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Questions raised about Palm Springs contracts and conflict of interest law

Questions about state law on conflict of interest

Questions raised about Palm Springs land sales and conflict of interest law

PALM SPRINGS, Calif. - Robert Stone looks forward to the day his Palm Springs condo doesn't overlook a vacant lot.

His backyard borders a plot of city-owned land on North Palm Canyon Drive known as Casa Del Camino. Last December city leaders, including Mayor Steve Pougnet, voted to sell the parcel to developer Richard Meaney, who at the time employed the mayor as a consultant. 

"I don't believe it's appropriate for the city to line the pockets of the developer by a cut rate price that's 20 percent of the market value," said Stone.

According to the city's Long-Range Property Management Plan for undeveloped land, the lot's value was last evaluated in December 2013 by an independent firm. 

The plan says that firm conducted a "limited analysis" and "the estimates are not necessarily representative of what the properties could be worth when put on the open market for sale." 

The open market spoke last year when Richard Meaney bought the vacant lot directly next door to Casa Del Camino from a private seller for $1 million.

The lots measure almost the same size.  The city land is 29,185 sq feet, and Meaney's private land is 32,545 sq ft.  But just six months later, the city council approved the Casa Del Camino sale for $195,561.

"I don't understand why a similarly sized parcel immediately adjacent could only be worth $195,000," Stone said.

"That doesn't seem kosher, to me that sounds like there might be a little hanky panky," said Jack Reed, who owns a business across from the lot.

Local business owners and people familiar with the area say they're also frustrated that the land value was only assessed using comparable sales, "comps," outside city limits. 

"I'm sorry this is the comp," Stone said pointing to the privately sold land. "This is a private sale next door for a million. To me this suggests there is a problem with corruption at city hall."

We contacted the city about the land sale but city officials refused to talk to us on camera.

Instead, they told us to talk to the city's financial advisor in Orange County, Suzanne Harrell.

Harrell told us it made sense for the city to release the land to the developer who owned the next-door lot to maximize future value.  She wrote the following in an e-mail to News Channel 3:

"The long-term view of what is best for the City's future, financially, is more important than any short-term gain on a sale that results in sub-par development of properties that could be used more productively."

"They did a very rough appraisal," says Stone. "So I'm sure for a shrewd investor $195,000 looked like a great deal.  I'd go for that too if I was a developer."

The politics of recent land sales represent just one of the layers residents want city officials to peel back.

A News Channel 3 investigation into the city's economic development programs, which awards grant reimbursements of up to $250,000 to qualifying businesses, found not all business owners experienced equal treatment.

The city gave developer Richard Meaney $250,000 last June for Hacienda Cantina, without obtaining legal proof he paid the contractors who did the work.

Instead they accepted a spreadsheet as proof of payment and less than a year later, seven contractors are in litigation because they say Meaney still owes them money.

"It appears there must have been some oversight of the city process because that's not the rules as I understand," said Geoff McIntosh, owner of Bernie's Supper Club in Palm Springs.

Bernie's and other restaurants, including The New York Company, jumped through many more hoops for their grants.

"We showed them paid receipts and cancelled checks," said McIntosh. "The reality is the program is tremendous if it's applied equally to everyone."

Mayor Pro-Tem Paul Lewin says this doesn't sit well with him and announced at Wednesday's city council meeting that he wants the city to launch an outside investigation into both the incentive program and property transactions. 

"We have to be willing to admit we make mistakes," says Lewin.  "If we made mistakes we need to own it and we need to make a change."

Lewin claims he didn't know about the business relationship between Meaney and the mayor until he saw last month's news reports.

But he did recall the Mayor recusing himself on certain votes in the last year, and so did other council members.

This bothers Steve Quintanilla, city attorney for Desert Hot Springs and Rancho Mirage.

Quintanilla teaches a mandatory ethics training course on public policy to city officials.

"If a councilman has a potential conflict of interest, the law requires that they publicly disclose the extent and scope of that potential conflict of interest.  That has to be disclosed for the minutes of that meeting," said Quintanilla.

Both Quintanilla and the State Attorney General's Office pointed us to California Government Code Section 1090, which highlights what may be a bigger issue with land sales and the Hacienda grant awarded to Meaney. 

Section 1090 says the city official must reveal the extent of a conflict of interest, but that doesn't mean the city still can enter into that contract.

"If we have a council member who is a consultant for a developer or property owner who wants to enter into any type of contract with the city, the city cannot even approve that contract," said Quintanilla.  

We asked Lewin whether the mayor was straight up with the city about his financial ties to Meaney.

"I think those are great questions for you to ask the mayor," says Lewin. "It's time for him to answer those questions."

Mayor Pougnet has continued to deny our requests for interviews. 


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