OK, Will Carless here, it’s my turn to respond to some of our readers’ questions. I’m going to have a try at answering some questions from reader Robert E. Lee’s letter, which we received yesterday.

Here’s how Lee’s letter starts off:

Will Carless has done an outstanding job of investigative journalism regarding the secretive and excessive ladling out of dubious bonuses and other financial compensation at Southeastern Economic Development Corp.

Thanks very much, Robert, much appreciated. Let’s get to the questions:

How is it possible that Carolyn Smith and an agency like the SEDC, which gets its funding from taxpayer dollars, can possibly contend that how she spreads around the bucks is, effectively, none of our business?

I don’t know that it’s fair to say that Smith has said it’s none of our business. Smith did tell me at an interview two weeks ago that she couldn’t give me a breakdown of the various bonuses and extra compensation because of privacy concerns, but my colleague Andrew Donohue dealt with that in his last post.

What Lee is probably referring to more is the lack of oversight from either SEDC’s board or the City Council when it comes to paying these various extra payments. Well, Smith was very clear on that one. She and SEDC attorney Royce Jones argued in the same meeting that the agency’s budget procedures don’t require them to detail how much is paid out to each individual in extra payments or what those payments are for.

The bottom line is that SEDC never overspends on its employees, Smith said. Smith insisted again and again that because SEDC doesn’t overspend on the total approved by their board and the City Council for salaries and other compensation, how that compensation is parsed out is relatively unimportant.

So, that’s Smith’s reasoning on that one. Next question:

Why are the SEDC board members allowing Ms. Smith to get away with such a “mind your own business” attitude and practice?

Well, I spoke to five board members, and they all told me this was the first they had heard about any bonuses being paid to Smith or anyone else at SEDC.

So at least five of the nine board members didn’t know these payments existed. Indeed, the board members appeared to be completely in the dark as to Smith’s compensation. Remember this quote from board member D. Cruz Gonzalez, who said he didn’t even know how much Smith is paid?

“I have asked for her specific salary, not just the salary range, and they won’t give it to me,” Gonzalez said.

Having said that, for members of the board of directors of a public agency to have no idea how much the president of that agency is being paid is pretty extraordinary.

There’s more to the story, however.

Yesterday, Smith and the chairman of SEDC’s board, Artie M. “Chip” Owen, sent a response to our story to members of the City Council and city officials. In that response, they wrote:

In 1994, the SEDC Board of Directors delegated the details of SEDC’s president’s compensation to the Chair of the Board of Directors.

That presumably means that one person, at present Owen, has the responsibility of setting the president’s salary, bonuses and “extra compensation.” That’s certainly not how SEDC’s sister agency, the Centre City Development Corp. does things. I’d be interested in hearing from any readers who can shed light on whether this is a usual arrangement for the board of a public agency.

Smith and Owen’s reasoning also appears to be different from what SEDC officials have told me in recent weeks. I have been told, again and again, that the board knew all about any extra compensation and had approved it.

For example, here’s an e-mail from Alexis Dixon, SEDC’s spokesman, dated July 3:

Regarding your budgetary questions; as addressed (and reviewed) in our detailed discussions with you all items are included in the budget, by line item number, and approved by the board.

Next question.

Likewise, why is the City Council, as the city’s Redevelopment Agency, allowing Ms. Smith to snub their requests for salary and compensation details? In Carless’ article, Council Member Ben Hueso is quoted as conceding that the council members have been told to basically buzz off. Haven’t at least five of the council members — Scott Peters, Toni Atkins, Brian Maienschein, Donna Frye and Jim Madaffer — who were deemed “negligent” for not performing their fiduciary duties in the city employee pension scandal, learned their lesson about taking such a hands-off, “oh, well” stance when it comes to managing taxpayer dollars?

Again, before placing the blame on the City Council’s shoulders, it’s important to realize that the members of the City Council I spoke to for my story (Frye, Hueso, Young and Faulconer) had no awareness of these extra payments or bonuses whatsoever.

The City Council does sign off on SEDC’s budget. But that budget only contains two small line items that are vaguely worded and could easily be overlooked. It’s not as if these bonuses are spelled out anywhere. In other words, at no point is the City Council asked to sign off on something that says “This year, Carolyn Smith’s bonus will be x.”

That’s really the whole point of the story — that while SEDC might not be overspending when it comes to the total amount of money, the actual allocation of that money is not detailed in the agency’s budget, is not discussed at the board, and is not shown to the City Council.

And, as I pointed out in this post yesterday, last year SEDC spent more than the total it is allocated for any sort of extra compensation or bonus on Smith and her finance director, Dante Dayacap’s bonuses and extra compensation.

Lee signed off on his letter with a call to arms:

If Ms. Smith is unwilling to give a detailed accounting of how and where taxpayer dollars are going at SEDC, then I think it’s well past time for the district attorney or the U.S. attorney’s office to step in and “help” Ms. Smith with the task. These kinds of financial shenanigans must stop!


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