I finally took a moment to read and fully ingest the response that the Southeastern Economic Development Corp., or SEDC, sent after the investigative piece Will Carless ran Tuesday.

Remember, Carless’ piece dealt with a central issue: That the City Council and SEDC’s board had approved a certain salary range for President Carolyn Y. Smith and her top deputy and that, tax records show, they ended up with far more than that. The staff had received some kind of bonus or series of “acknowledgements” as they’ve been called. Carless also found, through exhaustive reporting, that five members of SEDC’s nine-member board apparently didn’t know about the bonuses and that the City Council didn’t either.

The mayor, of course, was so incensed by the story that he immediately fired off a memo demanding answers to the questions the story raised.

SEDC itself responded with a memo. Here’s that link again. It’s comprised basically of 10 points.

I’ll go ahead and summarize: Their 10 points are quoted in italics. Then, I translate them to plain speak and, after that, I write what it means in the bigger picture:

1) The budget/compensation process has been the same at SEDC for over 20 years.

In Plain Speak: “This is the way it’s been done for 20 years.”
What It Means: They aren’t saying that the clandestine bonuses weren’t given. Nothing about the passage of time or the number of times it’s repeated makes a practice ethical.

2) SEDC’s total compensation benefits are contained within the budget format approved by the City Council sitting as the Redevelopment Agency of the City of San Diego.

In Plain Speak:“The City Council approves our budget. They have never questioned the way we bring it to them. “
What It Means: Again, they’re wondering how this could be a problem when no one has ever said anything about it before. The City Council approves their budget and so, ipso facto, they approve of the way SEDC presents and spends it. If you are upset about it, they’re contending, blame the City Council.

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

In Plain Speak: The story implied that Smith gave herself and her top deputy the bonuses. Actually, they’re contending, it was one board member and one board member alone who gets to know and set Smith’s compensation.
What it means: Holy smokes! This is an incredible admission that led to this piece today. SEDC later clarified that the chairman only set Smith’s salary and not the bonuses. No matter. As the article today points out, that’s an interesting power for one single board member to have in a nonprofit especially if that person has a direct financial interest in a company doing such big development deals with SEDC and its staff.

4) The Administrative Budget provides the salary ranges for all the SEDC employees as required by the Agency (city).

In plain speak: Pretty straight forward. Rather than provide the salaries of their employees, SEDC provides the public with a range.
What it means: Very little. Not sure how this responds to the questions raised in the article at all. But it does set up the next point rather well.

5) During the following three fiscal years: FY 04/05, 05/06 and 06/07, the ranges were stagnate as were some of the salaries of those staff members who had reached the top of the range. Additionally, in FY 06/07, the Agency (City Council) did not approve any SEDC salary range increases. In those instances affected staff members received a one-time only lump sum payment. The lump sum payment was equivalent to what the next incremental salary increase would have been but did not change the base salary or the associated benefits.

In plain speak:“The city wouldn’t give our staff raises. So we decided to give them bonuses.”
What it means: Holy smokes! It is one thing to argue that your employees deserve raises. It’s another thing to admit that the city didn’t give you raises so you decided to give them bonuses on your own accord. That’s just bold.

6) SEDC has been forthcoming when salary information has been requested.

In plain speak: “When Councilman Ben Hueso asked for salary information for our staff, we denied him because it was private. Then that big decision came out of the California Supreme Court making the exact salaries of public officials available for public inspection. At that point, voiceofsandiego.org‘s Andrew Donohue made reference to the court case and so we decided to give him a letter for once specifying Smith’s and others’ exact salaries.”What it means: Carless quoted one SEDC board member who had requested salary information and been denied. It’s one thing to keep the public out of your payroll. It’s quite another to try to keep a board member of a nonprofit from seeing how much its staff is being paid.

7) On April 30, 2008, SEDC staff invited representatives of the 4th and 8th Council offices for a briefing on the proposed FY 08/09 budget.

In Plain Speak: “This shows how forthcoming we’ve been.”
What it means: The briefing discussed a number of different projects and developments in the area of SEDC’s influence. It has nothing conceivable to do with the article to which the memo is supposedly responding.

8) For the past 14 years, the corporation has operated at an administrative level of between 5-8% of SEDC’s total Administrative Budget. All compensation benefits are included in this 5-8% level.

In Plain Speak: “We use the money we get efficiently and spend a small amount of our budget on administration. Therefore, how we actually spend that money shouldn’t matter.”
What It Means: This is another point that could be challenged. What is included in that figure? Does it include all the myriad lawyers, consultants and lobbyists with whom SEDC works? The figure undoubtedly comes from reports like this budget that shows administration as 7.4 percent of the agency’s costs.

9) The former SEDC employee quoted in the Voice of San Diego story was terminated March 2006 and failed to mention that the holiday acknowledgement referenced in the quote was negotiated as additional compensation upon his hiring.

In plain speak: The guy was terminated so he probably has sour grapes. And that he got a bonus (I love that they call it an “acknowledgement”) shouldn’t mean that others did because it was worked out with him individually.
What it means: You tell me. They seem to be grasping to debunk something, anything.

10) It should be noted that all administrative and project related expenditures are reimbursed through the City of San Diego.

In plain speak: “If we keep talking, maybe nobody will notice that we’re not saying anything.”
What it means: Absolutely nothing. It’s just words as far as I can tell — words that remind everyone that this entity is fully funded by San Diego city taxpayers.

Even though No. 3 produced the follow up story today, No. 5 is really the shocker to me. It basically admits that the City Council did not approve SEDC staff raises so the group decided to give “one-time” payments out in their place. In other words, they went around the process. That’s unbelievable.

Their responses bring up more questions than they answer. None of these directly address the mayor’s questions to the organization. They still have a few days to respond to them. I’ll look forward to poring over those answers when they come. I’m sure they’ll clear everything up.


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