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Friday, Aug. 15, 2008 | A termination payment voted on behind closed doors by the Southeastern Economic Development Corp.’s board of directors has come under fire from a local attorney and a public meetings law expert who argue it was created in violation of state open-meetings law.
The $100,350 severance payment to ousted SEDC President Carolyn Y. Smith violates the state’s open-meetings law, known as the Brown Act, because a public body is not permitted to discuss or vote on compensation for employee dismissal in a closed meeting, said Terry Francke, general counsel for Californians Aware, an open government advocate.
On Thursday afternoon, Cory Briggs, a local attorney, faxed a letter to SEDC requesting that the agency rectify the violation. Briggs said the letter is a precursor to a lawsuit he will file on behalf of his client, community activist Ian Trowbridge, unless SEDC completely rescinds the termination agreement and releases a transcript of the closed session discussion that led to its creation.
Briggs said the seasoned attorney who represented SEDC in the board meeting, the agency’s corporate counsel, Regina Petty, as well as SEDC’s board members and Smith, should have known the board was violating the Brown Act by voting on the settlement in secret.
“The people at SEDC and their lawyers are way too smart to go into this closed session meeting on accident — they know what the Brown Act requires,” Briggs said.
Petty did not answer repeated calls for comment. Late Thursday evening, SEDC spokesman Alexis Dixon faxed a statement to voiceofsandiego.org with no indication of authorship. The statement said that the action taken during last month’s meeting didn’t alter the amount of Smith’s salary.
SEDC officials haven’t answered questions about how the board arrived at the $100,350 figure. Smith’s termination agreement doesn’t explain the figure.
Smith’s severance payment was voted on in a closed session of the SEDC board meeting on July 23. The agenda for the meeting lists the item as an adjournment into closed session for “Public Employee Discipline/Dismissal/Release (Government Code Section 54957).”
Francke said that section of the Brown Act specifically forbids a public body from meeting in closed session to discuss or vote on a settlement payment for an employee who is being dismissed. In other circumstances, Francke said, a public body can discuss employee compensation in closed session, but it must always vote on any termination payments in an open meeting.
At the conclusion of the closed session part of the meeting, board Chairman Artie M. “Chip” Owen addressed the crowd.
“The board has unanimously — once again, those voting in closed session — has unanimously approved a payment of $100,350 at the time of [Smith’s] departure,” he said.
Francke agreed that Petty and the board should have known that the vote and any discussion of a termination payment were a violation of the Brown Act. He said the agreement could successfully be challenged in a lawsuit brought either by a private citizen or the district attorney.
“Enforcement teaches the strongest lesson,” Francke said.
City Attorney Mike Aguirre criticized the termination agreement earlier this week when he learned that the document includes a clause that effectively bars SEDC from suing Smith for her actions as president of the agency. The clause states that Smith is “released” from lawsuits brought by SEDC.
Legal experts said that clause could hamper a lawsuit Aguirre filed against Smith on Friday that seeks to recoup hundreds of thousands of dollars Smith approved for herself and other top SEDC employees in non-budgeted bonuses and extra compensation.
In an apparent attempt to clarify the release clause in the termination agreement, the statement faxed by SEDC to voiceofsandiego.org Thursday stated that “The City of San Diego and the Redevelopment Agency are not named in the termination agreement as parties to the mutual release.”
The bonuses and extra compensation payments were revealed in a voiceofsandiego.org investigation that led San Diego Mayor Jerry Sanders and three members of the City Council to call for Smith’s resignation.
The investigation found that Smith had approved bonuses for herself and staff under vague programs called “holiday bonus” and “acknowledgment” without the knowledge of the City Council or SEDC board. Documents later released by the Mayor’s Office showed those bonuses and extra compensation amounted to more than $1 million over five years.