On July 30, 2001, the San Diego City Council unanimously voted to write a check for $1 million of the taxpayers' money to a nonprofit group called the San Diego Public Library Foundation, which had been incorporated only three months before.
Its president was James R. Dawe, a 58-year-old attorney and longtime lobbyist who is a familiar face in the corridors of city hall. According to lobbyist disclosure records, Dawe's clients include Pardee Homes and McMillin Communities of National City. Both are powerful developers who have long had their way with the San Diego City Council. McMillin built the controversial Liberty Station development on the grounds of the old Naval Training Center, which was conveyed by the city redevelopment agency in what critics argued was a sweetheart deal. The council has also approved millions of dollars in taxpayer payments for improved sewer and water lines for the development, over the objections of some Point Loma residents.
The library group's board of directors included Mike Madigan (another lobbyist and onetime chief of the city's ballpark-development program) and Mary Walshock, the head of the extension program at the University of California at San Diego.
Last year Madigan, a former Pardee executive, agreed to pay a $1000 fine to settle charges that he did not properly report his financial interests on city disclosure statements required under the state's conflict-of-interest law.
"[Madigan] failed to report his spouse's interest in MNA Consulting on Schedule A-2 of his annual statement of economic interests for the 2001 calendar year, as well as his leaving-office statement," the stipulation says.
"[Madigan] is a sophisticated businessman with extensive experience in municipal affairs," it continues. "[He] could have been more diligent" in determining the scope of his disclosure obligations, especially in light of the fact that he knew his spouse's company was representing the San Diego Padres Baseball Club and Centre City Development Corporation with respect to the ballpark and redevelopment project.
Listed as "executive director" of the library foundation was James Lewis Bowers, 75, a fundraising professional who was executive vice president of Scripps Memorial Hospitals and president of the Scripps Memorial Hospital Foundation from 1977 until his retirement in 1993.
A La Jolla resident, member of the board of the San Diego Symphony, and certifiable member of La Jolla's social set, Bowers is a partner in Laurel. The restaurant, located on the corner of Laurel Street and Fifth Avenue near Balboa Park, caters to some of the city's wealthiest diners.
In the foundation's hands, according to Mayor Dick Murphy, was nothing less than the future of public libraries in San Diego. Book budgets were being cut, and patrons were having to make do with a decrepit downtown library and shorter hours there and at other branches. Still, the million-dollar payment to Dawe's foundation was crucial, according to Murphy.
Using the payment, the foundation was supposed to launch a campaign to raise at least $50 million from private corporations and wealthy philanthropists for construction of a new main library downtown and branches throughout the city.
"For the first time since the main library was built in 1954, we're making solid progress, not only for a new main library but a branch system that is a package that will really give San Diego one of the finest library systems anywhere," Murphy proclaimed prior to the July 2001 council meeting. "My belief is that the ballpark site is the best remaining option. Furthermore, we need to move forward."
Murphy was joined by Seventh District city councilman Jim Madaffer, who along with the mayor argued that the million-dollar contribution was essential to the city's library building efforts. "This is going to send a message to the philanthropic community that we're serious," Madaffer told the Union-Tribune the day before the vote. "We'd like to raise $40 million or $50 million."
According to the plan presented to the public at the July meeting and later documented in a so-called memorandum of understanding (MOU) between the city and the foundation, the city's contribution would represent seed money. Only a limited amount could be used for expenses. The rest would ultimately go back to the city's public library system.
"The Mayor and Council of the City recognize that a world-class Library System requires not only public monies, but also private support," says the preamble of the agreement between the city and the foundation that was to govern how the million dollars of public money would be spent.
"As evidence of the city's good-faith desire to secure a world-class Library System and to enable the Library Foundation to begin operations, the City agrees to provide $1 million to the Library Foundation."
The city's million-dollar payment came with a few restrictions and accounting requirements to protect the funds from misappropriation. "The Library Foundation shall secure an annual independent audit of its books and records for compliance with the requirements of this [memorandum of understanding]," it said. "The Library Foundation shall ensure that an annual independent audit report shall be prepared and submitted to the city."
The agreement also required that "from time to time during the Term [of the agreement], the Library Foundation shall submit to the City a written proposal for use of the City's Contribution for the Library Foundation's expenses. This proposal shall describe in detail the anticipated use of the City's Contribution."
Finally, it placed a cap on how much of the city's $1 million contribution could be used to cover the foundation's overhead. "The Library Foundation's expenses shall be payable first from Campaign funds, if available," the agreement says, referring to the proceeds of the foundation's anticipated fundraising appeal to the private philanthropists.
If that money was insufficient to cover the expenses, the agreement said, they could be paid from "City's Contribution in an amount not to exceed $150,000. The City shall have no other obligation to pay the Library Foundation's expenses."
Thus did Mayor Murphy and the city council vote 9-0 to approve the agreement. "It's time to move forward. The bottom line is a world-class city deserves a world-class library." Added Madaffer, "This is finally, actually going to happen after years of false starts."