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School Board sues ex-superintendent over condo loan [SJ Mercury News 12/12/12]
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San Jose Mercury News
Santa Clara County School Board sues ex-superintendent over condo loan
by Sharon Noguchi
December 12, 2012
Seeking to recoup almost $1 million in taxpayer funds, the Santa Clara County Board of Education has sued ex-Superintendent Charles Weis, who walked away from the luxury San Jose condo he bought with a loan from the board.
When Weis retired in June, he said the condo was worth less than the $890,000 he paid in 2008 when he was hired, and he sought to hand the title to the school board. Under the terms of a loan from the board, he wasn't required to make any payments until he left office or stopped using the downtown condo as his primary residence. But the seven-member board said no thanks and instead tried to negotiate with Weis.
"The board was not eager to file suit," preferring instead to settle, board President Joseph Di Salvo said. But because talks failed, he said, on Tuesday the board filed a "judicial foreclosure" suit in Santa Clara County Superior Court. The suit seeks to reclaim $952,409.69 that the county board alleges Weis owes as of Nov. 20, plus interest after that date of $34.11 daily. The board also alleges Weis failed to pay taxes, insurance and fees on the condo and that he removed light fixtures and ceiling fans when he moved out at the end of June.
According to the lawsuit, Weis has made only one interest payment of $15,562.50 on the loan to the Santa Clara County Office of Education.
Messages left for Weis, who has moved back to his beachfront home in Ventura County, were not returned.
But it's not clear that the suit will be successful.
It appears that under the terms of Weis's loan, he had no personal liability for the value of the property dropping. If so, "filing a judicial foreclosure is a waste of money and time," said real estate attorney Paul Hogan of Sunnyvale.
The lawsuit claims that Weis did not use the condo as his primary residence, which may affect the lawsuit's success. During his four-year tenure as superintendent of Santa Clara County schools, Weis maintained a home in Oxnard, where his wife, Patricia, reportedly stayed. Last year the couple also purchased a vacation home in Twain Harte, in the Gold Country, for $350,000.
The San Jose condominium, on the 18th floor of the Axis building, is a corner unit overlooking the Guadalupe River. Weis said he used some of his employer's loan to remodel the unit before moving in. While the county board has not had the unit appraised recently, during the summer it was estimated to be worth up to $745,000, Di Salvo said.
"It's hard to tell which party to this sordid affair abused the public trust worse," said Greg Coladonato, a board member of the Silicon Valley Taxpayers Association. He suggested the board not lend money and find more trustworthy superintendents. "If our children are to learn right from wrong, perhaps we can start with a superintendent that knows the difference."
The county school board extended similar favorable home-loan terms to Superintendent Xavier De La Torre, who was hired in the spring. To purchase his house in San Jose's Cambrian neighborhood in May, De La Torre borrowed $500,000 at 2 percent interest and $460,000 at 3 percent interest in public money. The board is trying to renegotiate the loan terms so he will make monthly payments, and it has extended a proposal. "The ball is in his court," Di Salvo said.
But De La Torre disputed that characterization. He said that, against the advice of his attorney and financial adviser, he met with Di Salvo to talk about his loan contract. De La Torre proposed reducing the loan's interest to zero, while paying $3,000 a month for four years toward the principal. That would generate $144,000 for the County Office of Education to safeguard against any depreciation in his home.
"I am just asking that me and my family be treated fairly," said De La Torre, who relocated from Texas. He said he believes the board should give him the same consideration it gave to Weis, and noted that other area superintendents receive favorable home loans as part of their employment.
Contact Sharon Noguchi at 408-271-3775. Follow her at Twitter.com/noguchionk12.
This article is also available at the Web site of San Jose Mercury News, here.