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Tolerable No More

By Robert E. Lee, Normal Heights



Thursday, Aug. 14, 2008 | Until now, I, as a concerned citizen and taxpayer, have practiced restraint as I have followed the reporting on the abuse of tax dollars at Southeastern Economic Development Corporation (SEDC). In Voice of San Diego and elsewhere, we have read reporting on: gross padding of base salaries by SEDC president Carolyn Smith, finance director Dante Dayacap, and others on staff, using taxpayer dollars; extravagant meals and other pricey perks that most working people do not enjoy or reasonably expect from their jobs, using taxpayer dollars; and a six-figure severance package for Carolyn Smith, allowing her to take up to 90 days to depart the job from which she was fired, using taxpayer dollars.

We have also learned of an ineffectual board of directors at SEDC, which I contend did not perform the oversight and fiduciary duties expected of them in their role as stewards of taxpayer dollars. Oh, by the way, all of the board seats are long expired, yet these board members are still there at SEDC. Only in government and the public sector can these board members not only remain in their expired positions, but they vote to provide legal immunity to Carolyn Smith in the event she is sued (and should be) for her malfeasance and disregard for the value of taxpayer dollars.

Now, we hear that, last night, the same SEDC board cannot even bring itself to remove Artie "Chip" Owen as the board chairman. The same Owen who, in the view of many, has a glaring conflict of interest in his role at SEDC, given the business that he has personally, financially benefited from in his time as chairman, to the tune of over $1 million.

Like a lot of taxpayers in San Diego, I have waited hopefully for the fraud and abuse at SEDC to sort itself out in a way that reassures citizens that governmental misconduct is eventually cleaned up, reforms are enacted, and a mess like this does not repeat itself. So far, this hoped-for outcome has not happened. In fact, we were told that the reason for the establishment of quasi-independent agencies like SEDC and Center City Development Corporation was to allow such entities to operate in a non-political environment, free from meddling by politicians at City Hall. Well, I think we can fairly conclude that the "quasi-independent corporation" experiment has been an abysmal failure.

So, given the pattern of unlawful behavior of SEDC officials, and the failure of the board there to vote in ways that protect the sanctity of taxpayer dollars, I now call for Mayor Sanders and the City Council to abolish SEDC. I also call on the offices of the District Attorney, the U.S. Attorney and the Internal Revenue Service to finally step up to the plate and prosecute and punish the long history of obvious wrongdoing at SEDC. Until these actions and investigations are undertaken, the citizens and taxpayers of San Diego will just grow more and more cynical about their city government, and will keep losing faith that things will ever get better there.




22 Comments so far on this story...

The City Council is responsible for oversight, they let these groups get out of control. The entire board should be fired at SEDC. The City Council should disband this agency. If it is truly needed then replacements should be appointed. The Council must assume ownership of these groups.

Posted by Lee | reply to this comment
August 14, 2008 11:27 am

Finally me and Robert E Lee are in full agreement on something. I would like to point out that Lee's critisism of the board for not providing due diligence and proper oversight of Smith and the SEDC is on the money. I will also add that this gross failure of oversight permits the directors to be sued PERSONALLY by the shareholders for gross neligence. Mike Aguiree should consider sueing each and every director under this theory of law. The board of directors tried to imdemnify Smith for her acts-which I consider criminal in nature and therefore beyond the scope of the boards authority- BUT, if the imdemnification agreement is upheld I would cross sue the directors for personal liability of Smiths acts. And they deserve to be sued.

Posted by Billy Bob Henry | reply to this comment
August 14, 2008 11:28 am

excellent editorial. Maybe the taxpayers need to file a lawsuit agaisnt SEDC, city council, whoever is the proper party since they are abusing OUR taxdollars.

Posted by steve | reply to this comment
August 14, 2008 11:49 am

Doesn't anyone (besides me) find it ironic that the author and others suggest the City Council that failed to handle the city's budget, and had us in a financial deep freeze in the bond market, should now somehow take control of SEDC, CCDC, et al? One bad apple does not make the whole bunch bad. As a taxpayer, I find it crazy that the City is spending $400-$600 thousand to do audits.

Posted by sandiegosmile | reply to this comment
August 14, 2008 12:11 pm

You have spoken for every "concerned citizen and taxpayer" in San Diego. This simply has to stop. One way to resolve the issue is for the Mayor and City Council to appoint the current eight members of the City Council as the Board of Directors of SEDC and the Mayor as its President and CEO, pending a decision by the new Council as to whether to disband or not. That would be in perfect compliance with the intent of State Redeveloment law. The City Council is meant to be the ONLY governing body, as everywhere else except developer-controlled San Diego.

