Sept. 24

Robert Maguire sends first of four letters to LAUSD Superintendent Roy Romer asserting that acquisition of 333 S. Beaudry Ave. building would be a bad deal and urging that “other options” be pursued.

Sept. 25

School board decides to postpone vote on Beaudry building purchase until Sept. 28, to give the LAUSD inspector general time to complete his investigation.

Sept. 28

Maguire sends second letter to Romer, again urging that Beaudry facility not be bought and offering to assemble a “pro bono advisory group” to come up with an alternative. Board cancels special meeting and defers vote until Oct. 1.

Oct. 1

Maguire calls Romer and asserts that a prominent structural engineer, Tom Bouquet, has told him that the Beaudry building may be structurally flawed and unsafe. Board, at Romer’s request, postpones vote until Oct. 9.

Oct. 3

Maguire sends third letter to Romer, proposing alternative headquarters acquisition that would cause Romer and the LAUSD to be “viewed as the smartest public agency in the country.”

Oct. 5-9

LAUSD real estate staff and advisors initiate extensive additional testing of Beaudry facility, including X-rays of concrete slabs and connections.

Oct. 8

Maguire sends fourth letter to Romer, spelling out details of proposal for LAUSD and Maguire to buy Arco Plaza for $460 million.

Oct. 9

Maguire testifies briefly before school board, and receives cool reception. Board approves acquisition of Beaudry facility as new LAUSD headquarters.

Oct. 31

Escrow expected to close on acquisition of Beaudry.

Early November

Construction to begin on modifications/upgrades to Beaudry facility.

April 2002

LAUSD administrators to vacate 450 N. Grand Ave. and move into Beaudry. Demolition to begin on 450 N. Grand, to make way for new high school.

July 2002

LAUSD staff to vacate Third Street Annex and move into Beaudry. Demolition to begin on Third Street Annex, to make way for new school.

March 2003

Final large group of LAUSD administrators should vacate KPMG Tower and move into Beaudry.

Dec. 31, 2005

Bank of America master lease expires on Beaudry, giving LAUSD full occupancy.

A last-minute gambit by developer Robert F. Maguire to buy the Arco Plaza twin towers for $460 million and flip one to the Los Angeles Unified School District as its new headquarters has backfired, leaving a number of powerful real estate executives seething.

Maguire’s proposal was submitted to LAUSD Superintendent Roy Romer on Oct. 8, the day before the school board was to vote on a plan to buy another building as its new headquarters. That plan was approved Oct. 9, and the building at 333 S. Beaudry Ave. is being bought in a deal slated to close by month’s end.

While Maguire’s move was shot down, it outraged a wide circle of real estate executives who, working under contract to the school district, had scrutinized dozens of buildings for more than a year before recommending that the Beaudry building be acquired.

The situation comes at a crucial juncture for Maguire, one of L.A.’s most powerful and prolific commercial developers. For the past several months, he has been negotiating with various parties to sell all or part of his 5.5 million-square-foot downtown office portfolio, which is in the Central Business District. The Beaudry building is outside the CBD, just west of the Harbor Freeway. (He’s also looking for an equity partner to join him in developing the Playa Vista commercial campus.)

By consolidating into the downtown core, the school district would significantly lower that submarket’s vacancy rate, leading to higher rents and a higher value for Maguire’s portfolio.

What struck some in the real estate community as inappropriate was Maguire’s interest in having the school district’s 935,000-square-foot headquarters occupy a glitzy downtown office tower like Arco Plaza. More striking to many was his public questioning during school board meetings about whether the Beaudry building was structurally sound. That caused alarm among board members who are desperate to rise above the district’s last big real estate deal, the Belmont Learning Complex.

‘Not a licensed engineer’

“(Maguire) wasn’t just saying, in a public forum, that our firm doesn’t know what we’re doing. He was saying that all these other prominent firms advising the LAUSD didn’t know what they were doing,” said Tony Mason, president of Anthony Mason Associates, a structural engineering consultant to the LAUSD.

“Rob is very qualified to talk about real estate, but he’s not a licensed engineer,” said Christopher C. Martin, chief executive of AC Martin Partners Inc., another school district advisor. “So when he was rendering an engineering opinion, which he came close to doing, it was a bit bizarre.”

Maguire last week staunchly supported the Arco Plaza proposal.

“I have a better idea to save the LAUSD a lot of money and that would be good for the CBD, which a lot of us have put a lot of money into and that is becoming a very exciting urban center,” he said. “If people take offense, I’m sorry. Is my timing late? Yes. But is this doable? Absolutely.”

The plan called for his firm, Maguire Partners, to buy Arco Plaza from Shuwa Corp. for $330 million, and then spend another $130 million on deferred maintenance and tenant improvements in both towers. He would then sell one of the towers the BofA Tower to the district for $230 million. Under the plan, any space not occupied by LAUSD in its 1.3 million-square-foot tower would be master-leased by Maguire. He would retain ownership of the other tower Arco Tower as well as the project’s subterranean retail plaza, all on-site parking and the ground-level bank branch. In addition, his firm would collect a building management fee.

In an Oct. 3 letter to Romer, Maguire said the deal would “be viewed as the smartest public agency transaction in the country.”

Promised savings

Maguire then wrote in an Oct. 8 letter that “the annual cost savings to LAUSD are extraordinary $6.5 million to $7 million, which if invested at 5 percent would amount to $310 million to $360 million at the end of 25 years.” Last week, Maguire clarified that those “savings” compared with the cost of buying and upgrading the Beaudry building.

But several senior school district advisors scoffed at the notion that a premier downtown tower could be bought for essentially nothing, and they claimed that Maguire’s plan would cost the district almost twice as much as Beaudry.

Several advisors pointed out that delays caused by Maguire’s criticism of Beaudry put the deal in jeopardy of falling out of escrow. This might have forced the district to execute one-year extension on the 325,000 square feet of space it currently leases at the Maguire-owned KPMG Tower on Bunker Hill. LAUSD pays about $1 million a month to rent that space, according to Caprice Young, president of the school board.

Maguire denied being motivated by a desire to retain the school district as a major tenant at KPMG Tower.

“LAUSD’s rent in that building is substantially under-market,” he said. “We would expect to substantially increase the rent on the turnover (to another tenant after LAUSD vacates in 2003).”

Romer refrained from publicly criticizing the developer. “I’m trying to be a good soldier and soldier on down the road,” he said. “I want to move beyond this because you never know who has the next building you’re going to want to buy.”

The LAUSD is still contemplating converting Maguire’s ill-fated parking structure at 17th Street and Grand Avenue into a school. The downtown structure sits on ground owned by the LAUSD and leased by Maguire.

“We are at a letter-of-intent stage, and are going for prospective approvals from the district and state,” Maguire said. “I think that deal is cooking along.”

Young and Romer said the LAUSD remains open to dealing with Maguire.

“As board president, I have not ruled out dealing with him in the future,” Young said. “But to my knowledge, he has never once delivered anything of value to the district.”