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Two members of the Davenport School Board, including the president, acknowledged having conflicts of interest in the sale of Lincoln School, but they both took part in negotiations anyway.

Board President Ralph Johanson repeatedly disclosed his personal interest in buying Lincoln over nine closed meetings discussing the property. Despite that, he continued to lead board discussions on the sale. Board Vice President Linda Hayes is employed by Third Missionary Baptist Church, which ultimately won the board’s approval in the sale.

The new revelations come after the Quad-City Times obtained taped closed-door discussions the school board had over the school. The board sold Lincoln for $30,000 to a non-profit group related to the church, even though the board received several offers for more than 20 times that amount. The decision to sell for such a low amount touched off a firestorm in the district, which has been forced to layoff 83 certified staff members and make $13 million in cuts over two years as it struggles with budget problems. 

The tapes show the board's discussions over the sale were contentious. Directors Bruce Potts and Julie DeSalvo voted against the sale, and the latter said it was “horrible for taxpayers.”

The district and the non-profit group, Together Making a Better Community, closed on the property last week, so the sale is final. Upon closing, the minutes and audio from nine closed meetings related to the sale were released to the Quad-City Times under Open Records requests.

“The records and audio files speak for themselves,” Superintendent Robert Kobylski said via text Saturday when asked for comment. He did not enter his role as superintendent until after the board approved the sale.

The conflicts

“I’m concerned about the conflict of interest, because I work at Third Baptist,” Hayes said in a March 12, 2018, closed meeting. “I do know what the finances at Third Baptist are, and if this were a goal, I know they’d make arrangements tomorrow, if it were that soon.”

She added she would prefer the board follow through on a developer’s $600,000 offer still on the table at the time.

At first, board president Johanson said Hayes “could even just recuse” herself, but then he mentioned his own conflict.

“I’ve looked at buying the building myself, and I’ve also felt a conflict of interest,” Johanson said. “And I have a real conflict, because now I know what people are bidding. I think the building and the whole facility has a lot of promise.

“I don’t know that I could possibly do that — if I came in at $60,000 or $70,000 — just to beat someone else out. I think that’d probably be inappropriate.”

No one else at the meeting expressed concerns, and neither Hayes nor Johanson recused themselves from any discussion about the property.

“There was never a negotiation, never an offer (from Johanson),” Director of Operations Mike Maloney said Monday, adding he thought the comments were made “out of frustration.” However, Johanson reiterated his interest in the property in several meetings over more than a year.

Johanson said Monday he looked at the building, but did not make an offer.

According to the audio, Hayes’ employment was also noted as a potential problem at the last meeting before the district approved the offer from her employer.

On June 3 — more than a year after Hayes she first mentioned the conflict — TJ Schneckloth, then–interim superintendent, told Johanson he should “probably ask about Linda” when he talked to the district’s legal counsel.

“I think it’s an issue of not voting,” Johanson said, without mentioning Hayes’ participation in each of the six closed meetings where her employer was discussed.

Hayes indicated she would not vote, and she didn’t. But her input was used to help build the board’s consensus; she questioned Maloney as to why Third Baptist's informal offer hadn't been brought to the board; she participated in a discussion of the church's financial wherewithal to take on the project; she publicly endorsed Together’s plan for the property before the vote; and she made the motion to proceed with the vote on the sale.

Dan Dolan’s offers

Local developer Dan Dolan also wanted to purchase the school. His first offer in July 2018 was for $450,000, with six months of due diligence. He later made an offer of $290,000 with a shorter time frame to close. In each of the seven meetings in which one of his offers was discussed, Johanson and Director Dan Gosa expressed suspicion of Dolan and his motives.

“$450,000 is like pocket money to that dude,” Gosa said in July. “Seriously.”

In three meetings, Johanson joked Dolan could put in a brothel or “strip joint,” instead of veterans housing, as was proposed.

Dolan said Monday he was mystified by the personal criticism leveled against him by Johanson and Gosa.

“For Gosa to say he doesn’t trust me — I don’t know the guy from a hole in the wall.”

Early on, the board didn’t know what Dolan’s plan for the property was. But the district’s real estate agent Joe Wonio did, because he was a dual agent, which he told the board.

“I think it’d be a use that you guys would like,” he said of Dolan’s plan. “He’s not looking to make money off of it.”

Dolan presented to the board Aug. 6, 2018, with Lola VanDeWalle, founder of the Quad-Cities Veterans Outreach Center. He said he wanted to rehouse her group on the first floor, with expanded space for programming, and convert the second floor into apartments for veterans.

“It’s, I think, a very doable project, because Lola is already doing most of the work,” Dolan said. “It’s a natural progression.”

Johanson didn’t ask Third Missionary what sort of staff they would employ during their presentation, but he asked VanDeWalle if a volunteer staff was sufficient for Dolan’s plan. She said her group has a huge volunteer base.

