says Bailey.
I hadn't realized that the Board never heard formal presentations but relied on senior staff recommendations.  Personally, I think this was wrong as the sale of any school building is a big deal.  It would seem better to have each group give a 15-minute presentation followed by staff recommendations.  
Community leader Adrienne Bailey commented:
  “We’re just simply saying, let’s just look at this.  With all that’s going on, with the impropriety with money, and communications and working, we really want some scrutiny on this thing.”  She adds, “no one should have a problem with us asking for it to be looked over.  If it’s fine, than it’s fine.”

I also didn't know that in May of 2010, legislators Sharon Tomiko-Santos, Adam Kline and Eric Pettifgrew found more state money  for the sale(which is the majority of First AME's offer).  They requested that the district reopen the RFP process after it was closed.  They gave all bidders another month.

What is even more disturbing is that a previously allocated $1M came from the Department of Commerce's Community Schools program.  Fred Stephens left SPS to work for the DOC by the end of June 2010.  

From a district document:

Thus, comparing the Bush lease offer and the CCC@MLK and FAME offers of $2.4M on an "apples to apples" basis, the Bush lease offer is worth $7.3M more, or over four times as much."

One commenter at the Seattle Weekly sums it up nicely:

In the end of all this, a private church which Fred Stephens had deep and longstanding ties to, was given a public school property using state grant money in a surprisingly short time, all for well under market value, and when they were the lowest bidder during the process. Grant money that came from the state Department of Commerce, to boot, during a time of fiscal belt-tightening.

33 comments:

wseadawg said...

So we not only gift public property to a tax-exempt religious entity by giving them public money to buy MLK, but, on top of it all, we forego at least 7.3 million bucks? And it took Pottergate to fire the SI?

If anything reeks of cronyism, not to mention, unconstitutionality, it's the sale of MLK.

Juana said...

There was always something strange about this issue. From a financial perspective, the property should have been sold to Bush. I was at the board meeting where people gave their pitch to acquire the property and Mr. Stephens was sitting with the AME group. I thought it noteworthy but tried to not make a big deal about it, but when AME was given (pretty much)the properrty, what I saw made cronyistic sense.

Anonymous said...

Some local discussion:
http://centraldistrictnews.com/2011/03/09/watch-the-king-5-story-on-the-selling-of-mlk-jr-school-madison-valley
Juana, the deal begs the question about why was the District in such a hurry to sell the property with quite a better sized lot than others in the area and in record time. Never had a school building been sold so quickly after being closed.

One valid point regarding selling to public school to private schools was taken into account. Could it be selling a public schools to a private school be in the public interest or justified in an area with plenty of families and in an area where District policies and program placement have driven tax paying families to private schools? No, it should not have been sold. If it was to be sold the SUAC group would have supported the sale to the neighborhood group and its plan. Schools are an asset to their neighborhoods and Seattle. Neighborhoods are robbed of their asset when schools are closed.

Nonetheless, this sale was done way too quickly and more quickly than any other in the history of the District in an area of the city where the assignment areas don't really make sense.

Anonymous said...
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joanna said...

I was the first anonymous, and want to know what the second anonymous on this thread wouldn't come down on the side of not selling the school. Bush would not serve the general neighborhood,.

Anonymous said...
This comment has been removed by a blog administrator.
Melissa Westbrook said...

Sorry last Anonymous, you need to sign your name but you said:

"I don't believe that Bush or any other private school should get access to a public school property. And, on top of that at the State's expense."

Why is a private school worse than a church? And how would it be at State's expense - they were going to pay 4 times what First AME was.

Stu said...

Why is a private school worse than a church? And how would it be at State's expense - they were going to pay 4 times what First AME was.

Also, forgive me if I missed something, but wasn't the Bush offer, technically, a lease? And weren't they going to build sports fields that the community could use as well?

Johnny Calcagno said...

First Queen Anne High School, now this. Nauseating.

wsnorth said...

The Fauntleroy School and "Old Cooper" properties were practically given away, too. Millions were left on the table. If the district was rolling in dough, it would be "nice" to provide "give aways" to worthy community organizations, however, that is obviously not the case!!

Seems like these giveaways should be as illegal as Pottergate.

joanna said...

Sports field for community use, really I doubt it. Bush would have used it for the purposes of Bush, as would any school. The community would not have had access to use of the property.
Again, Schools should not be sold. The property should not have been offered for sale in an area where the assignment areas are not well done. Most District property where a school still exists stays in the stock and is possibly leased much longer than this one did. Again I ask, "Why." This is always wise to give the District some flexibility where lots are not readily available for schools and this piece was larger than either Montlake or Madrona. Therefore, with potential for a good site for a school. The State helping anyone buy the property seems a little weird to possibly sleazy. And, the way this worked out seems even more underhanded. All this information was available to the Board at the time of the sale.

