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Across San Diego, the city’s business improvement districts use public money to support the economic growth of small business communities, playing an increasingly significant role in a city that’s cut back on many basic services.
But while they’re public entities, many don’t always act like it and fail to comply with basic responsibilities of the state’s open records and meetings laws, according to a Voice of San Diego evaluation.
More than half of San Diego’s 16 business improvement districts are failing to properly notify the public of their board meetings. Eight don’t announce their board meetings on their websites, as required by state law.
Because they’re public agencies, the districts are required to disclose their employees’ compensation. Seven didn’t. They’re required to promptly respond to requests for public records. Seven didn’t.
For example, the San Ysidro Business Association should’ve provided its executive director’s employment contract within 10 days of our request. It took a month. And the association never provided any compensation information for two other employees. Neither the City Heights Business Association nor the Little Italy Association created 2011 annual reports, despite being obligated to do so under their contract with the city.
In many cases, the organizations argued that they were private agencies that weren’t required to disclose the information.
“We are not the government,” Gaslamp Quarter Association executive director Jimmy Parker wrote in an email. “We are not doing the government’s business and we are not government employees.”
Under California law, however, they’re considered public agencies. They are required to adhere to the same public records and open meetings laws that the City Council or local school districts must follow. They spend public money and their board members are chosen through an election.
The improvement districts are created when a group of businesses in a geographic area band together and decide to pay an assessment to promote economic growth and physical maintenance. The goal is to create jobs, attract new businesses and prevent the deterioration of neighborhoods. Crucially, these fees are involuntary. Any new businesses coming into an established business improvement district must pay them.
They are run by nonprofit organizations that contract with the city.
In 2001, a state court of appeals established that the boards of nonprofit organizations created to run the districts are legislative bodies and must abide by the Ralph M. Brown Act, the state law requiring meetings to be open to the public. Given this designation by the courts, they’re also subject to the California Public Records Act.
The city of San Diego has reinforced the need for the organizations to act like public agencies in its contracts with the districts. Those contracts require the districts to hold open meetings and disclose records to the public when requested.
Jonathan Heller, a spokesman for the city attorney, said his office will be looking into the issues found by Voice of San Diego.
With the city government scaling back its services, communities and businesses alike are starting to pick up where the city dissolves.
San Diego is home to the most business districts of any city in California. During the past 18 years these districts have taken on a larger role in the upkeep of neighborhoods as municipal budgets shrink. Smaller business districts are also popping up in places like Bankers Hill and Rancho Peñasquitos with the help of city grant funding.
We decided to see how well those organizations comply with laws meant to keep them open and accountable. What we found is that many districts aren’t doing what they’re supposed to, and are getting little guidance from the city.
What We Asked For
The city collects approximately $1.3 million annually in business improvement district assessments from about 12,000 San Diego businesses. In turn, the city then forwards that money to the improvement districts.
The districts can use that money to organize activities like street fairs and parades to attract visitors. They can also spend money to beautify the community. Examples include the iconic Hillcrest sign and the gas lamps downtown.
We submitted requests under the California Public Records Act to each of the city’s 16 active districts. We asked for three basic records: the organization’s latest annual audit, the 2011 annual report to its membership and employment contracts for all workers. Only a few business districts use employment contracts so, in lieu of them, we asked for documents listing each employee’s name, annual salary and benefit costs.
All the documents we requested are public information.
In total, 11 of the 16 failed to comply with at least one aspect of our records request.
Under the law, a public agency has 10 days to decide whether the records request seeks information that should be disclosed. If it does, the agency must immediately make that information available. But an agency can also make a case for an extension under unusual circumstances. Four districts that responded late never asked for such an extension.
If an agency believes the information requested is exempt, it must justify its withholding. It does this by demonstrating that it qualifies under an exemption in state law, or that the public interest in keeping the information confidential outweighs the public interest in disclosing it.
Some of the 11 districts that failed to provide the documents offered vague legal arguments as to why they could keep the information private. Others offered no explanation.
Some organizations argued that they didn’t need to disclose employee names and salaries because labor laws trump the public records law or that an exemption exists to protect that information.
For example, Judy Elliot, executive director of the Adams Avenue Business Association, refused to attach names to salary information.
“I do not give you names,” she said. “I do not have to do that.”
But she does.
In a landmark case in 2007, the California Supreme Court ruled that the names and salaries of individual public employees are generally required to be made public.
A narrow possible exemption exists for law enforcement officials, but other public agencies regularly hand over salary information to reporters and other interested parties who request it.
“This information helps prevent and uncover abuses or misappropriations of public funds,” said Donna Frye, a former city councilwoman and public information advocate. “One need only look at the city of Bell, where elected officials salaries were out of control, to better understand why the public has a right to know this information.”