After Dolan and VanDeWalle left the meeting, Johanson again mentioned he had considered buying the property himself.

Several board members noted over the nine meetings that if the money went into the general fund, there would be no question about getting as much for the property as they could. The district was ordered by the state to cut more than $13 million from the general fund budget after years of overspending. But instead, the profits would go to a fund used exclusively for buildings, maintenance and equipment, not staffing.

Johanson remained skeptical of Dolan’s presentation, saying the offer seemed “wish-washy,” and suggesting that Dolan was using VanDeWalle to win over the board.

“If I make it into a brothel, then that’s what it’s going to be,” the board president said. “We aren’t going to put any contingencies on it. He’s just saying, here’s somebody nice, maybe you’ll work with her. It didn’t seem like a sincere offer.”

Regarding Johanson’s comments about the brothel, Dolan said this week, “That’s one of the most insulting things I’ve ever heard.”

VanDeWalle was similarly outraged.

“We worked on this for a year, and Dan has worked with us and supported us for more than 20 years,” she said Monday. “For them to suggest I was a front for Dolan to do something else — it’s a slap in the face to our veterans.

“The school board members should be ashamed of themselves," she said.

By April 22, another offer from Dolan was presented: $290,000 with $10,000 earnest money and a 60-day due-diligence period. The proposal’s closing date was Aug. 30.

VanDeWalle presented to the board at this meeting, this time without Dolan. She said his job was to get it all laid out, and hers was to make sure the building was full.

“It’s not just everybody who’s down and homeless,” she said. “It’s grandparents raising their grandkids. It’s people who are really sick.”

While noting that he found VanDeWalle “very impressive,” Johanson could not shake his suspicions of Dolan.

“There’s some things about Mr. Dolan that I just don’t care for,” Johanson said March 25. “I think it’s because of other deals he has had in the area. I’ve been — I’m trying to think of the right word. The thing I’ll say is I just don’t trust him. I’m trying to do the right thing for the district, but also the right thing for the community.”

In various meetings, DeSalvo and Director Allison Beck pressed for a specific example of the dealings either had with Dolan, but neither Johanson or Gosa gave specifics.

“I’ve dealt him with as being one of the builders on houses. It’s just never been a good process. I don’t want to get into too many details,” Gosa said May 29. “… I’ll just keep that stuff to myself. That’s my personal opinion.”

The administration told the board when there were concerns about another developer, Dubin Consulting out of Chicago. They said they found no such concerns with Dolan.

“That’s something you’ve actually looked at?” Johanson asked.

At the Nov. 26 meeting, the real estate agent, Wonio, told the board he had liked Dolan in the business relationship they had.

“I think he fully intends to put (VanDeWalle) in here at a free rate, and I think that’s a good service,” he said. “I don’t think it’s even an option for him to not do it. It’s going to be with her — I don’t think he was just using her as a good face to do something else with it.”

Potts challenged Johanson about his opinion of Dolan on March 25.

“We’ve been over this so many times. You don’t like Dolan,” he said. “I think that is coloring some of your attitude here, I really do. And that’s fine, but we’ve been trying to sell the place since it closed in 2012. We can’t make anybody — anybody — guarantee what they’re going to do with it once they sell it.”

The board’s decision

All seven current board members were present for a closed meeting June 3, which wasn’t true of any of the other nine meetings. By then, the lines were drawn. Potts and DeSalvo stressed fiduciary responsibility and favored Dolan. The remainder preferred Third Missionary’s plan, with or without some sort of arrangement with Lives of Legacy, another nonprofit Christian group.

“I think their intentions are great, but I don’t think we heard they have the financial backing for what they’re talking about doing,” DeSalvo said.

While Hayes said she respected Potts’ and DeSalvo’s opinion, “money cannot buy everything,” a sentiment echoed by the other board members who were vying for Third Missionary.

“My heart really says the two lower offers,” Beck said. “The logic part says goes with the Dan Dolan offer.”

One last time, Johanson mentioned he had thought about buying Lincoln, but that he’d be doing it for money. “I wouldn’t be doing it for these altruistic motives,” he said.

“I’ll buy it for $31,000,” DeSalvo said, with a laugh. “I’ll buy it for $31,000 and a buck.”

Schneckloth asked if there was any opportunity of Dolan's final $290,000 offer being made public.

“Probably. I anticipate that it will,” Johanson said. “The board of education might say something.”

In addition to the offers from Dolan and Third Missionary, the board entertained at least five offers for more than $700,000.

“Selling it, I don’t think that’s the issue,” Johanson said of the property they had been reviewing offers for since 2017. “It’s doing the right thing.”

Barb Ickes of the Times contributed to this story.

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