Chairman of Business Group Quits Under Fire

The chairman of the Valley Economic Development Center has resigned under fire, and half of the center’s governing board has quit in a leadership shake-up at one of the city’s leading small-business organizations.

After months of controversy, a group of board members asked David Honda to leave the board on grounds that he was interfering with the day-to-day operations of the nonprofit group, board member Wayne Adelstein said Monday.

Honda, who had been chairman for eight years, agreed to step down last Tuesday, saying he was exhausted by all the turmoil within the organization.

“I didn’t want to fight,” Honda said Monday. “I wanted to get the organization back on its feet. But some of the other board members refused.”

Eight other board members have resigned this summer, Adelstein said, leaving just eight people on the 17-seat board.

Honda said several board members left because of his departure, although Adelstein insisted that many were planning to resign anyway.

The VEDC’s board has been sharply divided between allies of Honda, a Northridge contractor who served as chairman on a volunteer basis, and backers of the organization’s president and top-paid staff member, John Rooney.

Honda accused Rooney of running up debts at the organization, which relies on government contracts to provide advice, training and loans to small businesses across Southern California. Rooney and his supporters said Honda was “micromanaging” the center, meddling in the organization’s day-to-day affairs.

Rooney’s future remains unclear. Adelstein said Rooney was considering resigning, but he would not elaborate.

Rooney did not return calls Monday. In an interview last month, he vowed to remain at the VEDC, which under his helm has grown from a three-person agency to a regional player with a $2.8-million budget, a $7-million loan fund and a staff of 50.

A key dispute between Rooney and Honda involved commissions. In May, Rooney was paid $5,700 and an economic development center consultant $31,000 in commissions for their work in landing a $1.2-million venture capital investment for a Canoga Park sign company.

Outraged that Rooney took a commission when the center was more than $200,000 in debt, Honda and another member of the executive committee, Bob Myler, demanded that Rooney resign. Rooney resisted, and the full board, after reviewing his performance, upheld Rooney’s authority. However, Rooney confirmed that the board decided to reduce his compensation.

Honda said his attempts to remove Rooney led to his departure.

“The Rooney issue had 100% to do with this,” Honda said. “And after eight years of being chairman, I didn’t think that the way these other board members handled the situation was the right way to do something.”

According to Honda, a small group of board members called a meeting on July 19, a date Honda had indicated he couldn’t make because he had a scheduling conflict. Adelstein was at the meeting and said the handful of board members present--either five or seven, he couldn’t remember--decided it was time for Honda to step down.

“We felt that there was an inordinate amount of micromanaging on [Honda’s] behalf,” Adelstein said.

Marvin Selter, an Encino human resources consultant and veteran board member, is now the organization’s interim chairman. He did not return calls Monday.

On July 20, when asked by a reporter what action was taken at the July 19 board meeting, Selter said “just routine business.” He did not mention the decision to demand Honda’s resignation.

Adelstein acknowledged that the board has been secretive about its inner workings, and said it was because of the recent leadership battles.

“All of this clearly indicates there are some problems,” he said. “But I’m very proud of this board. We’re doing exactly what needs to be done.”