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Conflicting the Board

Published: Friday, July 18, 2008 7:18 AM PDT



What's going on here? It's simple, really. The city attorney is opining that because the chairman of the Southeastern Economic Development Corp. has a financial interest in a development firm, not only is he prohibited from participating in any contracts the SEDC might approve for the company, but so is the entire board.

He has to either lose the conflict or the board has to lose him in order to do business with his partners. And they've tried to do a lot of business with them. The controversial Valencia Business Park development, for example, was sold to the chairman's partners, who then dramatically changed the vision for it -- most importantly from an industrial park to a commercial area. This may or may not have been a good move, but by doing it, they made the land far more valuable. Yet the chairman's partners were never asked to put any more money into it.

When all this was brought up, SEDC pulled back on the deal -- only to quietly re-award it to the same team for substantially less than before. Yes, they tried to give them an even better deal.

What the city attorney is saying now is that none of those deals is valid.

Why?

You might remember several weeks ago a similar issue came up with regard to Councilwoman Toni Atkins. Eager to plan her post-politician life set to begin in December, Atkins applied for the highly coveted job of CEO of the city's Housing Commission. But who gets to decide who gets that job? The City Council, of course. Atkins thought that she could just recuse herself from the process. At first she just didn't show up to meetings where the council convened as the housing authority.

Later she withdrew her application after the city attorney and Ethics Commission made it clear: She had a direct financial interest in the contract the City Council was going to build for the new head of the Housing Commission. Even if she recused herself, her conflict meant the entire council was conflicted.

Why couldn't the board you are on simply work out a deal with a company or partner of yours as long as you stayed out of it? I think the answer is that your influence on a board is more powerful than just the official acts you may take or the on-the-record statements you may make. If your colleagues know of your interest in a deal, they may be tempted to help you for many reasons.

Perhaps you lawyers out there can provide perspective on this.

-- SCOTT LEWIS




15 Comments so far on this story...

The nature of boards, for better and worse, is that they are like extended families, with the 'grandma/pa' as chair, vice chair, the ma and pa as secretary and treasurer, and all the uncles, cousins and kids as members. // An ideal board has members who are unrelated to each other in life and in business, who think independently, but as a whole work together as a group for the benefit of the organization and ultimately for the public good. // In reality, though, boards are built on a who you know basis, and worse, appointments to boards are also based on political decisions. // It is without question that ALWAYS an entire board is compromised if one member is compromised, as the board family dynamics are incapable of being unwound without a complete dissolution. With big boards of a few dozen members, it just gets more complex.

Posted by Christopher Hall | reply to this comment
July 18, 2008 6:27 am

OK, I'll go ahead and say what everybody else in the room is thinking: Nancy Graham

Posted by Mike P | reply to this comment
July 18, 2008 6:39 am

Someone please explain to me why the activity discussed in this post -- and uncovered in a much earlier Voice story -- did not spark outrage, but suddenly bonus pay has? Makes no sense. Nice of Aguirre to FINALLY jump in, two years after shady deals were uncovered, now that the public has decided to pay attention.

Posted by Someone explain! | reply to this comment
July 18, 2008 12:59 pm

“Nice of Aguirre to FINALLY jump in” sure it is easy to write today, but what support did Aguirre have, in any camp, that would support his 'jumping-in' against the power of city owned redevelopment agencies in San Diego? I believe I remember him being attacked from just about every side for lawsuits and questioning conduct..., and dealings of employees. Perhaps, Aguirre was just waiting until one of our elected public representatives was ready to represent and protect the public. I do not remember any of the three presently demanding a ‘resignation’ - supporting Aguirre anytime before this incident, but I could be wrong. Personally, I believe the whole of our city’s and county’s governmental structure (every department) should be examined for ‘conflict of interest’ and ‘potential for personal profit.’ What could it hurt? When was the last time our city looked at its conflict of interest politics?

Posted by Public 'Interest' | reply to this comment
July 18, 2008 4:22 pm

More closed-door meetings in which the statements, conducts, and behaviors are keep from public viewing/hearing. When I was a child I asked my father about secretive organizations and groups; my father told me “Son, no good works need be hidden from the light of day.” Was I the only one - who had a father like this?

Posted by Gregory | reply to this comment
July 18, 2008 5:00 pm

I bet if Aguirre jumped on this months ago, Someone explain, would be whining why Aquirre has to get involved in everything. With the Voice, he is damned if he does and damned if doesn't. The real question, should be directed to the mayor. Why didn't Sanders know about this long ago??? You know, the strong mayor who is running the show with Sainz. Sanders not only has to fire Smith but he has to fire Chip Owen, So I say to someone explain, nice of Sanders to FINALLY jump in!

