A RISKY DEAL ON BELMONT; BOARD ACCEPTED PENALTY PROVISIONS CRITICS SAY ARE TOO SWEET FOR DEVELOPER.

Byline: Terri Hardy Daily News Staff Writer

Hours after a judge warned it of the risks, the Los Angeles school board agreed with the developer of the Belmont Learning Complex to a penalty-laden contract - potentially making the district, the teachers union and even the Proposition BB oversight committee liable for delays.

Details of the penalties were disclosed Friday when the Los Angeles Unified School District went to court to try to get lifted an injunction won by the teachers blocking progress on the project temporarily.

Judge Diane Wayne refused to lift the ban, but agreed to require that United Teachers-Los Angeles - which successfully sought the injunction while the project is being reviewed - to post a $500,000 bond to pay for the penalties if the court later overturns its decision.

UTLA attorney Jesus Quinonez said the union is confident of winning but was stunned to see the provisions of the penalty-laden contract clearly favoring the developer. Particularly troubling, he said, was a last-minute addition that imposed penalties if a lawsuit was filed to challenge the project.

``It is an ironic and bizarre approach, something that penalizes the taxpayer even if there is a legitimate legal challenge,'' Quinonez said. ``I was wondering what rationale there could possibly be for any public entity to agree to it.''

Jeff Horton, board president, defended the contract Friday, saying it was a ``good deal'' for the district. ``They gave us a guaranteed maximum price with no cost overruns,'' he said.

The board voted 4-3 on April 21 to go ahead with the agreement, including a series of penalty provisions added from February until mid-April favoring the developer, Kajima Construction.

Hours before the board vote, Wayne granted a UTLA request that bars the district from continuing with the project until the proposed $87 million Belmont high school-retail-housing project is reviewed by the citizens oversight committee.

Wayne warned the board it would enter into a contract with delay penalties while facing legal challenges ``at its own risk.''

Horton said the board believed it was necessary to go ahead with the contract despite the judge's warning.

``We had to get started so we can build the school as soon as possible,'' Horton said. ``Delays will cost us money and that was a concern. But more than that, we want to get kids off the bus and into a school in their neighborhood.''

Board member David Tokofsky, who voted against the project because of longstanding concerns about the price of the school, said the district's legal counsel ``softened the judge's warning'' and possible risks in discussing the case with the board.

The UTLA action was prompted by revelations that the district intended to use at least $43.5 million of Proposition BB funds to pay for the project without review by the oversight committee set up as part of the bond measure approved April 8 .

District lawyers said Friday that delays could be extremely costly to the school system.

In a letter to members of the oversight committee, attorney for the district Peter James said failure to meet the retail and housing component deadlines could mean a loss of as much as $9.7 million.

James said there are estimates that the delays of over 30 days could mean further loses of $1 million per month.

Pressure on the citizens oversight committee, which is seeking to look at complex issues of cost and bidding, clearly intensified with the judge's ruling.

In his letter, James sternly tells oversight committee chairman Steve Soboroff to schedule an emergency meeting ``to resolve all outstanding issues'' with the Disposition and Development Agreement, the document that contains the penalties.

Some committee members became concerned with the potential that they too could face liability, Soboroff said. So an item discussing the committee's legal liability was placed on its agenda for Tuesday's meeting.

Committee member David Barulich of the Howard Jarvis Taxpayers' Association said the letter and agenda item make it clear that the district is intending to rush the oversight group through its review.

``They don't want us to do our job,'' Barulich said.

Barulich said he was angered because it was clear the district simply used the concept of an oversight committee to sell the $2.4 billion Proposition BB to voters.

``They regard us as the enemy now, our usefulness was served after the bond passed - now they want us to vanish,'' Barulich said.

Tokofsky agreed, saying the district also intimidated the citizens committee appointed earlier to review the Belmont project proposal.

``They beat them down, make them feel guilty,'' Tokofsky said.

Horton said the district does value the committees but ``we just don't want their actions to cost the taxpayers more money.''

``There is some danger of that,'' Horton said. ``There needs to be some balance of due diligence and efficiency.''