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Being publicly identified as a friend of Mayor-for-Life Marion S. Barry Jr. these days could be as bad for business as the Pinto‘s exploding gas tank was for the Ford Motor Co. The public furor over Barry’s plan to move city workers into two buildings controlled by his protégé R. Donahue “Don” Peebles forced Hizzoner to retreat and sank Peebles’ $48-million bid. Peebles was shut out for the second time last week when the mayor turned down his new lease offer and selected two less-controversial leases instead.
Peebles’ high political profile also figured in the recent decision by the D.C. Board of Education to reject Peebles’ offer of space for the board in his building at 900 F St. NW.
And then there’s real estate broker Fred Ezra. Barry’s friend and fund-raiser is starting to learn the high cost of being Hizzoner’s crony. Just a few weeks ago, Ezra was expecting to pocket a cool $1.4-million fee for acting as the city’s broker and putting his seal of approval on Peebles’ $48-million bid. But with Peebles and rival developer John “Chip” Akridge apparently out of the picture (Akridge also had agreed to pay Ezra a 3 percent commission—around $1.1 million—if his $38-million lease offer had been accepted), Ezra’s fat fee is deflating like a punctured balloon.
Ezra won the broker’s job in early July, beating out at least two other competitors with his bid of only $1. Ezra took responsibility for getting the best deal on office space for the 720 workers being displaced by the new arena. The city employees must vacate their 6th and H Streets NW offices by Oct. 20 to accommodate local sports czar Abe Pollin‘s building schedule. Official groundbreaking is set for Oct. 16, although digging actually started in August.
In return for the brokerage contract, Ezra agreed to pay the city’s architectural and moving costs, and planned to recoup his fees and expenses from the winning bidder. The commission from either the Peebles or the Akridge deal would have made meeting those costs a piece of cake. (One official estimates the city’s moving costs at about $200,000.) But now Ezra is facing the prospect of a much smaller paycheck.
Barry was forced to reboot the leasing process early this month after Peebles’ deal drew fire from councilmembers and the financial control board. Barry withdrew the Peebles proposal and asked for a second round of bids. City officials say they received 16 offers by the Sept. 12 deadline, but the selection panel toured only five sites. Akridge and Peebles each submitted new bids. But rather than opting for the Solomonic solution of splitting the lease deal between the feuding developers, Barry last week picked two new landlords.
Barry has asked the council to OK two leases worth a total of about $19 million. Some workers would move into the Presidential Building at 415 12th St. NW, which is owned by Laszlo N. Tauber and Associates. The Presidential Building is already home to the Board of Education and the D.C. Public Schools’ (DCPS) much-maligned central administration. For several years, the school board has been trying to flee the Presidential Building for better quarters, but Barry’s choice will force the board to stay in its current offices.
The other workers displaced from 6th and H Streets would move into the Waterfront Centre at 800 9th St. SW, which is where the school board thought it was going until Barry concocted this latest deal.
Here is where Ezra should worry. Though Tauber’s group has agreed to pay Ezra’s commission, which will total $377,000 on its $12.5-million lease, the majority owner of the Waterfront Centre, Marvin Lang, is balking at Ezra’s rate.
The commission deal has stirred resentment within the real-estate industry because Ezra seems to be raking in a large fee for a small amount of work. Ezra wasn’t hired until early July, after the city had already received 38 lease offers from city landlords. Ezra did not have to perform the usual broker’s duty of finding space. All Ezra had to do was evaluate the proposals and make a recommendation to the mayor.
“There wasn’t a whole lot of work involved,” says Sherman Ragland, head of the Tradewinds International consulting firm, which bid around $200,000 for the contract Ezra won. (Tradewinds’ bid did not require a commission from the winning landlord.) “The city had already put its solicitation out on the street, and had all its proposals sitting in a box.”
“It wasn’t like brain surgery,” Ragland adds.
According to a representative of Lang’s firm, NBL Associates Limited Partnership, Lang never expected to pay an extra 3 percent commission. The representative says that after the Waterfront Centre bid was submitted, Ezra called and asked to tour the building. During the tour, according to this official—who asked not to be named because “I want to do business in this town”—Ezra said the firm would have to increase its bid in order to accommodate his commission.
The owner’s representative replied that the commission was not specified in the city’s bid solicitation. Therefore, the representative told Ezra, Lang and his partners did not feel compelled legally to pay it. According to the representative, the firm offered Ezra a 1 percent commission instead, approximately $70,000 for the $7-million lease.
Lang’s representative then met with James Gaston, director of the Department of Administrative Services, and relayed Ezra’s position. The representative told Gaston that if Ezra demanded the commission, Lang would have to hike his bid by more than $200,000 to pay for it—a cost that would be passed on to city taxpayers.
