Housing Search Is Expensive for Getty

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Housing Search Is Expensive for Getty

A $3.5-million home the trust bought for use of an official had mold

that left it uninhabitable.

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By Ralph Frammolino and Felch, Times Staff Writers

February 15, 2006

ktla 5 - Los Angeles,CA

Already under investigation for questionable executive spending, the

J. Getty Trust recently purchased a $3.5-million official

residence for its new museum director's use only to find that the

house was contaminated with mold and uninhabitable.

Getty officials bought the house in Beverly Glen near UCLA in

October after Director Brand decided not to live in a home

the trust already owned next to the Getty Villa near Malibu.

But shortly before he and his family were to move into the Beverly

Glen residence, inspectors opened the walls and found so much mold

that the house was considered unsafe to live in.

The Getty then made an offer on a $5.5-million house near Santa

. Spokesman Ron Hartwig said the trust pulled out of the deal

Tuesday after inspectors found structural problems with the roof.

Meanwhile, the Getty is paying $15,000 a month to rent Brand a

Holmby Hills home with five bathrooms and a swimming pool on a two-

acre lot.

Nothing prohibits the Getty from buying an official residence for

its museum director to use. In fact, many leading museums do so.

But under the tax code, nonprofit organizations must use their

resources for the public good and provide " reasonable " compensation

for employees. In Brand's case, the use of the house would be

considered additional compensation beyond his annual base salary of

more than $480,000.

The state attorney general is investigating spending by former Getty

Chief Executive Barry Munitz — and at least one land transaction he

was involved with — to determine whether any of it jeopardizes the

trust's nonprofit status. Munitz resigned last week under pressure

from the board.

At least one authority on nonprofit governance, U.S. Sen.

Grassley (R-Iowa), chairman of the Senate Finance Committee, said

Monday that the Getty's spending on a home for its museum director

seemed excessive.

" Apparently Getty officials didn't get the word that 'Lifestyles of

the Rich and Famous' went off the air in 1995, " said Grassley, whose

committee oversees the IRS, which regulates tax-exempt

organizations.

" Champagne wishes and caviar dreams still seem to rule the day

there, " he said. " It's hard to see how a nonprofit museum can

justify spending millions of dollars for its director's house. "

While acknowledging that they face a " short-term " loss over the mold-

contaminated house, Getty officials say they are determined to get a

refund and have consulted attorneys about a possible lawsuit.

" We're desperately trying to get our money back, " said Getty board

Chairman Biggs. " That house is not going to work out, and I

think we're going to essentially come out even. "

Getty officials said they didn't order a mold report before closing

escrow on the house, relying instead on a 2004 report that the

previous owner supplied showing there was no fungus in the walls.

The former owner's real estate agent, who spoke on condition that he

not be identified, said that along with the report, his client

provided a standard written notice urging the Getty to conduct its

own mold investigation.

Los Angeles attorney B. Castro, who has represented wealthy

home-buyers as well as won multimillion-dollar court awards over

construction defects, said the Getty has only itself to blame.

" If someone had come to me and said, 'Gee, Mr. Castro, we had a mold

inspection a year and a half ago,' my answer would have been: Are

you out of your mind? Do you know how fast mold grows? " he said.

The costly saga over finding a museum director's residence started

with the talks to lure Brand from the Virginia Museum of Fine Arts.

With the blessings of the Getty board, Munitz offered to buy a home

for the 47-year-old administrator's use.

Hartwig said the board set a spending limit of $5 million to $6

million but asked Getty staff to try to keep the purchase to $4

million. He said the intent was to buy a Westside home close to the

Brentwood museum and big enough to host community meetings,

fundraising events and other museum functions.

Providing such homes is not unusual for major museums. Until last

year, the Metropolitan Museum of Art provided a Manhattan residence

for Director Philippe de Montebello. The Los Angeles County Museum

of Art's new director, Govan, will live in a home owned by a

museum-related foundation.

In Virginia, Brand, his wife and their two children lived in a two-

story house owned by a foundation associated with the museum he led.

The director said that after accepting the Getty job in August, he

took a house-hunting trip during which he looked at 30 homes, with

specific requirements in mind.

