Sunday, August 13, 2006

The Washington Post: Yeshiva Facility Deals Costly for Montgomery

County Has Spent Millions in Public Money to Help Fund the Nonprofit's Renovations of Two Schools
By Cameron W. Barr
Washington Post Staff Writer 
Sunday, August 13, 2006

In 1999, Montgomery County leased a shuttered public school to the Yeshiva of Greater Washington, a deal both sides considered a bargain. The nonprofit group got a derelict building and 20 acres in Wheaton for $1.75 million, with the understanding that it pay the millions more needed to renovate it. The county unloaded a neighborhood eyesore.
Seven years later, the deal has turned out to be costly for taxpayers and a boon for Yeshiva.
The county school system took back the building to ease overcrowding, had to compensate Yeshiva for renovations it had made and spent $12.4 million on further improvements needed to reopen the facility as a public school. The county then leased a second former public school to Yeshiva, where it now operates a private girls academy.
Yeshiva's compensation was a $9.9 million construction contract with the school system that provided nearly enough public money to cover the cost of the organization's renovations at both schools, according to a Yeshiva financial document reviewed by The Washington Post.
A top aide to County Executive Douglas M. Duncan (D) was involved at every stage of the complex series of transactions. The aide, Jerry Pasternak, mixed policy and political roles, helping to negotiate the leases and the construction contract with Yeshiva, in addition to raising some of the $92,000 that Yeshiva supporters have contributed to Duncan's political account since 1998. Pasternak declined to be interviewed for this article.
Jeffrey Lee Cohen, president of Yeshiva's board of directors, said in written responses to questions that county schools Superintendent Jerry D. Weast initiated the move from the first school to the second, not Yeshiva. The construction contract "was executed and performed in good faith by both parties," Cohen said.
In interviews in late May this year, Cohen and fellow Yeshiva board member Dennis Berman said there was no connection between Duncan's support for the leases and campaign contributions to him from the organization's supporters. "It certainly never was a quid pro quo," Berman said.
Duncan spokesman David Weaver said that the county executive had addressed questions for this article in earlier interviews. Weaver noted that Duncan did not act alone; the school leases and the construction contract were approved or funded by the County Council.
"I've spent 25 years working hard to do things for people," Duncan said in an interview in June. "Do people give contributions? Yes. Is there a pay for play? No. Is any decision I make based on campaign contributions? No. I always put policy before politics."
After being elected county executive in 1994, Duncan implemented a policy of leasing or selling unused public schools as a way to return neighborhood eyesores to productive use, he added. "We had people living in [one former public school]. We had syringes in the courtyard, we had mattresses in the courtyard, we had condoms in the courtyard. That's not good for a neighborhood."
Duncan is completing his third term as county executive. On June 22, he abruptly halted his campaign for governor of Maryland, citing a diagnosis of clinical depression.
Montgomery school system officials said they entered into the construction contract so that Yeshiva would relinquish the first school, which Duncan had leased over school system objections. "We had to fulfill a lease which we did not write, which we were not a party to," school system spokesman Brian Edwards said. He said Weast was not available to discuss the issue.
The contract allowed Yeshiva to bill the full $9.9 million regardless of the renovation costs and to use the leftover taxpayer money as it wished. The school system awarded the contract without competitive bidding and waived rights to inspect the project.
"Our clear intent was to reimburse [Yeshiva] for what they had done" at the first school, said Richard Hawes, the school system's director of facilities management. "If they made money off of it, that's the American way," he said.
The financial records reviewed by The Post indicate that in 2004, Cohen wrote checks for $200,000 to two educational organizations in Israel from an account used for renovation work funded by the construction contract. The records also show that Cohen wrote a $220,000 check on the same account to Brit Limited Partnership, a firm he partially owns that has contributed $12,000 to Duncan.
Cohen declined to answer questions about these checks.
Two Deals for YeshivaIn the mid-1990s, Yeshiva was searching for a new home for its girls school. The organization had vacated a six-acre campus in the Four Corners area of Silver Spring and was temporarily housing the girls school at a synagogue.
On Oct. 29, 1998, Pasternak wrote to the County Council in support of a Duncan initiative to lease the former Col. Joseph A. Belt Junior High School in Wheaton to Yeshiva. The proposed deal gave Yeshiva the option to buy the 20-acre facility for the amount of the 17-year lease: $1.75 million. The terms were similar to a 1995 lease between the county and a nonprofit group that defaulted in July 1998.
In the letter, Pasternak said Yeshiva had funds available to renovate Belt; the Maryland-National Capital Park and Planning Commission had bought the organization's Four Corners property that year for $1.25 million...

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