According to the representative, Gaston responded that “higher-ups” would decide whether Lang needed to raise his bid. But Barry, who recognizes a hot potato when it is steaming on his plate, did not get involved. Neither he nor any of his staff asked Lang to change his bid to include Ezra’s payment. Ezra declined to comment on the matter.
Barry has asked the council to approve both leases immediately, but he had submitted only the Presidential Building lease to the council prior to a Tuesday hearing. Completion of the Waterfront Centre lease had been held up for several days by the dispute over Ezra’s commission. By midweek, however, the real estate broker had bowed to pressure and agreed to the 1 percent rate.
Ezra’s acquiescence means that he’ll only make $449,000 on the real estate deal, a fraction of the $1.4 million he once hoped to collect.
Even so, that’s a pretty nice paycheck for three months’ work.
A GUN TO THEIR HEADS
The Board of Education is proof that city officials need a gun pointed at their heads—figuratively speaking, of course —before they act. On Sept. 20, one day after the House D.C. Appropriations Subcommittee moved to strip the 11 board members of much of their power, most of their salaries, and nearly all of their staff, the board voted to allow private firms and entities to manage D.C. public schools. That 7-4 vote broke a bitter deadlock over privatization that had paralyzed the board for most of the year.
Had the board taken a stand earlier, it might have been able to dissuade the Congress from cutting its staff from 27 to 2, and members’ annual salaries from nearly $33,000 to $5,000. Those proposals were attached to the D.C. budget last week. Despite House Speaker Newt Gingrich‘s (R-Ga.) vow to slow down the GOP’s “Contract on the District,” the school proposals are expected to be included in the final budget bill. But a Senate plan to all but replace the board with an appointed commission is expected to get watered down significantly, if not scrapped altogether, before the FY 1996 budget wins final congressional approval.
The school board’s action last week vividly demonstrates why this city needs the financial control board and Congress looming over it. Although they finally managed to vote for reforms—some of which had been stalled for years—board members tarnished their public image by misunderstanding what they had just done.
School board President Wilma Harvey, who deserves to be nicknamed “The Buckler” for her quick collapses under political pressure, insisted afterward that the board had not opened the door for private firms like Educational Alternatives Inc. (EAI) to run D.C. schools. EAI, which operates schools in Baltimore and Hartford, Conn., has become the target for privatization foes, including the D.C. Teachers’ Union.
After the vote, Harvey told reporters that the new policy allows only nonprofits, universities, and unions to step in and manage D.C. schools. But after carefully re-reading the measure, Harvey had to concede that the privatization door had been kicked open to anyone and everyone. (But Ward 6 school board member Bernard Gray, an attorney, is not yet ready to admit that the policy says what it says.)
If school board members can’t master reading comprehension, how can they be expected to oversee improvements in English test scores for D.C. students?
HE’S BACK
During the ’80s and early ’90s, David Lee Hall lived D.C.’s high life. Hall finagled his way into hotel rooms, high-priced dinners, and star-studded charity events with the usually believed but never kept promise of “the check’s in the mail.” Hall, sometimes in the company of friends, freeloaded off the American Heart Association, the American Cancer Society, the National Abortion Rights Action League, the YMCA, the Washington Opera, the Art Barn, the Corcoran Gallery and School of Art, and the Greater Washington Boys and Girls Club, to name just a few.
Hall disappeared more than two years ago, following legal problems and media disclosure of his amazing ability to eat free (a 1992 Washington Post profile dubbed him “an urban Robin Hood taking from the rich and giving to himself”), but he seems to be back on the D.C. party circuit. In recent months, he has been spotted at charitable events, political gatherings, and even a Luther Vandross concert, seated in the section reserved for Sony Records’ guests.
Hall, decked out in a tux, attended last weekend’s Congressional Black Caucus (CBC) events, although how he got his hands on those coveted tickets remains a mystery. According to a staffer for D.C. Delegate Eleanor Holmes Norton, Hall had called Norton’s office on Friday, claiming that he was a loyal campaign worker who deserved a free pass to the CBC events. But Norton’s staff was too familiar with Hall’s history to fall for that one.
Hall has also tried to ingratiate himself with the D.C. government. Hall hung around the Mayor’s Office of Ombudsman Services for much of the summer. In August, the mayor’s Deputy Chief of Staff Betty King booted Hall from the ombudsman’s office. King says that Hall was volunteering at the office and was never on the city payroll. She says she let him go because she needed his space for other volunteers.
“He wasn’t doing anything that I assigned him,” she says. “I don’t believe he had any official position here. I don’t know what he was doing.”