Conflict-of-Interest Case Triggers Conflict Between City, Housing Commission

Speaker 1: 00:00 Tensions appear to be rising between city leaders and the San Diego housing commission as a recent conflict of interest case has come to light. That's according to the article by Andy Kate's voice of San Diego, his assistant editor and senior investigative reporter, and here to tell us more is Andy Keats. Andy, welcome. Speaker 2: 00:18 Thanks for having me so Speaker 1: 00:20 First, just so we're all on the same page here, remind us what the housing commission does and what its role is. Speaker 2: 00:26 So the San Diego housing commission is an independent agency that was created by the city of San Diego in the late seventies. And the idea was basically that this agency would be, uh, in charge of the city's low-income housing efforts. So they would handle federal programs related to low income housing. They would handle state programs related to low income housing, and then they would do their own independent work to try to, uh, pursue opportunities to increase the stock and availability of affordable housing for people with low incomes in San Diego. And that by being independent, they would be able to be nimble and creative and sort of do more than if that was all handled by city staff, uh, at the direction of the city council. Speaker 1: 01:10 And you write about conflict between city officials, notably the city attorney and the city council, uh, have with the housing commission, where did this conflict start? Speaker 2: 01:21 Basically this spring or early in the spring, there was a revelation that there had been this conflict of interest case involving the San Diego housing commissions acquisition of two hotels. Last year, the state made some funds available for cities to buy hotels and turn them into low-income housing. The idea here was that hotels would be available more cheap because, uh, the hotel industry was basically shuttered by the COVID-19 pandemic so that the cities could pursue those houses, those hotels that were sort of in distress by them, turn them into actual long-term housing options for people who needed them. And this would be a good opportunity. One of those hotels specifically that the city of San Diego purchased, uh, we later learned that the broker that the housing commission had hired to help them identify properties and negotiate the terms of a transaction, uh, that broker had allegedly purchased 50,000 shares and stock in the company that sold that hotel to the housing commission. Speaker 2: 02:35 And he made that, uh, that stock purchase in between the time that he signed a contract with the San Diego housing commission, and then came to an agreement on the transaction in between that time is when he made that 50,000, uh, 50,000 share purchase. The stock went up after the purchase. And, uh, the according to both the San Diego housing commissions legal council and the city attorney that was worth millions of dollars profit. So it, during the handling of this conflict of interest, that there started to be some real tension between the city council and the city attorney in how they were handling the conflict of interest case, how they were handling the new information and how they were pursuing what they were going to do about it. So where is Speaker 1: 03:15 The conflict of interest case involving the broker at now? Speaker 2: 03:18 There's basically two things going on right now. One, the city attorney has been deputized by the city council to take over, uh, this had been handled by the legal council as part of their sort of, uh, ongoing displeasure with how the commission has handled it. The city council put the city attorney in charge and the city attorney brought a civil suit alleging that this arrangement broke state conflict of interest laws, financial disclosure laws, that there were fraudulent misrepresentations made to the city by this broker. At the same time, the legal counsel for the housing commission had previously determined that they were confident that a criminal law was broken and that they recommended that they hand this case to the district attorney for prosecution. So that could happen. Uh, it also may not happen. It's really hard to say that's a, that's a bit of a black box at this point. Speaker 1: 04:09 Yeah. How did the, the conflict of interest case impact the relationship though between the city and housing commission? Speaker 2: 04:17 Well, housing commission is a very peculiar agency. It has its own independent board that oversees its at the actions of its staff. That board is those board members are appointed by the mayor and then confirmed by the city council. But the city council still has a role overseeing certain things that the housing commission does. So when the city council operates in its oversight capacity, it renames itself, essentially the housing authority. So there's these two boards that oversee overlapping, but slightly different elements of it. And what was revealed during this, uh, issue was that the San Diego housing commissioners, the people on that commission thought this is a serious matter and it should really be relayed to city staff and the city council. They weren't comfortable being the only ones that knew about it. Uh, and it seemed like they had a really difficult time getting city, the, uh, housing commission staff to push that information to the other side of this organization, which ostensibly also has oversight responsibility over it that's one big part. Speaker 2: 05:25 But the other big part is between the legal counsel for the housing commission and the city attorney. Um, when the city attorney brought its lawsuit, uh, one of a spokesperson for the city attorney's office pulled the union Tribune that they had never, that the city attorney's office that is had never approved the terms of the transaction in the first place that, that work had all been done by the legal counsel. I had seen the letter from the legal counsel complaining to the city attorney that that was wrong and that they must have approved it and that it was not appropriate for the city attorney to say what she said, the city attorney then responded, uh, you know, this was a pretty tense back and forth, I would say. So there's actually new policies and procedures in place because the city attorney has essentially determined that she can't trust the legal work of the housing commissions lawyers. And so it's really revealed, uh, this, some holes in the governance structure that, that has created this city, the housing commission in the first place, and some mistrust between all these different officials that have this sort of diffuse role. And it, it, I, I, I think one way to look at it is that so many people are in charge that no one is in charge and that in a situation like this, that is new, it sort of makes it very difficult to hold people accountable. And there's a lot of finger pointing internally. Speaker 1: 06:45 Is this reported conflict or tension as you quote the CEO of the housing commission referring to it as is it hindering the creation of low income housing in San Diego? Speaker 2: 06:56 No, not right now. I would. I mean, I don't, I don't, I have no indication that that's the case. The creation of low-income housing is, is such a long and arduous process in the first place. And for the most part doesn't happen by the housing commission. They, they do create some, uh, but for the most part, it's low it's affordable housing developers that go out, uh, buy their own property, uh, put together financing from state or federal or local sources. And basically just ask the housing commission, um, for permission to build it. Um, so that all can continue happening in the short term. The bigger question going forward is who's in charge. And whether, if, if this led to a major rearrangement of the agency or its staff, or, uh, just the responsibilities of the city council or the commissioner's board, how that might change going forward and that, you know, it's too early to say that right now, Speaker 1: 07:51 Ben speaking with voice of San Diego's assistant editor and senior investigative reporter, Andy Keats, Andy, thank you so much for joining us. Thank you.