Panel Says Its Conflict Rulings Wrongly Interpreted by Downey

The California Fair Political Practices Commission says Downey has erred in using past commission rulings to argue that Councilman James Santangelo could vote to expand the city’s redevelopment district even though he owned property in the district.

A Superior Court judge invalidated the new redevelopment area in 1985 after finding that Santangelo, who cast the deciding vote, had a conflict of interest in violation of state law.

Downey has asked the 2nd District Court of Appeal to strike down the decision, relying on past FPPC rulings support its contention that Santangelo did not act improperly because he voted only to expand the district and did not decide specific redevelopment activities that would benefit him.

But in a 32-page friend-of-the-court brief submitted to the appellate court, the FPPC said Downey attorneys misinterpreted its rulings for other cities.

“Appellants argue that Commission advice letters have established that an owner of property within a proposed redevelopment area would never have a conflict of interest in acting upon adoption of the (redevelopment) plan or amendment to the plan,” the FPPC wrote. “This assertion is inaccurate.”

The FPPC stopped short of asking the appellate court to uphold the trial court decision. But the FPPC urged the court to consider that Santangelo had economic interests on which disqualification could be based.

The appeal stems from a 1984 lawsuit filed against Downey by a group of property owners called Downey CARES.

308-Acre Addition

The group sued after the City Council voted 3-2 in July, 1984, to expand the existing 125-acre redevelopment district by adding about 380 acres along Firestone Boulevard. Santangelo, who now is the mayor of Downey, cast the deciding vote.

In September, 1985, Los Angeles Superior Court Judge Norman R. Dowds invalidated the action. He ruled that Santangelo had a conflict of interest because he owned property in the original district--established in 1978--and in the expanded area.

Dowds found that it was “reasonably foreseeable” that expansion of the redevelopment area could eventually increase the value of Santangelo’s property through improvements, such as storm drains, or by general improvement of properties in the area.

Attorney Paul L. Gale, who is representing Downey in the case, said this week that the city’s main argument in the appeal is still valid despite the FPPC brief. Gale has asked the court to allow him to file a response. No hearing date on the appeal has been set.

Letters of Advice

In briefs to the Court of Appeal, attorneys for Downey use letters of advice from the FPPC to the city attorneys of San Bernardino and Orange as key arguments to overturn the trial court decision. The FPPC provided San Bernardino with advice in 1984, and advised Orange last year.

“The FPPC advised (San Bernardino) that a city councilman who owned a business and real property in a redevelopment project area was entitled to vote on the decision to adopt a redevelopment plan, because the plan did not implement any specific redevelopment projects,” the Downey brief says.

In Orange, the redevelopment agency planned to expand an existing project area. A city councilman, who doubled as a redevelopment agency member, owned an architectural firm that might have done future business in the original and expanded redevelopment area.

“The FPPC advised that the councilman could participate in the decision to amend the redevelopment plan,” the Downey brief says.

The brief says that Santangelo was entitled to vote because the adoption of only the plan, without specific projects, would have no financial impact on Santangelo.

Preliminary Plan

But the FPPC noted in its brief that San Bernardino City Councilman Gordon E. Quiel was to vote on a preliminary plan, rather than an actual expansion of a redevelopment district.

In the original advice letter, the commission cautioned, “ . . . if a proposal were made to adopt a plan which included specific projects of more specific development guidelines and requirements . . . Mr. Quiel would have to disqualify himself from participation in the decision on the proposal.”

In the other case, Orange Councilman Jess Perez, the owner of an architectural firm, had received income from work performed in the city’s original redevelopment area. At the time, Perez had no contracts for work in either the existing redevelopment area or the proposed area of expansion, but he did not want to be restricted from seeking future business.

“The situation of Mr. Perez is readily distinguished from that of Council member Santangelo, who directly owns several parcels and a real estate business within the existing project area and the proposed addition to the project area,” the FPPC wrote.

“The location of Council member Santangelo’s real property and business interests, and the extent of those interests, increase the likelihood that Council member Santangelo would be affected by the amendment to the redevelopment plan.”

Real Estate Office

When the city approved the expanded redevelopment district, Santangelo owned property in the proposed expansion area on South Downey Avenue. That property was later sold. He also owned five properties totaling 1.5 acres within the original redevelopment district, where his Century 21 real estate office is located.

Under the ordinance that would have expanded the redevelopment area, both the new and old redevelopment districts were to share in property tax revenues set aside for redevelopment.

When a redevelopment district is created, property taxes used to support traditional government services are frozen. Additional tax revenue generated from the higher value of redeveloped properties is diverted to the redevelopment agency. Those funds are used to promote further redevelopment and, often, to pay for public improvements in the redevelopment area.

Last July, the Los Angeles County district attorney’s office charged Santangelo with a single misdemeanor conflict-of-interest count in connection with the 1984 vote.

Pretrial Hearing Monday

Santangelo pleaded innocent in October, and a pretrial hearing in the case has been scheduled for Monday in Downey Municipal Court.

Santangelo declined to comment this week, but he has said that he was unfamiliar with state law on conflict of interest at the time he voted, just seven days after taking office. He also has blamed a former city manager and City Atty. Carl Newton for giving him bad legal advice on whether to vote.

Meanwhile, the Downey City Council is scheduled Tuesday to consider sending another plan to expand the redevelopment district to state and county taxing agencies, said Community Development Director Jim Cutts. The new plan would expand the redevelopment district by 305 acres along the Firestone corridor.

Downey CARES spokesman Michael Sullivan has said the group will oppose the new plan as well. Downey CARES is composed of property owners in the Firestone area who were fearful of the condemnation powers that the city would have gained under redevelopment.