Actually come to think of it, on this even Betty and Kay have to be accountable. In fact Kay came to the full-board work session where it was discussed to show support for the decision. Kay did have some power here, as the school is in her Director District, and other Board members did look to her for leadership on this. AME's membership represents some well-known community members. While this does not make the church evil, the situation clearly demonstrates why ensuring that policies regarding conflicts of interest should be clear, and decisions like this not be rushed, especially where a conflict of interest may be driving the decision and the speed.

Anonymous said...

Ron English is also deeply connected to all this. He not only set the ground rules for the bidding process on the SUAC, he also participated in the bid review and bid selection process. I believe he also made the staff recommendation to the board, and he is on record after the staff recommendation as enthusiastically supporting First AME. He could certainly have provided some bias or push towards First AME.

Ron English was also tasked with keeping Fred Stephens separated from the bidding process due to Stephens's conflict of interest. Yet Stephens was seen sitting with First AME during the presentations, and a couple of his relatives were reportedly involved with writing First AME's bid, which seems quite cozy. Doesn't look like English did a good job at all, and if he was bought off by Stephens, he'd have been in a good position to funnel information to First AME. We know English had ties to the Small Business Program and Stephens, because English taught at least one class. They must have been somewhat chummy.

And don't forget the silence of the Urban League and other leaders on this. I remember that was being commented on back during the bidding and sale process as well.

I am glad to see this finally getting some light. I was bugged by this when I first heard of it. Once the problems with Silas Potter came to light, it wasn't that hard to put two and two together, and figure out that the MLK sale could very likely have been tainted.

Though I have no real opinion as to whether it should have gone to the Bush school or to the community group, I never though a private church should have won it. Especially using state money to finance nearly the entire price tag.

Observer

Anonymous said...

Something to remember, when English approached Ikeda about the issue with that small business development program, Ikeda responded to English that he did his job because he notified his client. So Stephens is English client. Wow! Even though Stephens formally reclused himself from the MLK deal, the fact that English sees Stephens as the client smells very fishy! There's no way Stephens didn't influence this deal!


A friend to Seattle

Melissa Westbrook said...

I'm going to mention this in my remarks to the Board tonight. Despite the appearances, technically the district may have done it properly.

BUT, the appearance of impropriety is there. Our district always seems to have this whiff of getting it wrong or was this the best deal for the district.

It's sad that the district can never get a clean win and all the excuses in the world won't make it so.

Po3 said...

This property should have gone to the community center group because that is the group that would have benefited the most people in the community. That fact that a public property went to a church funded by tax dollars is unbelievable. I will never understand how any board member could have forgotten we have separation of church and state in this country!

Anonymous said...

"Technically did it properly, MW?"

In any transaction, the people in charge of the public's assets have a fiduciary duty to do what is best for the public. Lawyers have a duty to do what's best for their client. How does leaving money on the table achieve that? Stephens clearly did not recuse himself from the process.

Sheesh! The question never was "what was best for the community at large?" The proper question was: "what is best for the school district?"

Apparently that was never asked by anyone involved, which is textbook malfeasance and legal malpractice.

For so long the powers that be have treated public assets as their own, instead of realizing they hold them in trust for the community, with trustee-like fiduciary duties, duties of loyalty, duties of full disclosure, etc. But not at SPS, apparently.

This deal reeks on several levels.

wseadawg

Anonymous said...

http://www.seattle.gov/neighborhoods/mi/suac/mlk/mlk_final_report.pdf

SUAC meetings and those attending.


Public School Parent

Juana said...

I agree that schools should NOT be sold, but re-purposed on a temporary basis if not needed. BUT if the school district and board members decide to sell a property they should exercise good financial judgment, make the most of the situation, and selling (?) it to AME did not satisfy that criteria in my mind.

Olliesdad said...

Any comments on the lease of E. C. Hughes in West Seattle for $40,000 per year to Westside Academy?

Olliesdad said...

PS The old Cooper school was sold to Youngstown for $550,000.

Braessae said...

Even if there is a policy (written or not) against selling school properties to private schools (I would quibble with it, but never mind), it became irrelevant here when a bona fide "community group" stepped in with a higher offer than First AME (also, Bush was willing to do a lease deal, rather than a sale, which would have given the SSD cash flow from the property AND several more years to figure out a permanent disposition, if they wanted to sell). It NEVER made sense to me to accept the NON-community offer, when it was for the LOWEST amount of money. I definitely think this needs to be audited -- and I think the appropriate entities should move to set aside the sale (i.e. -- void the transaction) if it turns out that it was not fairly bid, or the bids were not fairly evaluated.

And yes -- I think even Kay (and Betty, if she voted yes) get dinged on this one. They should have had bid presentations, and they should have looked harder at the numbers. I still think Kay and Betty are good directors, but Kay (and Betty, if she voted yes) should have known better than to let this pass without more serious review and some hard questions about maximizing District benefit.

