Created by RoseInstitute on Jul 18, 2008
Last updated: 03/12/10 at 03:23 AM
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Despite several hours of community testimony defending her, SEDC President Carolyn Smith was forced out of the office she held for 14 years by a unanimous decision of the board. After a two-hour closed-door meeting, Smith was given a severance package totaling $100,350; a lower figure than the $200,000 many expected.
The decision came as a shock to many of her supporters, who praised her diligence and competence in redeveloping many of the blighted neighborhoods of San Diego.
Mayor Sanders again called for the termination of SEDC President, Carolyn Smith, warning the committee that appointing a financial official was simply not enough.
Fred Sainz, the mayor's spokesman, said the mayor plans first to terminate Smith's employment, then to install an interim president to run SEDC. Only then would the city consider installing a senior-level financial official at the agency.
SEDC Officials met today to discuss growing controversy over compensation practices, but failed to address several related items on their agenda.
At the meeting, the Board unanimously voted to approve the Mayor's budget freeze. Smith's termination is slated to be discussed at a future meeting, along with the creation of a temporary financial manager position.
A local church today asked the mayor and the City Council to circumvent the Southeastern Economic Development Corp. and consider its bid for a troubled development project in southeastern San Diego.
Last week, City Attorney Mike Aguirre issued a legal opinion stating that any deals between SEDC and developer Pacific Development Partners are null and void because of a financial relationship between the developer and SEDC Chairman Artie M. "Chip" Owen.
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"Mayor Jerry Sanders and three City Council members called for the immediate resignation of Southeastern Economic Development Corp. President Carolyn Y. Smith on Friday in the wake of a burgeoning scandal surrounding her agency's clandestine compensation program.
City officials originally gave Smith until 1 p.m. Friday to resign quietly, with the ultimatum that they would go public in the afternoon if she did not abide. The memo, released Friday afternoon, co-signed by Council members Tony Young, Ben Hueso and Donna Frye, told Smith to contact the city's chief financial officer by 5 p.m. with her chosen course of action."
Mayor Jerry Sanders and the City Council tell SEDC President Carolyn Smith that "If she does not [resign] immediately, we ask the Board of Directors to terminate her contract immediately at an emergency meeting of the Board." The letter comes on the heels of a Voice of San Diego investigation of bonuses given to her and her employees without the knowledge of the SEDC board.
San Diego city councilwoman Donna Frye calls for SEDC Chairman Artie M. "Chip" Owen to resign along with other members, noting that "there is a growing consensus building to have Carolyn Smith removed".
A new document prepared by San Diego city accountants shows that SEDC has spent 38% of its budget on administrative costs in 2007, up from 16% in 2002. Much of this money has gone to pay the salary of President Carolyn Smith, who was approved by the city for a salary of up to $180,000 and claims to has received $172,000, but has actually earned $261,393 including bonuses and extra compensation.
San Diego Mayor Jerry Sanders writes a letter to SEDC chairman Artie M. "Chip" Owen asking to explain the excessively large compensation for Smith and Dayacap, the SEDC finance director. During one pay period earlier in the year, Smith received a paycheck for $34,666 after earning only $7,166 the week before. More information can be found here.
The SEDC board votes 5-3 to approve Pacific Development's plan for the Valencia Crossings shopping center on the SEDC land. The shopping center will contain a McDonald's, a Fresh and Easy Neighborhood Market, and a few other small shops in 29,180 square feet. The bid was accepted over a competing bid from Bishop George D. McKinney that would have had 102,000 square feet of stores, restaurants, and meeting halls. McKinney bid $1.6 million for the land, while PDP's winning proposal only offered $562, 235. SEDC chairman Artie M. "Chip" Owen has business ties to PDP and has been accused of having a conflict of interest.
"The city of San Diego has broken ties with its selected developer for a redevelopment project in southeastern San Diego over concerns about the public's perception of the troubled deal. The city's Redevelopment Agency has chosen to put the project, Valencia Business Park, back out to bid after a city councilman and officials at the City Attorney's Office questioned whether the city was getting a fair deal after the developer significantly altered its plans." http://www.voiceofsandiego.org/articles/2008/03/18/news/sedc031808.txt
"In a Jan. 24, 2007 memo, Burger told Carolyn Smith that he couldn't make up the difference between the price promised in the settlement by SEDC and the current market price. "It became apparent to me that we would never be able to deliver a building that would cost us a minimum of $135.00 per sq. ft to Our Feathered Friends for $73.00 per sq. ft.," he wrote...The Petrarcas wouldn't be getting their building." http://www.voiceofsandiego.org/voice_special_reports/valencia/valencia111307.txt
"Then, on Sept. 21, 2006, an attorney for SEDC wrote Moot. The SEDC attorney noted that the agency and PDP were finalizing their development deal and needed the Petrarcas to remove their claim on the land. The Petrarcas agreed, lifting the claim and thus removing an important obstacle for the project." http://www.voiceofsandiego.org/voice_special_reports/valencia/valencia111307.txt
"Carolyn Smith, who has served as SEDC president for 12 years, was due to take the witness stand. Instead, she and SEDC’s lawyer, Royce Jones, the same attorney who James Smith said convinced him to take the deal in the first place, approached the Petrarcas and their attorney and offered to settle the lawsuit on James Smith's behalf, according to court documents. It was an odd arrangement; neither Carolyn Smith nor SEDC was a party to the Petrarcas’ lawsuit, but the Petrarcas heard the SEDC officials out. The settlement agreement, which was scratched out by hand by the Petrarcas’ attorney, stated that SEDC, working with a developer, would "cause to be delivered a 10,000 sq. foot building in the Valencia Business Park for $73 per sq. foot." The document, signed by Carolyn Smith, James Smith and Sharon Petrarca, essentially promised the Petrarcas a smaller warehouse, but for the same price they had agreed to four years earlier, which, by then, was a bargain." http://www.voiceofsandiego.org/voice_special_reports/valencia/valencia111307.txt
"The Petrarcas sued James Smith and his company, Roseau Development, claiming up to $2 million in damages and alleging breach of contract. Because of the pending lawsuit, a claim was placed on SEDC’s land, complicating any sale of the land or development agreement." http://www.voiceofsandiego.org/voice_special_reports/valencia/valencia111307.txt
After overcoming many difficulties, James Smith abandons the project. With the help of developer Russ Ries from Marus Enterprise, James Smith calculates that he would need at least $110 a square foot for the project to work, far more than the $73 a square foot he had negotiated with the Petrarcas.
"Santa Monica-based Pacific Development Partners, LLC, was awarded the project in 2005 on the understanding that it would build a 65,000-square-foot industrial park on the land. As such, PDP got the land at industrial rates, paying $1.5 million for the 4.3 acre parcel." http://www.voiceofsandiego.org/articles/2008/03/18/news/sedc031808.txt
"In April 2002, the Petrarcas signed a contract with James Smith for the development of a 17,000-square-foot building at the then-market price of $73 a square foot. Working with a local architect, the couple started to draw up plans for the green warehouse." http://www.voiceofsandiego.org/voice_special_reports/valencia/valencia111307.txt
"In 2001, SEDC handed the development rights for Valencia Business Park to a local businessman, James H. Smith, who planned to build a number of warehouses on the land...James Smith was an unlikely candidate to develop Valencia Business Park. While he was a local businessman, his experience was in janitorial services, not development. Smith doesn’t deny his lack of experience in development. Indeed, he said before Valencia Business Park came along, he wasn’t really interested in becoming a player in southeastern San Diego’s development scene." http://www.voiceofsandiego.org/voice_special_reports/valencia/valencia111307.txt