Thursday, July 24, 2008 | A night that started with pride ended with tears.

Carolyn Y. Smith, the embattled president of the Southeastern Economic Development Corp., was forced out of the office she has held for more than 14 years by a unanimous decision of her board Wednesday night.

In a nearly six-hour board meeting that drew dozens of community members and many supporters of Smith, the SEDC trustees ultimately decided to grant Smith a severance package of $100,350 and to bring an end to a tenure that, while supported by some in the community, has been marred by scandal of late.

Smith has been at the center of a maelstrom of publicity since a voiceofsandiego.org story two weeks ago revealed a system of hidden bonuses and extra compensation under which she has paid herself and her staff more than $1 million over the last five years.

Late last week, Mayor Jerry Sanders and three members of the City Council called for Smith to resign. She did not, and in the days since, the rhetoric emanating from the Mayor’s Office has become increasingly vitriolic, with mayoral spokesman Fred Sainz saying Smith would be removed from office no matter what the result of Wednesday’s board meeting.

After more than two hours of closed-session discussion, SEDC’s board Chairman Artie M. “Chip” Owen, who is himself at the center of a furor over his ties to a developer, announced the board’s decision just after 10:30 p.m. Wednesday.

“This board would like to unanimously express our heartfelt thanks to Ms. Smith for all she has accomplished on behalf of this community,” Owen said.

Smith followed up the announcement with a brief statement.

“I know that in the future southeastern San Diego will continue to thrive, particularly for the current residents. In the meantime, I will continue to pray for the future of our community,” she said.

Smith broke down into tears at the end of her statement and quickly left the room to applause from the community members who had stayed to hear the decision.

The board meeting featured almost two hours of public testimony, most of it from supporters of Smith who praised her hard work, her integrity and her upstanding position in the community.

There were also several allegations from speakers that the push to oust Smith was racially motivated. Among the direct accusations of racism was much innuendo aimed at the mayor and the three council members who called for Smith to step down.

“As someone who is as good at what she does as Carolyn Smith, for her character to be assassinated, her quality to be assassinated, is unbelievable to me,” said Hartwell Ragsdale III, the owner of a local mortuary. “If you don’t think this is racially motivated, you’re crazy.”

Sainz called the accusations of racism “absolutely preposterous.”

“A black man, a Latino, a woman and a man who has dedicated 35 years of his life to serving all aspects of this community signed the memo calling for Ms. Smith’s resignation,” Sainz said, referring to Council members Tony Young, Ben Hueso and Donna Frye, as well as the mayor.

Members of the community who spoke positively of Smith’s tenure both in public comment and in interviews also raised wider concerns about the future of SEDC. Several members of the crowd expressed fear that the ousting of Carolyn Smith would spell the beginning of the end for SEDC as a force within a community they said has been historically been pitifully underserved by San Diego’s leaders.

And several speakers criticized the mayor and the City Council members for demanding Smith’s resignation before the completion of an SEDC audit that has been in process for months and which is expected to be completed by September.

There was little mention in the public comments of the hidden bonuses and extra compensation payments or of findings by the Mayor’s Office that SEDC has spent as much as 39 percent of its expenditure in recent years on administrative costs while claiming it spends between 5 percent and 8 percent on such costs.

Sainz said the ouster of Smith opens a new chapter in SEDC’s history.

“Let me assure everyone, this is not the end of SEDC. In fact, this is the beginning of a new SEDC,” he said.

Smith has served for 14 years as president of SEDC, a nonprofit arm of the city’s Redevelopment Agency that uses tax money to revitalize southeastern San Diego. She served as a staff member for a decade before ascending to its top position. The 51-year-old San Diego native graduated from Point Loma High School and San Francisco State University.

She is the daughter of Rev. George Walker Smith, a prominent local civil rights leader, former school board member and founder of the civic forum the Catfish Club.

SEDC has highlighted a number of projects that Smith has successfully overseen. Those include Gateway Center East, a business park off Market Street in Mount Hope and Imperial Marketplace, a multi-use development off Imperial Avenue that houses a thriving Home Depot store, restaurants and offices, including SEDC’s headquarters.

Smith alone received more than $293,000 in the extra payments, which were unknown to the SEDC board and City Council, over the last five years. In fiscal year 2006-2007, for example, Smith received $94,853 in bonuses and extra compensation above her $158,000 base salary.

The board said it had voted to evoke the 90-day clause in Smith’s contract.

Smith’s employment contract, inked in 1994 and last updated in 1996, states that she can be fired for any reason upon 90 days’ notice. Under that clause, she’s to receive a severance of either three months’ pay total or one month of pay for each year she served as president, whichever is greater.

Based on Smith’s salary of $172,000, 14 months of pay would equal a severance of about $200,000. The board announced Wednesday she would be paid $100,350.

A separate clause in her contract would’ve allowed her to be fired for cause with 30 days notice and no severance, and terminated immediately for dishonesty, misconduct or fraud.

After the meeting, as some community members wept and others walked out in stunned silence under the glare of lights from television camera crews, Carrol Wayman, a local resident and a columnist with the San Diego Monitor newspaper, took a moment to reflect on the night’s events.

“As a member of this community, I do feel saddened by the action tonight. I understand why they took it, but I would hope that the healing could begin,” Wayman said. “We must look forward to the future for conciliation.”

Please contact Will Carless directly at will.carless@voiceofsandiego.org with your thoughts, ideas, personal stories or tips. Or set the tone of the debate with a letter to the editor.

Dagny Salas

Dagny Salas was web editor at Voice of San Diego from 2010 to 2013. She was an investigative fellow at VOSD from 2009 to 2010.

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