Architect Responds to Allegations of Conflict of Interest, Breach of Contract.

HAVING grown up in East L.A., Ernie Vasquez was cherishing the opportunity to help design a new high school in downtown Los Angeles.

He was certainly qualified, having grown up to become a principal of Orange County's largest architectural firm, McLarand, Vasquez & Partners.

But six years after accepting that cherished job, it has turned into a nightmare, with Vasquez being among several parties facing possible litigation over the $200 million Belmont Learning Complex fiasco.

In his most extensive interview to date, Vasquez and his attorney sat down with the Business Journal to discuss the situation. "The whole process has deteriorated into chaos," Vasquez said. "It's a huge mess."

The allegations against Vasquez arise from a recent report by the Los Angeles Unified School District's chief auditor, Don Mullinax, following a six-month investigation. The report recommends taking legal action against Vasquez over an alleged conflict of interest and alleged failure to accurately determine and fully disclose the extent of contamination on the Belmont site. (The report also recommends that legal action be initiated against various other parties involved in the Belmont project.)

Other criticisms being leveled against Vasquez center on the nearly $6 million in fees his firm billed to the district.

Vasquez says the criticisms against him stem from political vendettas and other interests that have little, or nothing, to do with his actual role.

As to the conflict-of-interest allegations, district records indicate that Vasquez was briefly working simultaneously for the district and a development team vying for the contract to build Belmont.

Vasquez denies those allegations, and has hired lawyer Samuel J. Muir of the Pasadena firm of Collins, Collins, Muir & Traver to defend himself.

Both Vasquez and Muir point out that while Vasquez worked with both the LAUSD and private developers, he was implicitly left out of any decisions on awarding of contracts.

"I wasn't even involved in the selection process at all," said Vasquez. "The LAUSD made that clear in writing when they released me to work with (the development) teams."

They also cite a letter signed by the head of planning and development for the LAUSD in January 1995 that terminated Vasquez's contract. The document makes it clear the architect was approved to solicit work from any of the developers then bidding on the project.

That letter, says Muir, was cited but not quoted directly in the Mullinax report.

"It's about 190 pages long, and by page 132, they come to the conclusion that they didn't have enough evidence to determine whether Ernie's actions were a conflict of interest," said Muir.

Such a conclusion came after the report's authors recommended on page 10 that the LAUSD take legal action against MVP and four other members of the private development team selected by the district.

While the district has filed suit against O'Melveny & Myers LLP, the law firm retained to assist LAUSD on the Belmont project, no legal action has yet been taken against any of the other development team members, including MVP.

"There are just so many inconsistencies," said Muir. "They know there's no conflict -- they cite exhibits showing there's no conflict."

Another issue over which Vasquez is receiving heat is the environmental contamination on the Belmont site, the full extent of which was not fully understood by the district until construction of the high school was well underway. Vasquez said the environmental issues are being politicized, and that the Belmont situation is not unlike those encountered at many construction sites in Los Angeles.

"Yes, we knew there were oil lines and old gas lines going through the project," said Vasquez. "But there are technologies to clean it up. It's not a situation that should stop construction of a school."

Questions also have been raised about the fees that Vasquez's firm charged the district, almost $6 million. An internal review of the Belmont project by the LAUSD in 1997 found at the time that proposed architectural fees were $1.7 million over budget. Since then, additional fees have reportedly been billed by Vasquez.

He said his payments amount to about 7 percent of the cost to build the school, which Vasquez places at around $86 million. (The higher figure of $200 million often associated with the project includes the cost of land, retail and recreational components, etc.)

Vasquez said his fees are well within state guidelines, which are generally 6 percent to 8 percent of a project's costs, he said.

"Then you've got to consider the fact that those fee structures are set much lower than what I would be making for a similar project in the private sector," Vasquez pointed out.

For a purely private development, he added, an architect can expect to receive a fee based on design work alone. "In public-sector projects, my fees don't just include architecture work. There are a lot of engineering requirements -- from civil to electrical work on structures -- that are included in my fee structure," he said.

Further inflating his fees, he said, were the numerous delays the project encountered.

"The clarity of the original project has become muddied," said Vasquez. "I don't know how many different new oversight committees and review processes have been introduced since we first began. It's made the entire process go much slower."

The reason there have been cost overruns is because some of the very entities now complaining about the project had stipulated plan revisions and multiple reviews, he said.

For example, at the urging of political leaders such as state Sen. Tom Hayden, D-Los Angeles, the Belmont site has undergone at least five different environmental studies.

While his work is largely finished with the project, Vasquez says he continues to keep a close watch on developments with the Belmont project.

"I still believe there has got to be a better way to build schools for our children," said Vasquez. "I don't want to see politicians and government bureaucrats dictate the delivery of a school at the expense of an entire community.

Vasquez said turning school development into a more privatized process has been an interest of his since becoming an architect. As a young architect in the early 1970s, he worked on a project to build three new high schools in Colorado. Just as with Belmont more than 20 years later, Vasquez said he helped form joint ventures between public and private planners.

"It's not a new concept," said Vasquez. "It was hot in the '70s, but the whole idea kind of died down in the '80s. We're seeing a revival of sorts, particularly in Florida and Texas, for these types of (public-private) partnerships."

So when the L.A. school district planners contacted him in 1993 about the Belmont Learning Complex project, Vasquez jumped at the opportunity.

"The ideas they are trying to implement are the same ones I've been following for years," he said. "That's why this Belmont project seemed like such a natural fit."

Not so any more.