" This is not a house being bought for me, " he said in an interview

last week. " This is a house being bought for the museum. "

Among the properties he toured was one the Getty already owned: a

two-story, four-bedroom stucco home on Surfview Drive, next to the

Getty Villa, with a swimming pool and a view of the Pacific.

Records show that the trust bought the house five years ago for $2.6

million to settle a neighbor's lawsuit over the Villa renovation.

The purchase price was about $1.1 million more than what comparable

nearby homes sold for in 2001, records show.

Brand said he decided not to live in that home because it was

isolated and didn't have the floor plan or backyard space needed for

entertaining. Getty officials said that they realized the home was

too small to host museum-related functions and that they did not

consider it an ideal fit for their new director.

With the $4-million limit in mind, officials eventually made an

offer on the 70-year-old, 4,900-square-foot Spanish-style home at

711 S. Beverly Glen Drive. It was owned by a trust on behalf of an

unnamed female celebrity.

A source close to the transaction said the Getty jumped at the four-

bedroom house with open-beam ceilings and custom stained-glass

windows after the seller dropped the price from $4.4 million to $3.5

million in September.

During the routine inspections, nothing indicated a problem with

mold, Getty spokesman Hartwig said.

He added that the trust would have looked closer if there had been

indications of mold.

" The people responsible for getting the house ready were very

comfortable using the year-old report, since there was no indication

of mold in the general inspection, " Hartwig said.

Several Westside real estate agents and mold experts said it was a

mistake for the Getty to rely on the report, especially after last

year's record rains.

With enough space and nutrients, mold can spread throughout a house

in three to six months, a prospect that motivates many high-end home

buyers and agents to routinely lay out the $300 to $500 for a basic

mold inspection.

Their hope: to avoid the kind of nightmare that befell Ed McMahon,

the former ny Carson sidekick who won a $7.2-million insurance

settlement after claiming that mold in his Beverly Hills house

killed his dog Muffin and sickened him and his wife.

The 90210 ZIP Code " has been a hotbed for mold issues, primarily

because the people who can afford " mold testing have it done, said

Dennis Butcher, vice president and general manager of Environmental

Management Solutions, a mold remediation company in Chino.

That the Getty didn't do its own mold test " makes no sense to me, "

said Fitzgerald, a leading Coldwell Banker agent in Beverly

Hills who added that she would have one done even if the owner

didn't " just for peace of mind. "

" We do a mold inspection with every single sale we do, " said

Fitzgerald, who called such precautions " de rigueur … even in condos

built in 2001. "

Hartwig said the Getty discovered its mold problem around Christmas

during renovation to ready the house for the Brands. While preparing

the living room for painting, crews found moisture on a wall. An

expert was called in, the wall was opened and mold was discovered.

That's when the Getty ordered air testing, which revealed mold

spores throughout the house. " Destructive " tests, which punched

holes throughout the walls, showed that fungus was " rampant, "

Hartwig said.

The smell was so bad that one Getty employee who walked through the

house after the testing felt sick, went home and woke up the next

morning with her eyes sealed shut because of irritation.

" The people we relied on believe that mold as extensive as [was]

ultimately found in the house would not have grown in a year's

time, " Hartwig said. " We're at a loss to explain how that could be

the case if mold was not present and not made known to us. "

He said that even if the Getty doesn't get a refund, it considers

the Beverly Glen property a " liquid asset " on which a new home can

be built and sold for a profit.

After the trust determined that the house was unsuitable, it

scrambled to find a rental for Brand and started looking for a

replacement home.

Hartwig said the Getty made its offer on the $5.5-million house near

Santa on Feb. 1 and last week opened escrow, only to find the

defects that led to the trust's decision Tuesday to withdraw its

offer.

Frances Hill, a professor at the University of Miami School of Law,

said the IRS' standard in determining the appropriateness of homes

provided for nonprofit executives is " reasonableness. "

" Shock and awe is the right response, even in Los Angeles, " she said

when told the Getty was considering the purchase of a $5.5-million

home for Brand. But she acknowledged that real estate is expensive

in Southern California and added: " There is no number that someone

says, 'That's too much.' "