Food Pact for Convention Center Is Challenged

Prompted in part by a charge of conflict of interest, a San Diego City Council committee voted Wednesday to scrutinize how a local company obtained the food service contract for the waterfront convention center, apparently without offering the city the highest returns.

By a unanimous vote, the council’s Rules Committee, chaired by Mayor Maureen O’Connor, asked the city manager and the city attorney to report back March 16 on questions about how Premier Food Service company, partly owned by former San Diego Padres President Ballard Smith, was awarded the important contract--estimated to gross $3 million yearly--earlier this month by the San Diego Convention Center Corp.

O’Connor Displeased

O’Connor was unhappy that the corporation, created by the city, failed to alert council members before making its award to Premier on Feb. 2.

“I don’t think you are doing anything unsatisfactory,” O’Connor told convention center board chairman James Granby. “I have been very up front with you from the beginning that we should at least know exactly what’s going on since this is going to be the major decision we are going to be making with regard to the convention center.”

In an interview Wednesday, Tom Liegler, operator of the convention center, emphasized the importance of the contract because food service is the largest single income maker the center will have outside the city’s room tax.

O’Connor questioned the validity of the vote, noting that two of the seven board members disqualified themselves in the matter because of conflicts of interest. That left only five members, O’Connor said, and Premier won the contract on a 3-2 vote--a minority of the full board.

Also, an attorney for Service America, which submitted the highest bid, suggested that local businessman Mateo Camarillo, one of the corporation board members who voted for Premier, should have abstained from the vote, too, because of an apparent conflict of interest.

Attorney Karl Zobell pointed out that Camarillo owns a McDonald’s franchise in Linda Vista and that Smith serves on the board of directors for McDonald’s Corp.

“Certainly, if any member of this council or if any official on a City of San Diego board or commission were to enter into any arrangement like that, we believe it would be directly contrary to the city’s code of ethics” and would “tend to impair his independence or judgment,” Zobell said.

Link Wasn’t Known

Byron S. Georgiou, counsel for the convention center corporation, said he was unaware of that connection between Smith and Camarillo before the vote, but he declined to say whether he would have advised Camarillo to abstain.

After Wednesday’s committee meeting, Smith, who owns about 35% of Premier, said his position with McDonald’s was disclosed in Premier’s bid for the convention center business.

“I’ve never had any conversation with Mateo about McDonald’s or this project,” Smith said, adding that as a board member he has no say regarding individual franchise owners.

Camarillo, reached at his Linda Vista store, said he “didn’t know that Ballard was on the board, either.

“I have nothing to do with the McDonald’s board,” Camarillo said, adding that decisions about his franchise are made on a regional level in Los Angeles. “I’ve never met them. I have no interaction. If anybody would understand how McDonald’s works, they would see how ridiculous the question is.”

The award of the contract was made after convention center officials sent out requests for proposals in September. The top three qualifiers were Premier, which owns the concessions at the San Diego Sports Arena; Service America, which runs food service at San Diego Jack Murphy Stadium and several convention centers throughout the country, and ARA Leisure Services.

Service America offered a bid that would have netted the city $6.2 million over five years. ARA’s bid would have brought in $4.95 million over the same period, convention center officials said.

Premier’s bid appeared to be the lowest at $4.8 million, but it offered to transfer the operation of a smaller catering business to the convention center that would bring the total take for the city to $5.5 million.

Dead Heat Resulted

After being put through a special evaluation formula--which considered such aspects as minority hiring, an operations plan and the company’s financial strength--the three companies came out in a dead heat. Liegler suggested board members pick one of the two nationally known companies--ARA or Service America.

Instead, a minority of the board picked Premier.

The two abstentions were Bruce Moore and Granby, the board’s chairman.

Moore, an executive with Barney and Barney Insurance, abstained because his firm carries the insurance on Premier at the Sports Arena.

Granby abstained because he is currently in a legal fight with four minority partners of Premier. Those partners are developers Gil and Salvatore Contreras, Dr. Ralph O’Campo and Rudy Martinez.

Granby told reporters Wednesday that he was a co-owner of Pacific Beach Toyota with the four men from 1983 to 1986, when he and another businessman decided to buy the quartet out and take over the dealership.

However, a “very emotional conflict” has arisen, and Granby is withholding more than $1 million from the men.

“We are currently fighting at each other,” Granby said. “Suffice it to say we have a very serious dispute with them, and we’ve spent a lot of time with our lawyers.”

Granby said he didn’t know that the Contreras brothers, O’Campo and Martinez were involved in the Premier bid until a few days before the vote. The convention center’s counsel advised him to abstain.

O’Connor said Wednesday she wants to make sure that the board’s vote is the “best deal for the city.

“I’m assuming that it is,” she said. “But I would like an opportunity to have our city manager take a look and say, ‘Yes, this is the best we can get from a financial standpoint.’ ”