Fix to San Diego’s long-ignored transparency law to go on November 2018 ballot
The land purchases prior to the construction of Petco Park were cloaked in Delaware anonymity. If Section 225 had been enforced over the past two and a half decades, the entities involved in developments like this would have had to disclose who was behind them. Art by Ben Chlapek for inewsource.

Fix to San Diego’s long-ignored transparency law to go on November 2018 ballot

A San Diego City council committee voted unanimously Wednesday to revise a vaguely worded and long-ignored transparency law requiring anyone doing business with the city to disclose their identities.

The Rules Committee recommends that the proposed changes go on the November 2018 ballot. In the meantime, city staff is working on an ordinance to jumpstart the process.

More than 86 percent of voters approved Section 225 of the City Charter in 1992 after the city almost entered into a multimillion-dollar real estate deal with an alleged mobster. The law mandates that every person or company doing business with San Diego disclose the name and identity of everyone involved in the transaction — whether directly or indirectly — along with the “precise nature” of those interests.

Illustration by artist Ben Chlapek for inewsource.

Read inewsource‘s original investigation into Section 225 from August 2016.

In theory, the law could thwart shady deals between developers, politicians and powerful interests in the city famously dubbed more than a decade ago “Enron-by-the-Sea” by the New York Times

Over the years, city councils and attorneys have blamed Section 225’s vague wording for its unenforceability. As written, the law would require the same level of disclosure from a billion-dollar publicly traded company as it does a mom and pop store supplying paper clips to city departments.

With no financial thresholds in place or clear explanation as to which people within a company are required to disclose their interests, the law has prompted several requests for clarification since it was passed 25 years ago. Three city attorneys have provided those answers and offered solutions, but it wasn’t until this week that council members took definitive action to address the problem.

“I think we should do two things,” said Councilmember Barbara Bry during the Wednesday meeting.

“We need to move forward to draft a charter amendment for November 2018,” Bry said, and “It would be helpful to city departments to draft an ordinance that will help us in the interim.”

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The reason Section 225 is going back on the ballot is the city charter can’t be amended (or updated with clarifying language) without voter approval.

The clarifying language tentatively proposed establishes a threshold for disclosure to be an aggregate of $500,000 or more of business with the city in any one calendar year. To clarify the original language designating disclosure from anyone “directly or indirectly” involved in the transaction, staff proposes those include anyone involved in the application or proposed transaction who are “the corporate officers, corporation board, shareholders with 10% or greater interest, any investor with felony convictions or any investor convicted of a crime related to truth and veracity.”

The working group tasked with this job will return to the Rules Committee with recommended language ”hopefully in October,” according to Councilmember Bry’s office. From there, the language of the ordinance will go to the full City Council for approval.

The financial interests behind some of San Diego’s biggest developments — such as Naval Training Center San Diego (Liberty Station), the billion-dollar Navy Broadway Complex and the Lane Field hotels — are shrouded in secrecy. Certain limited liability companies, for example, do not have to disclose the names of investors.

If Section 225 had been enforced over the past two and a half decades, the entities involved in those developments would have had to disclose who was behind them.


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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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