Developer Accuses Mayor of Conflict

The long-standing feud between Mayor Maureen O’Connor and developer Doug Manchester has hit another bump, with a lawyer for Manchester contending that the mayor tried to delay development of the San Diego Convention Center in an attempt to protect her financial interest in a competing Anaheim hotel.

The latest accusation surfaced Monday while the mayor was giving a deposition in a lawsuit between Manchester and the San Diego Unified Port District.

Manchester built the twin towers of the Marriott Hotel next to the Convention Center and is suing the Port District, alleging that delays in the center’s construction cost him business. He is seeking $130 million in damages, according to his San Diego attorney, Craig McClellan.

The lawyer claims that O’Connor, both as a former member of the Board of Port Commissioners and as mayor, contributed to the delay by voting against measures to quicken the pace of the center’s construction and urging others to do the same.

All the while, according to McClellan, the mayor failed to publicly disclose that she and her husband, Robert O. Peterson, founder of the Jack in the Box fast-food chain, had a financial interest in the 249-room Grand Hotel, near Disneyland and two blocks from the Anaheim Convention Center. About 20% of the hotel’s business is derived from that convention center, McClellan said in an interview.

McClellan said Peterson has a 40% ownership interest in the hotel, an interest controlled by Peterson and the mayor as trustees of Peterson’s family trust.

Because the San Diego Convention Center is a prime competitor with the Anaheim facility, and thus an economic threat to the Grand Hotel, the mayor had an obligation to disclose her financial interest, said McClellan, explaining that the potential conflict of interest was a main element in the deposition O’Connor gave Tuesday.

The mayor declined comment, and her office referred calls to San Diego attorney Oscar Irwin, who is defending the Port District against Manchester.

Irwin vigorously defended the mayor, saying she had no conflict under the law and was not even mayor during the time a major delay in the center’s construction occurred.

Moreover, Irwin said that, when O’Connor was a port commissioner, she raised the disclosure issue with the Port District’s attorney, who advised her that she had no conflict of interest and could vote on issues affecting the San Diego Convention Center.

“Why are they crying to the press . . . unless it has to do with Manchester’s vindictiveness?” Irwin said.

According to Irwin, the mayor’s deposition was stopped when McClellan began delving into the personal finances of O’Connor and her husband, and Irwin advised the mayor to seek the advice of her personal attorney.

In 1984, while a member of the Board of Port Commissioners, O’Connor asked Port District attorney Joe Patello whether her interest in the Grand Hotel would preclude her from voting on Convention Center matters. Patello sought advice from the state Fair Political Practices Commission.

In response, the FPPC said that, in general, the law prohibits elected officials from participating in decisions in which they know or have reason to know they have a financial interest. As to O’Connor, the FPPC said the key issues were whether her hotel interest was within the Port District’s jurisdiction or within 2 miles of the Port District’s boundary, in which case she would have had to disqualify herself. The Grand Hotel is about 90 miles from San Diego.

Also, the FPPC said, the issue was whether O’Connor’s financial interest would be both foreseeable and materially affected by her participating in Convention Center business.

In a May, 1984, letter to Patello, the FPPC said it had too little information to make a firm recommendation. According to Irwin, Patello investigated the matter further and concluded that O’Connor was not in violation of the state Political Reform Act and was free to vote.

McClellan said that, even if O’Connor was not required by law to disqualify herself, she had an obligation to disclose her financial stake in the Grand Hotel when she lobbied hard to have the center rebid in late 1986.

In April, 1986, bids for construction of the center--already delayed by problems with the excavation--came in far over the project’s budget. O’Connor was then running for mayor, and she made it a point to chastise the Port District for the bloated bids and called for a new round of bids.

Meanwhile, a coalition of downtown business leaders and tourist and convention officials called on the Port District to go ahead with construction despite the costs.

The mayor took office in July, 1986, and, in November of that year, the Port District rejected the bids and sought new ones. The new bids were opened in February, 1987, and the low bid was substantially lower than the previous bids. The Convention Center opened last month, two years behind schedule.