Broker says Housing Commission staff accepted investment that launched probe
San Diego Housing Commission officials not only knew that the broker they hired to help buy hotels last year had invested in the company that sold one of the hotels, they even told him that all was well, the broker said in his first public comments since the alleged conflict. of interest was revealed three months ago.
Jim Neil, the Kidder Matthews broker who helped the San Diego Housing Commission orchestrate the purchase of two hotels to be used as long-term housing for the homeless, released a statement Wednesday morning by the through public relations firm Paragon Communications, a week after the city attorney. Mara Elliott has announced a lawsuit alleging he made fraudulent representations to the Housing Commission, violated disclosure and conflict of interest laws and received a commission above his contract.
The statement says Neil intends to challenge Elliott’s civil lawsuit and defend his professional reputation.
“The City Attorney’s Release contains a long line of accusations riddled with critical fact omissions to support their flawed account of Jim Neil’s work on behalf of the City of San Diego,” the statement said, attributed to the City of San Diego. Neil’s legal team.
But the statement also makes a series of factual claims that, if true, would put Housing Commission staff at the center of the dispute. Jaycob Bytel, the spokesperson who sent the statement, in an email declined to provide text messages, emails or other evidence to support the claims of the statement, but wrote “there is a documentation of all our facts and they will be published in the course of defending the dispute.
In response, three members of the Housing Commission board and a member of city council – each of whom were briefed on the matter behind closed doors – told Voice of San Diego that Neil’s version of events was a new to them. The board of directors of the housing commission and the city council, acting as the housing authority, supervise the staff of the housing commission.
In May, Voice of San Diego revealed that a confidential Housing Commission legal analysis showed that in February the agency‘s legal counsel “learned” that Neil had purchased 40,000 shares of Chatham Lodging Trust, a trust of real estate investment that owned the company that owned the Residence Inn Hotel Circle, between when he signed a contract to help the company buy hotels for the homeless until August 5, when the Housing Commission agreed to the terms purchase of the hotel.
In the document, legal counsel concluded that Neil had a criminal conflict of interest and recommended that the agency’s board of directors and city council refer the case to the district attorney for prosecution.
At the time, the Housing Commission acknowledged in written questions to members of San Diego City Council, also reviewed by Voice of San Diego, that two staff members were aware of the stock purchase prior to February. Michael Pavco, then senior vice president of real estate for the agency that has since left the agency, and Pari Zaker, its vice president of development, learned “at some point,” according to responses to Council questions.
Neither could say whether they found out before or after the commission bought the hotel, and Zaker told commission staff that she knew she was not allowed to do such. investment, but thought it might be different for a third-party broker. Pavco left the Housing Commission in March.
Neil’s version of events maintains that several people from the Housing Commission were aware of his investment and approved it.
“The city attorney fails to mention that Mr. Neil proactively disclosed his assets to senior Housing Commission officials prior to the transaction,” the statement said. “Senior officials of the Housing Commission informed him that he could proceed with the purchase of shares. The city attorney’s office was fully aware of this again before issuing its press release. “
This was news for City Councilor Chris Cate, who oversees the commission in Council’s role as the San Diego Housing Authority. He said the information was never passed on to the Housing Authority during its multiple closed-door hearings on the matter.
“At no time as a member of the Housing Authority was it revealed to me that a stock transaction had been disclosed during purchase transactions or approved by staff,” Cate said. “I hope that a full investigation will find out who knew what and when did they know.”
The other eight city council members did not immediately respond to questions or declined to comment.
But three members of the Housing Commission board had reactions similar to Cate’s.
“This is the first time I’ve heard a suggestion that the agency has authorized its share purchases,” said Ryan Clumpner, a board member, who has also been briefed on the matter on several occasions. closed sessions. “Either this is wrong or the board has not been briefed on the key facts.”
Stefanie Benvenuto, chairman of the board of the Housing Commission, stressed the need for a judicial inquiry.
“The statement released by Mr Neil is not in line with what was shared with the Housing Commissioners, but as I think the priority right now is a full forensic investigation to uncover the truth and not a go-and-go. -comments distracting in the press., I’ll leave my comment on that, ”said Benvenuto.
Neil negotiated two hotel purchases for the city last year; the other was for a similar property, the Residence Inn Kearny Mesa, which was not owned by the Chatham Lodging Trust. For the purchase of Kearny Mesa, Neil negotiated a commission of $ 592,500 from the seller, which Elliott said in the statement accompanying the city lawsuit exceeded the limit of $ 250,000 for his commission stipulated in his contract. . But the Housing Commission, not the seller, paid the $ 502,500 commission he earned on that sale, also exceeding his contract’s maximum commission, Elliott argued in the lawsuit.
In his statement, Neil said the city insisted that it, and not the seller, pay for the transaction on the Mission Valley hotel.
“It was the City that proposed that Mr. Neil’s commission on the purchase of the Hotel Circle be paid by the City, in order to benefit the City,” the statement said. “Sir. Neil followed the instructions of the city attorney as to who would pay the commission and how it would be paid. The City has clear documentation on this, but chose to ignore it.
That – along with the allegation that senior executives approved the purchase of Neil’s shares – counted as news from Mitch Mitchell, another member of the Housing Commission board. (Disclosure: Mitchell is also a member of the Voice of San Diego board of directors.)
“My only comment is that I’m absolutely unaware of either of those two claims he’s making,” Mitchell said.
Neil’s statement is also based on a few points on which the Housing Commission legal analysis provided a detailed breakdown.
For example, he argues that the state conflict of interest law Elliott sued him for includes an exemption for cases where the investment represents less than 3% of the company’s total shares. Neil said his investment was only 0.085% of the company’s shares.
The legal analysis considers this exemption and acknowledges that it may apply, but says that it is impossible to determine whether the gains on the purchase also represent less than 5 percent of his annual income – a other provision of the law – since he did not file a mandatory declaration of economic interests, known as form 700.
Ultimately, however, the commission’s legal counsel concluded that it did not matter whether the exemption applied, as he received a commission on the purchase. The legal analysis concluded that it would have been clear if the seller, rather than the commission, had paid the commission.
Neil’s statement also argued that he had, unlike Elliott’s trial, disclosed his investment by telling senior officials about his plans. But that does not address his failure to file a Form 700, which legal counsel’s analysis concluded he was obligated to do because he qualified as a public official for the transaction.