Of the 16 business improvement districts surveyed, only four provided the names and salaries of their employees on time. Eventually, another six sent us that information. Six others sent us only part of what they’re required to provide by law.
The Downtown San Diego Partnership, Little Italy Association and East Village Association all used the same attorney, William H. Sauls, to respond to our public records request.
Sauls’ initial response to our request claimed that no such records exist, since neither the Little Italy nor the Downtown business improvement districts have any employees.
The Little Italy Association contracts out its administration to a private company called New City America, Inc., run by Marco Li Mandri. New City America is in the business of establishing municipal districts nationwide; in total it’s established 61 of them. Li Mandri’s company is sustained by public funds. Last year, the Little Italy Association paid it $250,000.
Pressed to provide details of the salaries of New City America employees paid by the Little Italy Association, Sauls provided the salary and benefit amounts, but refused to name anyone who works for the company on behalf of the association.
Sauls, who serves as the treasurer of Downtown San Diego Partnership’s board of directors and sits on the board of the East Village Association, also refused to provide the names of employees at the Downtown district.
In both cases, Sauls said providing such information would be “an unwarranted invasion of personal privacy.”
Sauls did, however, provide the same information for the East Village district. He said he did not want to discuss this discrepancy.
Public Meeting Violations
The Brown Act requires public agencies to do a few basic things: They must publicly post agendas that include the date, time and location of their meetings along with a brief description of what will be addressed.
Agendas must be posted 72 hours before a meeting and, beginning this year, they also must be posted online if the organization has a website. All of San Diego’s 16 business districts maintain websites, but eight don’t post their agendas on them.
The East Village business district has posted its board agendas online, but they don’t list a street address for the location of their meetings. The agenda descriptions of what will be discussed are vague and include the frequent use of jargon and unidentified acronyms, both of which detract from the public’s ability to fully participate in the decision-making process.
The executive directors in Pacific Beach and the Gaslamp District say their boards of directors are groups of volunteers, already busy running their businesses, so it isn’t reasonable to place onerous requirements like open government statutes on them.
But an appellate court directly addressed this argument in 2001, saying that the idea that it is unfair to subject businesspeople to the same laws that apply to city government is “simply not persuasive.”
The Best and the Worst
Our review found the San Ysidro Business Association was the most out-of-compliance district in the city.
It didn’t provide its annual report, its most recent audit, or employee salary and benefit information within the time period allowed. It eventually provided some of what was requested, but even then the documents were incomplete.
For example, San Ysidro’s annual report didn’t say what the district spent money on, a basic component of annual reports and one that’s required under its city contract.
The association is also failing to properly notify the public of board meetings; and it hasn’t posted any meeting agendas.
Since some of the business districts were uncertain of their responsibilities under open government laws, we asked City Attorney Jan Goldsmith whether he was concerned about the lack of transparency. Goldsmith’s office is responsible for approving each contract and ensuring it’s enforced. Heller, Goldsmith’s spokesman, refused to comment, saying that doing so would be improperly offering legal advice.
Frye, the former city councilwoman, said Goldsmith’s failure to take a more active role in enforcing the law when business districts do not comply with their contracts is troubling.
“At a minimum, the city attorney should add a requirement in the business district contracts that all board members and staff receive Brown Act and California Public Records Act training so they understand the laws,” Frye said.
But to three San Diego business districts who provided all requested documents on time and post detailed and descriptive agendas online, we hereby bequeath golden sunshine stickers of open government camaraderie.
The biggest winners were the College Area Economic Development Corp. and North Park Main Street Association, which quickly provided everything we requested. Both districts post meeting agendas with the required date, time and location as well as detailed descriptions on their websites 72 hours in advance of regular meetings. And both put meeting minutes on their websites.
The East Village Association also gets an honorable mention for complying completely with the public records request on time, despite providing incomplete agendas.
Lastly, for all of its noncompliance with the California Public Records Act, the Gaslamp Quarter Association impressed Frye. She gave it an “A” for the best agenda in town. She said item descriptions are detailed and easy to understand.
“Of the agendas I’ve reviewed, they are the only one to have noted that members of the public may speak on agenda items,” Frye said.
Correction: The original version of this graphic said Ocean Beach was two days late on providing employee pay and that Hillcrest was 52 days late on its audit. However, Ocean Beach did in fact respond in time and Hillcrest provided a draft audit. We regret the error and have updated the graphic to reflect the accurate information.
Sandy Coronilla reports on local government and education for Voice of San Diego. She is on the Armen E. Keteyian Scholarship for Investigative Reporting. You can contact her directly at firstname.lastname@example.org or 619.325.0528.
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