City Attorney’s Office will weigh in (again) on San Diego disclosure law
Illustration by artist Ben Chlapek for inewsource.

City Attorney’s Office will weigh in (again) on San Diego disclosure law

As a direct result of an inewsource investigation, the City Attorney’s Office will reiterate its recommendations that San Diego’s mayor and city council enforce a long-ignored policy requiring the disclosure of billions of dollars in city sales, purchases, leases and contracts.

City Attorney Jan Goldsmith told inewsource in an email that he’s pleased Council President Sherri Lightner is interested in clarifying the policy mandated by the city charter. Goldsmith said he hopes something can be done before Lightner leaves office in December.

Goldsmith, like two past city attorneys, has recommended that the city clarify the law called Section 225. Each time — over more than 20 years — elected officials have ignored those recommendations.

Lightner intends to docket a discussion of the disclosure law at a Rules Committee meeting on Oct. 26. She asked for Goldsmith’s advice, and he told inewsource, “we will reiterate our office’s prior analyses.”

“We will state that the Mayor and City Council should adopt policies that ensure [the law] is implemented as it was intended and fill in where it is a bit vague or incomplete. We will also ask our attorneys in the contracting unit to review the policies suggested in the earlier memo for any updates or additional ideas they may have.”

Section 225 requires every company doing business with the city to disclose the name and identity of everyone involved in the transaction — whether directly or indirectly — along with the “precise nature” of those interests. More than 86 percent of voters approved it during the 1992 primary election after San Diego almost entered into a $47 million real estate deal with an alleged mobster.

It’s never been enforced.

The concern is that the city may be engaging in business with entities — such as organized crime, foreign governments, or even local politicians — who can take advantage of corporate laws that allow anonymity, essentially masking their involvement. It wouldn’t be the first time that has happened in a city known for backroom deals and hidden interests.

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To check on the implementation of the law, inewsource requested the mandatory disclosures for more than $500 million in city purchases, sales, leases and contracts over the past two years. The request involved 38 companies — big ones such as Burtech Pipeline Inc., which has more than $126 million in contracts with the city, and small ones, such as EHOF La Jolla LLC, which purchased $7,500 worth of vacant land last year.

Out of the 38, only four contractors disclosed the names of their board members or corporate officers. Not one disclosed all of the information required under the San Diego law.

What’s likely to happen

Section 225 is vague and city officials have had a hard time understanding it over the years. As a result, the City Attorney’s Office has offered clarification and proposed council policies or charter updates on three occasions, and each time they’ve been ignored. Goldsmith’s office plans to send the council the same recommendations and await their questions. Here’s a brief rundown of what he and his predecessors have proposed:

  • Define the term “person” as any natural person, joint venture, joint stock company, partnership, association, firm, club, company, corporation, business trust, organization or entity.
  • Establish thresholds for what “financial interest” means as any person owning more than 5 percent of the entity or benefiting to the tune of $10,000 or more from the contract.
  • In the case of individuals who don’t have that level of ownership interest but who may reasonably anticipate benefiting to the extent of $10,000 or more from the deal, they will provide their full name and city and state, or country, as well as an explanation of the financial interest in the contract.
  • Clarify roles and responsibilities. For example, the city manager shall pass this information along to the council during each meeting.

In an interview with inewsource in July, Goldsmith said the best thing the city can do is to listen to its legal advisers.

“As a lawyer, I would agree with John Witt in 1992, and Mike Aguirre in 2005, and again, our lawyers in 2014 — interpret the thing. Clarify it. Make it clear so all the contractors and others who are doing business with the city know exactly what needs to be disclosed.”

Lightner plans to docket a discussion on Section 225 during a meeting of the Rules Committee on Oct. 26.

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About Brad Racino:

Brad Racino is a senior reporter and assistant director at inewsource. To contact him with tips, suggestions or corrections, please email bradracino at inewsource dot org.
 
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