What the SSD left on the table is nothing short of astoundingly negligent. I simply do not believe, and have never believed, that the bid accepted was in the best interests of the District (or the public) and I deeply suspect that it ONLY happened because people within the District who wanted First AME to win influenced the process -- or were inattentive to the District's best interests.

Anonymous said...

As much as I agree with most of you, I see nothing in the RCW that precludes this sales contract, and it would now likely be viewed by a court as moot....

grumpy

Melissa Westbrook said...

Ah, but Grumpy,I think that is understood that it can't be undone. But the Auditor can still find fault with how it was handled. The district needs to be corrected every time from here on out so they don't fall back into bad habits.

another mom said...

grumpy--yes but,

There needs to be a re-opening of this,if for no other reason than to clear-up the appearance of impropriety. If the District is at all concerned about regaining the "trust" of parents, teachers, and taxpayers, this sale is a good place to start. It will not hurt to revisit this. I don't care if it is a done deal, by ignoring it or wishing for it to disappear among the the earthquake headlines etc, the district only does itself more damage.

First AME maybe a wonderful institution, but right now they are not looking very good in this either. One would hope that they want to get off to a good start in the MLK neighborhood. FAME ought to ask for the sale to be reviewed, too. I don't get it.

Unknown said...

Agree with Another Mom.

If you want to reestablish trust show us that something is actually different.

Come out and say that everything is on the table, that you are in favor of an audit, that you are looking into what it would take to rescind the sale.

Throwing up your hands and saying "well there is nothing we can do about the sale, but next time we will be more vigilant!" is same as it ever was...

Jan said...

And Grumpy -- I am not so sure this could not be undone. It is like annulment in marriage. If there was sufficient fraud in the deal, it it possible that it could be vacated. I would imagine that is a really high bar, and I don't know that this transaction goes that far -- but there are theories whereby sufficient misconduct could get you there -- especially if, as could arguably be the case, the other party (FAME) was aware of the improprieties.

Suzanne said...

Joanna said "Sports field for community use, really I doubt it. Bush would have used it for the purposes of Bush, as would any school." Not true. Parents came together to fund McGilvra school's field of dreams (astroturf on what used to be a rocky mess) and now it's used by the Capitol Hill Soccer club as well as many other area kid sports that don't have anything to do with the school.

Observer said...

Just curious as to what would happen if the Department of Commerce grant was rescinded, or if that is even possible.

I still find it very odd that the grant was even made in the first place, much less so quickly.

wsnorth said...

Olliesdad said...(about old Cooper and Hughes).

I love what was done with old Cooper, but that is a fire sale price, practically a giveaway, as is the Hughes deal. And did you notice, on the multi million dollar Denny site, they are going to put up Tennis courts. OK, nice, but come on...

I pay school taxes, I vote for community projects and I used to pay private school tuition. I don't expect a "one way" subsidy FROM SPS to everything and everybody else!

It's OUTRAGEOUS!

Worried Mad Valley parent said...

I just want to thank everyone, especially Melissa and this blog, for keeping the issue in the spotlight. The plight of the MLK, Jr building has been troublesome for some time.
While I personally wanted the Mad Valley Community group to get it, I know Bush represented a better financial deal. Plus, they did promise to let us play on their nice field.
I still haven't seen any signs of work by FAME.

Worried Mad Valley parent

Anonymous said...

But guess what! The Ethics Policy is okay with the appearance of impropriety! There's nothing wrong with that. Like I said, a serial axe murderer who cheats on his taxes and downloads movies of the internet would only be faulted under SPS' policy if he took more than a reasonable amount of post-its from the supply cabinet.

grumpy

MAPsucks said...

Jan,

A KC Superior Court judge refused to void the MAP contract despite the language in RCW 42.23.050 which expressly voids prohibited contracts. Mootness is a tough nut to crack.

That doesn't mean we don't fully examine and revise procedures and safeguards as a result of failure of MGJ's much-vaunted "systems and processes" she put in place.

joanna said...

Public School Parent, thank you for posting the MLK document. This may be a done deal. I will say that at the time many in the community saw it as sort of reparations for losing so many schools. All the closed schools were in the 37th, and the SUAC group was in the process of meeting to decide how they wanted the building used. I think many were thinking it would become sort of community run center, sort of like some other schools. Really, the selling was being rushed, and who knows when the plotting for AME to become the owner began. I did not attend most of the SUAC meetings. The appointed committee is listed in this document which is a record of the meetings.

I have to say the District and City are well-represented in terms of those voting members and much of language seems to reflected permitted uses by the City and District. A more careful reading of the minutes or comments by attendees would be necessary to flush out what the community expected after these meetings and how they felt they were run. Ron English was chair.