City Overhauls Its Nonprofit Redevelopment Agencies

The Centre City Development Corp. and Southeastern Economic Development Corp., the city’s nonprofit redevelopment agencies, lost some independence Monday, nearly two years after scandals simultaneously rocked both.

The City Council voted 6-2 to approve more than two dozen reforms that draw the once largely autonomous agencies further under the council and mayor’s direct control. Almost two years after being powerless to force out SEDC’s former president, Carolyn Y. Smith, after a clandestine bonus system was revealed at her agency, the mayor and council will be able to fire executives and board members for cause. The agencies will no longer be able to choose their own top executives or set their salaries.

Being independent was once a chief selling point for CCDC and SEDC, agencies with their own offices and own letterhead, outside the governing structure that oversees redevelopment projects elsewhere in the city. But the risk of that independence was highlighted in 2008, notably when SEDC’s board refused to immediately fire Smith after the bonus system was revealed. A city audit later found that the agency’s accounting practices rose “to the level of fraud.”

Despite a call from Sanders and three council members for Smith’s ouster, SEDC’s board refused. It fired Smith, but granted her a $100,000 severance payment (which has not been paid) and allowed her to continue working for three months.

Not all the reforms were so notable. But they reflected just how ingrained CCDC and SEDC’s autonomy had been.

The city, for example, lacked the legal right to inspect SEDC and CCDC’s financial records and personnel records — even though they were created by the city. That’s changed. The agencies weren’t specifically required to post information like their budget, annual financial reports and by-laws online. That’s changed, too.

I’ve written this background about the overhaul. It still needs approval from the boards of SEDC and CCDC, which is expected to be a formality.

Much of Monday’s council discussion centered not on the details of the reforms, which have been discussed for more than a year, but on an arcane and symbolic legal reference that several council members added to the agencies’ by-laws. The labor-backed effort to include what ended up being a non-binding sentence urging the agencies to expand jobs for low income and unemployed residents led Councilmen Carl DeMaio and Kevin Faulconer to oppose the overhaul, an effort they’d previously supported.

— ROB DAVIS