Remember Brooks Institute when you vote for Measure O in November

“WHEN IN DOUBT, DON’T”
—Benjamin Franklin

WAVE GOODBYE TO BROOKS INSTITUTE AND OUR TAX DOLLARS

The news in the last few weeks has reported the closure of Brooks Institute. Everyone lost from this closure. The students hopefully will find other institutions to complete their education and their teachers may find other positions, but the Citizens of Ventura are again holding the proverbial bag.

On August 20, 2016, The Ventura Star published an editorial about the role of city government in this matter, and it sums the situations up fairly well – “The City Council and city government appear to have given preferential treatment to a small but vocal constituency – and failed the rest of Ventura”. We cannot improve on their conclusions except that it was all avoidable. We can provide you with specific facts and information that we have garnered thus far so that when the bureaucratic spinning and finger pointing starts, you will be able to see it for what it is.

In February the City announced with great elation and fanfare that Brooks was coming to town. Councilwoman Heitmann led the parade as well as the City Economic Development Manager, Leigh Eisen. They extolled the prospects of increased revenue for the city and that downtown business would flourish. Same hype surrounded the WAV (See our August 2011 letter published at August 2011 Newsletter).

Brooks Institute Unfinished Office Space

Brooks Institute left unfinished classroom space when the deal unraveled.

There were three sites leased, two private owner locations downtown and one behind City Hall. The largest was the two top floors of a 5-story city office building at 505 Poli just behind City Hall. There may have been two other private owner locations but that as yet has not been established.

Hope and promise filled City government. Staff rushed to execute leases for the 505 Poli property. Brooks Institute entered into a contract with a major contractor to demolish and build tenant improvements on the two top floors of 505 Poli at a contract price of $1.2 million. Tenants of those two floors were evicted; the contractor was permitted to fast track demolition and tenant improvements started. When hazardous materials were found on site Building & Safety again fast tracked the work, which was promptly completed by Venterra, a hazardous materials remediation company, at an additional cost of $80,000. Demolition was completed and 2/3 of the tenant improvements were built. Then Brooks closed its doors and the project imploded.

THE PROJECT UNRAVELS

Brooks Institute paid no money to the City for rent, no money for a security deposit and no performance bonds or guarantees were put in place. Reportedly $70,000 in back rent is due. Future rents are lost. The tenant improvements have yet to be completed. The Assistant City Manager tells us that it will only cost our City $200,000 to complete those improvements.

Unsurprisingly, within a matter of days, the facts have proven otherwise. The contractor has filed a lien against the City for $825,000 for the work they and the subcontractors performed on City property, including the $80,000 cost of the removal of the hazardous materials. Add lost rent to date, future lost rents the evicted tenants would have paid, the estimated cost to complete the tenant improvements and the damages causing the losses to swell to over $1.2 million. Then there will be the legal costs to collect these losses, if possible, and to avoid liability.

The private property owner who also signed Brooks’ leases and started the work of providing tenant improvements in the downtown area was more fortunate. He wisely obtained guarantees to protect himself. Brooks Institute, owned by a Chinese owned company named Gphomestay, has lawyered up with an expensive LA firm. The contractor has lawyered up too but no word yet on what lawyer will try to pull the City’s chestnuts out of the fire.

The citizens of Ventura deserve to know why the taxpayer has once again been “hornswoggled[1]“. Dreams, hopes and ideas for healthy economic growth are wonderful, but such things must be tempered with economic reality and good business sense. When those are ignored the phrase “a fool and his money are soon parted” is apropos.

DEMAND THE TRUTH

The City Council has a lot to explain. They were quick to ask the citizens of Ventura to increase taxes (Measure “O”). They spent $118,000 of our tax money to hire public relations firms to convince 51% of the voters to vote yes on that measure thereby giving them more of our money. Will they be as quick to take responsibility for another $1 million plus dollar loss?

Citizens should ask, “Who approved the Brooks Institute lease without asking for rent payments upon execution?”

This Council, particularly the two candidates seeking reelection in November, Councilwomen Weir and Heitmann, need to answer questions about their ability to conduct business on our behalf. We must have representatives that are experienced and understand business. We, as a community, cannot afford losses of this magnitude and we certainly should not be handing the City Council another $270,000,000 over the next 25 years if they are not qualified. By this recent action, this City Council is not capable of managing our tax money.

Other than “what were they thinking” here are questions EVERY citizen should be asking?

Who approved this lease without asking for rent payments upon execution?
Who reviewed and approved the terms of the lease with Brooks?
Who made the decision to permit construction on City property without a guarantee or performance bond in the event of default of Brooks Institute?
Who performed the due diligence and examined the financial condition of Brooks Institute to determine their ability to perform under the terms of the lease?
Who recommended the approval of this lease and its terms to the city Council?
Shouldn’t those who made the decisions in this matter resign or be fired?

City Government’s response thus far is that they will sue Brooks to get our money. City officials continue to say they are surprised, shocked and disappointed. They should not be any of these things. This was all foreseeable based upon the financial condition and history of Brooks Institute.

VREG is continuing to investigate this transaction and will report our findings in subsequent issues as new facts are discovered.

EDITORS COMMENT

In the private sector, when a so-called “good deal” goes bad for lack of due diligence people lose their jobs. In the public sector, nobody is held accountable and elected officials either choose not to run again, or they run and look for a fall guy.

Just keep the BROOKS project in mind when you are asked to vote for Measure “O” in November; and, when voting to fill the three City Council seats that are open ask yourself if they are truly qualified.