Posted by Pat Flannery | reply to this comment
August 14, 2008 12:14 pm

Please note: While I agree with his comments, the "Lee" in post #1 is not me, the author of this letter. I will respond under my full name as the posts come in.

Posted by Robert E. Lee | reply to this comment
August 14, 2008 12:34 pm

Don't all these EDCs and CDCs report to our strong mayor and his Economic Development department? That's what the strong mayor is about, isn't it?

Posted by me too | reply to this comment
August 14, 2008 1:13 pm

Not only will nothing be done about SEDC, I wouldn't be surprised if the whole thing isn't duplicated for another redevelopment agency with a councilmember placed at the helm. I don't know why the right thing is so hard to do in this town, but it seems as if there is a good way and a bad way to do something, the City picks what ever is most cost inefficient and open to abuse. I continue to admire Smith, however...she has a deal that probably means the City can't even sue her for her ill-gotten games. By all means, let us reward her some more for her deeds.

Posted by Leanne1 | reply to this comment
August 14, 2008 1:37 pm

how on earth is it okay for "chip" to cast a vote determining his own job status? shouldn't he have left the room during the discussion, much less actually vote? sounds like another conflict.

Posted by the truth | reply to this comment
August 14, 2008 1:46 pm

I'm just wondering why San Diego is the only place in the entire State of California to have these hybrid entities. That's right no other governmental body in the State has created a quasi-governmental non-profit redevelopment agency. I’m wondering why? What benefits do the taxpayers derive from the partnerships they fund? What are the true costs? We already know our city leaders failed miserably with their oversight responsibilities. So how much must we spend auditing these agencies to find out we’ve been fleeced once again. And of course, who, besides Ms. Smith, is getting rich on taxpayer's dime? These are just a few of the questions which haven't been asked or ignored. Now it's time for San Diego's CEO to bring forth some answers.

Posted by JustWondering | reply to this comment
August 14, 2008 2:15 pm

To "sandiegosmile": You are quite correct about the complicity of San Diego City Council in allowing things to get out of hand. As I have argued before, the Council members ought not be allowed to get away with pleading ignorance about the financial (and other) misdeeds at SEDC. One of the Council members (I don't remember who it was) recently argued that because the SEDC funding appeared as a simple two-sentence line item in the huge, annual City budgets, there was no way the Council could know what was going on at SEDC! My reply was that councilmembers meet in Budget and other oversight committees almost weekly, so there is no excuse that SEDC shouldn't have come up as a topic of discussion on more than one occasion. However, I still maintain that it's better to have the Council oversee redevelopment rather than an unelected, "quasi-independent" agency board of directors.

Posted by Robert E. Lee | reply to this comment
August 14, 2008 4:16 pm

To Pat Flannery: I agree with what you say, in spirit anyway, except for this: Instead of creating another layer of government with the various "DCs", why not just cut out the "middleman" and make the mayor and council members the DIRECT officers in charge of redevelopment? Remember, these "quasi-independent corporations" are quite unique to San Diego. As you stated, perhaps the other municipalities in California see something that we in S.D. apparently don't: Unaccountable agencies like SEDC are a train wreck waiting to happen! In this case, SEDC indisputably ran off the rails. At least with a body of officers like the Mayor and City Council, we can recall them or refuse to reelect them, which we as citizens cannot do with "DC" board members. Of course, citizens and taxpayers have to be willing to make the effort to go out and keep the mayor and council accountable.

Posted by Robert E. Lee | reply to this comment
August 14, 2008 4:31 pm

Ummm, I'm guessing that you're not in favor of a new, expanded city hall building either. That's good; neither am I.

Posted by Fred | reply to this comment
August 14, 2008 5:30 pm

Robert that was a great letter. You will be pleased to know that a "taxpayer" lawsuit will be filed against SEDC. Read Will Careless tomorrow.

Posted by Ian Trowbridge | reply to this comment
August 14, 2008 5:57 pm

Robert that was a great letter. You will be pleased to know that a "taxpayer" lawsuit will be filed against SEDC. Read Will Careless tomorrow.

Posted by Ian Trowbridge | reply to this comment
August 14, 2008 5:57 pm

I agree with the editorial that San Diego's bizarre governance structure of using quasi-independent corporations for Redevelopment service delivery is the core of the problem. All of them (CCDC, SEDC Data Corps and Civic center) were set up as vehicles for sole source-like contractual relationships governed by political appointments. Independent oversight cannot take place when public-private boundaries are blurred because it's like assigning a librarian or fire station captain to monitor the work of another library or fire station. Besides, there are no local Redevelopment Agency adopted policies and procedures online like Council policies) to guide local service delivery and performance. The onus is on the City Council to stop the decades long sole source sweetheart arrangements. Either outsource Redevelopment services formally and assume prudent contract administration costs or provide the service in-house with civil servants and avoid these costs.

