Business News

With Friends Like This ...

by Leslie Turk

UL President Ray Authement thought his land-swap deal involved longtime friends of the university, but those friends may have created yet another headache for him.

There was no smoking gun in Louisiana Inspector General Sharon Robinson's audit of the failed UL Lafayette horse farm land exchange. While her office found no evidence of wrongdoing in the report it issued last week, it concluded that the deal between the university and BRE-ARD LLC likely would have violated the state's Constitution. "The process of carving out a portion of the universities [sic] horse farm property that would be of equal value to the Davidson property would likely prove to be problematic," she said in a summary of the report.

What Robinson did uncover, however, is the motive behind BRE-ARD's Oct. 20, 2006, filing of the exchange agreement with the Lafayette Parish Clerk of Court.

"BRE-ARD LLC representatives said they filed these documents to cloud title on the properties," Robinson wrote. BRE-ARD, comprised of the late Jerry Brents, at the time a member emeritus of the UL Foundation's board of trustees, and Scott businessman Dan Menard, wanted to buy attorney Jimmy Davidson's residential land, which was initially valued at $3.25 million, and exchange it for 36 acres of the residentially-zoned horse farm. BRE-ARD was then going to donate six acres back to the university. Subsequent appraisals of the two properties revealed the university would be squandering about $4 million if the original deal had come to fruition.

At the time of the Oct. 20 mystery filing, BRE-ARD's attorney, Joe Bouligny Jr., would only say it was entered into the public record to protect his clients' interests. Both the UL System, whose board approved the dubious exchange in August 2005, and the university said they were blindsided by BRE-ARD's action ("Unsolved Mystery," Nov. 8, 2006).

More intriguing about this issue in the IG's report, however, was the UL System staff's contention that Authement signed the agreement prematurely, before the staff had granted final approval. Robinson also uncovered a Dec. 23, 2005, letter to Authement from BRE-ARD, in which the partnership offered to waive the agreement's requirement for rezoning the horse farm land to commercial. This previously undisclosed fact isn't surprising, because the $3.21 million BRE-ARD agreed to pay was based on the horse farm's residential classification. The rezoning request was rejected by the Zoning Commission in late 2005, and when Authement realized he did not have enough council votes for approval, he withdrew the request in February 2006. Robinson's investigation did not address the burning question of why the university was incurring the costs associated with rezoning the property when it had agreed to sell it at its less valuable residential classification. Though UL was asked by The Independent Weekly to provide copies of all correspondence related to the horse farm land exchange in conjunction with the paper's public records lawsuit, the university did not turn over that specific letter from BRE-ARD. The Independent's request was sent July 6, 2006. It was re-sent to the university last week.

For now, the title issue may buy time for the community group Save the Horse Farm's efforts to raise money in hopes of securing the 100-acre Johnston Street tract for a public park. In her report, the inspector general urged the university to do whatever is necessary to clear the title, but it's unknown what steps Authement will take to address the problem, or whether Authement can even tear down the barn without BRE-ARD's approval. The filing includes "all buildings" on the 36 acres. By press time, the university had not responded to The Independent's public records request for any correspondence related to its efforts to clear the title, and the UL System office says at this time it is not assisting the university in this matter.

"Clearly, this is a cloud on the title," says local attorney Tom Brumbaugh, who has more than three decades of real estate title work experience. He says what BRE-ARD filed with the local clerk's office was "an agreement to agree," based on a number of conditions, among which was the successful rezoning of the horse farm. "Agreements to agree can be dangerous to the extent they can foment litigation," Brumbaugh says, noting that it's difficult to ascertain whether BRE-ARD will attempt to uphold the contract. "Absent something further being done, some sort of document canceling this, the horse farm is not merchantable," he maintains.

This latest conundrum will likely add to the state's mounting financial costs of the horse farm debacle: $18,000 in professional appraisal, engineering and environmental services; $21,000 in reimbursement of legal fees to The Independent Weekly; and the university's own legal costs in fighting the public records lawsuit. The university's legal counsel, Oats & Hudson, has yet to bill for its services.

In responding to the audit, Authement again took the opportunity to reference the failed deal's supposed "gain factor" for the university: the improvements BRE-ARD would have made in developing the property for commercial use and the donation Davidson was planning to make to the nonprofit UL Foundation, where he serves as a board member. Though he insisted these were not factors in determining the exchange, Authement said UL would have benefitted from BRE-ARD's construction of a concrete bridge and 40-foot-wide paved roadway across the bridge to the back of UL's property. But what Authement didn't allude to was the tax benefits both BRE-ARD and Davidson may have realized from the deal. BRE-ARD was buying the land at residential value and then donating 6 acres back to the university. It's unknown whether Brents and Menard would have been able to donate the land back at its more valuable commercial classification had the rezoning been approved, resulting in a significantly higher tax deduction. Davidson's incentive would have kicked in after his $150,000 donation to the UL Foundation.

In response to Robinson's finding that she could not find evidence of any illegal activity, Authement responded in a March 5 letter: "You helped make a distasteful situation more tolerable," he wrote. "Rumors of 'pay offs' were circulated around the City. I was certain that no illegal activities had occurred."