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San Diego Contracts, Business Deals Closer To Transparency

As detailed in a recent <i>inewsource</i> investigation, backroom deals have ...

Credit: Art by Ben Chlapek for inewsource

Above: As detailed in a recent inewsource investigation, backroom deals have been a staple in San Diego for decades. Section 225 could force disclosure of hidden interests in billions of dollars of business with the city.

The City Council and Mayor’s Office are working to fix a vague but important law meant to make business between local government and private companies more transparent. The move comes after a series of inewsource investigative reports that found the city has more than $3 billion in contracts with more than 1,000 private companies, yet rarely knows the financial interests behind them.

This is despite a law, overwhelmingly approved by voters more than 25 years ago, that mandates every company transacting with the city disclose the name and identity of everyone involved in the transaction – whether directly or indirectly – along with the “precise nature” of those interests.

On Monday, the City Council approved a response to a San Diego County grand jury report that identified deficiencies in how the law was (and was not) being followed. A new ordinance will address those findings and be ready for the City Council Rules Committee to examine at their Nov. 1 meeting.

“If you want to know why people really are so cynical about their government and about their elected officials, look at this right here,” said Martha Sullivan, who spoke to the council before the vote.

“The voters passed this change to hold the city accountable … And the city has willfully refused to honor the voters’ will,” Sullivan said.

The law is known as “Mandatory Disclosure of Business Interests,” or Section 225 of the San Diego City Charter. It came about after the city almost entered into a $47 million real estate deal with an alleged mobster.

RELATED: “An Offer To Refuse” From Inewsource’s Original Investigation

In the meantime, Mayor Kevin Faulconer has directed all mayoral departments to comply in part with the law by following a similar rule set down by the federal Securities and Exchange Commission.

The council still anticipates putting a charter amendment before voters in November 2018 to clarify the language within Section 225, or repeal it. As the current council and three former city attorneys have pointed out, the law as written is largely unenforceable due to its vague wording and subjective interpretation.

The grand jury’s report from April urged officials to act “with haste” in enforcing Section 225 and said the City Council “has been remiss” in not following the advice of the three city attorneys who recommended council members fix the law’s wording to make it enforceable.

The council partially disagreed with that finding, saying: “While the City does not collect all information required under Charter section 225, it does collect some.”

Councilwoman Barbara Bry said Monday she is “very committed to making sure we move ahead with this – both in terms of addressing the short-term and a long-term solution.”

Council members Chris Ward, Scott Sherman and Georgette Gomez also spoke in favor of fixing the law.

“At the end of the day, transparency is what we need most in government at this time,” Sherman said.

To determine why the law was never enforced, inewsource previously reached out to several people involved in its creation and enforcement.

Former Councilman Bruce Henderson helped spearhead the ballot initiative that eventually earned more than 86 percent voter approval in 1992. He told inewsource it was mind-boggling that elected officials wouldn’t want to know who they are doing business with.

“The word corruption comes to mind,” Henderson said. “That's the only thing that I can think of that would cause people not to want to know that information.”

Former City Attorney Michael Aguirre wrote a detailed report to the council in 2005 noting a lack of uniformity and guidance with Section 225. Aguirre, a known firebrand in the city with strong beliefs regarding transparency and government accountability, echoed Henderson.

“Secrecy and concealment are the mode and method of doing business in San Diego,” Aguirre told inewsource. “It's buzzkill if you show up and say, 'Let's drill down and find out who everybody is.’”

The City Council and Mayor’s Office are working to fix a vague but important law meant to make business between local government and private companies more transparent.

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