Posted by Kathleen MacLeod | reply to this comment
August 14, 2008 9:11 pm

Why am I not surprised Owen was able to vote himself a stay in yet another shameless conflict of interest. Check the boards of most public oversight agencies and major nonprofits in the Southeastern area and you will find that termed out and invested is the rule rather than the exception. Southeast Planning should change its name to the junkyard and liquor store society. Hybrid Barrio Logan Planning structures operate beneath a shroud of mystery and quasi-democratic functioning. And how is it that all our major non profit service agencies are also partners in the development business. Affordable houseing, development, streetlights, and parks are what they promise. High density/high profit development and local homeowner/small business displacement is what we get. Of course we never get the streetlights or the parks, and the housing is never affordable. The last thing we need is SEDC having redevelooment area authority over our community.

Posted by Logan Heights Resident | reply to this comment
August 14, 2008 10:47 pm

I just went back and read the article about the lawsuit. Good for you, Ian! There have been times when I have vehemently disagreed with some of the suits or litigation brought by Cory Briggs, but this time around, you and he are on track. Now, watch the folks at SEDC play a little game: Knowing that they violated the law by having a secret session to discuss severance compensation for Carolyn Smith, and knowing a lawsuit is coming, they will properly docket such a meeting, rescind the deal they gave her, then re-offer it to her at another meeting. Is it now I who is being too cynical? Well, considering the totality of the unlawful and unethical conduct over at SEDC, perhaps not. It's so pathetic that it takes citizen and taxpayer litigation, time and time again, after some unlawful behavior has occurred, to set things straight in S.D.

Posted by Robert E. Lee | reply to this comment
August 15, 2008 6:18 am

Posters in support of REL's letter--yeah it's a good one. While the focus so far is on the obscene amounts of money the SEDC officers have paid themselves, the cavalier attitude of their theft and betrayal as VOSD unfolded the story and then their defiant, dissembling acts of denial of any wrongdoing. Astounding, absolutely astounding. Don't be blinded; here's what isn't being discussed. WHAT ABOUT THE MILLIONS IN PROPERTY NEGOTIATIONS AND SALES THAT TOOK PLACE DURING SMITH'S TENURE? LOW COST, AFFORDABLE HOUSING, HUD AND CBDG LOANS in addition to the commercial developments? What about people like CCDC's Robert McNeeley, Gil Evans and former City SD councilperson William O. Jones, now a developer himself (CITILINK a partner with Related Cos. doing the 7th and Market deal). They were all active and involved in District 8 too. Influence peddlars in the worst sense.

Posted by Linda Tegarden | reply to this comment
August 15, 2008 7:51 am

Linda Tegarden makes an excellent point: While the misconduct and lawbreaking and cavalier attitudes that we see on the surface from so many of our public officials is outrageous or infuriating enough, the various scandals are like an iceberg. While the surface is ugly and scary, it is far, far worse if you stick your head under the water, so to speak, and see the rest of the iceberg, where exists the real and overwhelming gravity of the scandals. As bad as Carolyn Smith's and Dante Dayacap's thefts were -- in the hundreds of thousands of dollars -- the cost is much, much higher when you factor in the value of the numerous sweetheart deals that have occurred at SEDC and the other "DCs", including those involving board chairman, Chip Owen. And we, the taxpayers, get stuck with the tab for this greedy and selfish behavior...

Posted by Robert E. Lee | reply to this comment
August 15, 2008 8:26 am

it'll be interesting to see how far back the various investigations go. are you listening herb cawthorne? you didn't learn from your old urban league problems huh?

Posted by the truth | reply to this comment
August 15, 2008 9:38 am

Sure 'truth' and he was exactly the right kind of person for ‘high dollar’ redevelopment job in one of the city owned redevelopment 'corps'. What would be wild - is to discover exactly what it was it, what could it possible have been, what behavior or conduct or act must he have finally ‘refused to over look' that got him ‘shown the SEDC door’? Those are the records I would like to see, I mean - was the then sitting SEDC board the people who had him 'let lose'? Exactly what do all the emails and texts between SEDCers say about that 'second' in SEDC's fine history?

Posted by Gregory | reply to this comment
August 18, 2008 4:20 pm


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