Posted by Norman | reply to this comment
July 18, 2008 5:48 pm

Thank you MIke P. - Nancy Graham should have been the first and hopefully will be the next to face the music. Not only Nancy Graham, but the board that hired her - did no one vet her employment history? Her shameed exit from Florida...her interest in Related? Really, shameful!!!

Posted by T. Tanaka | reply to this comment
July 18, 2008 7:05 pm

:This is a copy of the email I sent to Mike Auire in Noember 2007 In a message dated 11/13/2007 10:24:02 AM Pacific Standard Time, sdwatch@cox.net writes: assume you read the Voice story on SEDC. How about a 1090 investigation of Chip Owen

Posted by Mel Shapiro | reply to this comment
July 19, 2008 7:13 am

The major story here is the conflict of interest. The incestuous business dealings are far more newsworthy and important than the hush money paid out in salaries.

Posted by Tony G. | reply to this comment
July 19, 2008 8:10 am

It seems incestuous business dealings are the lifeblood of SD politics. The Mayor is the Executive Director of the redevelopment agency [the City Council is like the Board of Directors of the RA.] SEDC [and CCDC] contract with the RA to manage certain redevelopment areas. It is the MAYOR's responsiblity to MONITOR the contracts with these 'nonprofits'that Pete Wilson created [to hand out power to the then cronies of the day.] It's not "where has Aguirre been", but where has the Mayor been! We've had 20 plus years with these tax diversion boondoggles. Lots of money's been lost to the City by not keeping RA work in house.

Posted by historian | reply to this comment
July 20, 2008 6:02 pm

I got hooked on the competition between VOSD and the UT in digging up more facts on SEDC scandal and my OCD kicked in; I started checking facts too. I wondered where all the financial auditing info was; Macias & Gini are listed as SEDC's auditor consultants for 2007 on their website. That seemed like a familiar name... UT archives revealed that the City of San Diego's outside auditors for the pension mess were those same guys. As part of his 15 point recovery plan, in August 2005, CA Mike Aguirre suggests retaining Macias & Gini to complete fy 2003, 2004 and 2005 audits during the pension debacle. Now Mike says Chip Owen is conflicted out and the SEDC contracts are null and void for all board actions he was part of...so we continue to get GREAT LEGAL and AUDIT advice.

Posted by Linda Tegarden | reply to this comment
July 22, 2008 12:03 am

I remember asking a SEDC representative/emplo about 'Owens' during a meeting some time ago. We got three different answers – ranging from ‘we do not know who he is’ to ‘he is a member of the board’ in less than a three minute time span. By the end of that meeting - I believe we got a total of five different statements about ‘Owens’ and how he is/is not associated with SEDC and/or PDP. I complained, but perhaps because I have little political representation and no cultural capital in this city council district… nothing. So, exactly when does wrong information or misinformation - become something more when presented to the public by city employees?

Posted by Gregory | reply to this comment
July 22, 2008 7:53 am

Congratulations Gregory. You have just identified one of the most useful tools that the folk at SEDC have employed--the language of Abba Dabba. That's when you are able to recognize single words as ordinary English, but when they are strung together as sentences in response to questions, have no real meaning. SEDC is masterful in misdirection and dissembling. In fairness though, I have to say that lots of times, lower paygrade types (well I guess they weren't so lowgrade after all)just did not know, were not privy to the correct answers. We could say they were well paid to remain ignorant.

Posted by Linda Tegarden | reply to this comment
July 22, 2008 8:31 am

Here is a question Linda. Exactly why do you suppose it is - even thought some 63% of the people living in SEDC’s ‘Sphere of Influence’ are Latino (so we have heard,) we did not see one of that group represented at ‘speaking-up in support of’ the boss - at tonight’s SEDC board meeting (as shown on KUSI - TV)?

Posted by Gregory | reply to this comment
July 23, 2008 9:27 pm

What about the clinic at St. Rita's? Seemed like all aspects and groups of that community supported the clinic – a real rainbow coalition. Yet only one narrow aspect (a part of a single group) of that community stood against it. I remember being told that the council member in that area supported that clinic – then a flip-flop. Were we hearing things? Why? Moreover, what about using taxpayer money to bus people down town and feeding them lunch – did that really happen? Exactly what are the real demographics of the Districts SEDC operated in? Moreover, are the investment rates, economics, and political representation reflective of those numbers? Perhaps this is a very good time to talk openly about race and representation in San Diego. We all should be thankful to the good people at SEDC (and supporters) for bringing the topic 'up to the front of the bus'

Posted by Gregory | reply to this comment
July 25, 2008 8:25 am


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The Scott Lewis on Politics blog, abbreviated cleverly as SLOP, is a collection of observations, insights and the occasional scoop on public affairs in San Diego. Please feel free to e-mail Scott at scott.lewis@voiceofsandiego.org.


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