District Accuses Porter Ranch Developer of Conflict : As a state watchdog Nathan Shapell urged the school board to sell its excess land. He bought 37 acres of it.

Beginning in the mid-1970s, businessman Nathan Shapell--in his role as chairman of a state watchdog commission--sharply criticized Los Angeles school officials for refusing to sell unused school sites.

Shapell, a prominent developer, later benefited from his own advice when the Los Angeles Unified School District began disposing of surplus school sites. In 1978, as Shapell began assembling parcels for his proposed $2-billion Porter Ranch development, he purchased 37 acres of nearby school district land that had been planned for a high school.

Today, with the Porter Ranch project nearing final consideration by the Los Angeles City Council, school officials are searching for a school site for the hundreds of children expected from the 3,000-home development in the hills north of the Simi Valley Freeway in Chatsworth. And some school board members say they are angry they must ask for land from the same man who told them to sell property while serving as chairman of the state’s 13-member Little Hoover Commission.

“I think it was a conflict of interest,” board member Julie Korenstein said Thursday. “He wanted schools closed, and the district to sell land that was not being used, and then he buys it up. I think that is wrong.” Korenstein represents the West San Fernando Valley and has been a vocal critic of the Porter Ranch development.

“The Little Hoover Commission was directly responsible for the fact that school district property was sold,” said Roberta Weintraub, school board president. “It was a terrible mistake.”

Weintraub said she did not know Shapell had purchased the site near Tampa Avenue and Sesnon Boulevard in Northridge about a mile from the Porter Ranch project. “I think that would be a conflict of interest,” she said.

Paul Clarke, a spokesman for Shapell, disagreed. Shapell was only one of 13 commissioners, he said, and did not force the board to sell any property.

“It was the board’s decision,” Clarke said. “They put the property up for sale, they asked for bids and they approved the sale. They’re all big boys and girls here . . . nobody was holding a gun to anybody’s head.”

It made sense for Shapell to buy the property because he was buying much of the adjacent land, Clarke said. “If you had a piece of your back yard that you did not own, and the owner put it up for sale, wouldn’t you buy it?” Shapell could not be reached for comment Thursday.

Clarke said Porter Ranch Development Co. is obligated to pay for schools with an estimated $15 million in developer fees on the project, which also includes 6 million square feet of commercial space. He said the company has agreed to sell the district five acres for an elementary school.

But Korenstein said the district needs at least 10 acres for an elementary school and possibly a junior high school. District officials have said they fear the $15 million in developer fees will not be enough to pay for land and school construction when the Porter Ranch project is completed over the next 20 to 30 years.

The Little Hoover Commission, known officially as the Commission on California State Government Organization and Economy, issued reports in 1973 and 1978 that called for districts statewide, including Los Angeles, to raise revenues by selling or leasing unused properties.

School district records show Shapell’s development company was interested in buying the Northridge site as early as 1976.

The commission continued its pressure in the 1980s, when the Los Angeles district was the subject of commission hearings and reports. The commission in 1980 criticized the Los Angeles district for failing to heed its earlier recommendations and in 1981 again urged the district to “lease or sell schools and properties at market value.”

In its 1981 report, the commission charged that the district had not sold any unused sites since the issue was first raised in 1972. In fact, Shapell’s company had purchased the Northridge site in 1978.

Although the commission’s reports were advisory only, Weintraub, who was first elected to the board in 1979, said Shapell and the commission pressured the seven-member board to sell school properties that the district now wishes it had to house the city’s growing school-age population.

Board member Jackie Goldberg said that clearly Shapell, who still sits on the Little Hoover Commission, had a private interest in the sale of school district property.

“I think that it is unfortunate that he bought land after he advised us to sell it,” said Goldberg, who was elected to the board in 1983. “The advice may be perfectly legitimate but that is not the issue. The issue is public perception, and the perception still stinks.”

Former board member Tom Bartman, who was elected in 1980, said he does not recall that the commission pressured the board into selling any of its unused properties. “The board was acting independent of the commission,” he said.

Korenstein, who has been on the board since 1987, said the district should not have sold the school site. Shapell paid $1.5 million for the land in 1978. As of last October, the company had built and sold 124 homes there.

To replace that land now, as well as the eight other surplus school site parcels sold since 1978, would cost 10 times what the district earned from the sales, Weintraub said. The Los Angeles district has received about $17.8 million from the sale of 13 properties, which included an administrative office site and property in Northern California, district records show.

The district by 1983 had sold most of its undeveloped properties, said Robert J. Niccum, the district’s chief realty agent.

“I think that in the long run, time will show that we would have been better off holding on to the property,” Niccum said. “But it’s easy to second-guess; at the time we had some very significant needs, and the money went to relieve overcrowded schools in other parts of the district.”

Though Korenstein said the district would need another school site because of the Porter Ranch development, Clarke said that question is still unresolved.

Clarke said that Shapell could not have predicted in 1978 that West Valley schools, which were at less than capacity enrollments, would see dramatic growth in the next decade.

Shapell, of Beverly Hills, contributes heavily to state and local political campaigns and charitable causes. Last year, Shapell Industries had about $400 million in sales of commercial and residential development.