New information obtained by the Reader confirms critics’ worst fears about the Sweetwater real estate deals. E2ManageTech, hired by the district to make several pieces of Chula Vista shovel-ready for high-density housing has reiterated to the district several times that they intend to take — in addition to their salary — one-third of the profit from the sale of the properties.
A July 23 Reader article contains E2TManageTech’s October 7, 2011 participation agreement proposal in which the consultants first lay claim to the one-third. The subsequent agreement, dated July 18, 2012, states: “…the Developer is entitled to one third of the Savings [read: profits] for each of the Sites [district properties] or from related transactions after a particular aforementioned site is Entitled and Sold.”
Diane Russo, Sweetwater’s former chief financial officer, signed both documents. Her title at the time of signing — both the proposal and the subsequent agreement — was “Interim Deputy Superintendent of Operations.”
Tom Calhoun, executive facilities director for Sweetwater, has become the district face for the real-estate deals since former superintendent Ed Brand was put on leave.
Calhoun asserts the contract is not in effect because Russo was not empowered to sign for Sweetwater.
However, E2ManageTech consultants argue in an April 17 letter that Russo assured them that a September 2011 board action “provided her the authority to sign the PA [participation agreement] as a duly authorized representative of the District.”
E2ManageTech argues in the same letter that former trustee Jim Cartmill was aware of the contents of the contract when he voted for it at the September 2011 meeting. The letter states: “With respect to the one-third sharing…Member Jim Cartmill, as evidenced in the recorded minutes…clearly acknowledges his understanding of the compensation plan as outlined in our Proposal and PA.”
It appears from all the new documents that the district, belatedly, tried to renegotiate the one-third agreement with the consultants in March and April of this year.
On March 20, 2014, E2ManageTech sent Brand a restatement of what transpired in a March 17 meeting with Brand and Calhoun: “your position is that the District does not want to honor the one-third of the net cash savings of each of the Asset Properties…. You have instructed Thomas Calhoun to develop an alternate compensation plan on behalf of the District that would be acceptable to E2 and its partners….”
But the document continues, “After further consideration, E2 and its partners have decided to continue to operate in accordance with the Participation Agreement….”
In other words, E2ManageTech expects to receive the one-third.
On March 21, Calhoun sent an email to E2ManageTech principal Daryl Hernandez, saying, “Thanks Daryl and I am pleased that you and the E2TechManageTech team will be continuing your work under the existing Project Management Agreement while we discuss the status and efficacy of the Participation Agreement.”
The group doing the work for the district under the aegis of E2ManageTech is comprised of representatives from more than one consultant group: Daryl Hernandez is the vice president of E2ManageTech, Charles J. Diamond is a principal in HTI Property Group, and Vince Scarpati is a principal in C & V Consulting.
It is important to note that E2ManageTech’s agreement was never put out to bid by Sweetwater. At a March 2012 board meeting, then-trustee Bertha Lopez asked then-superintendent Brand if the district had ever sought bids. Brand stated no other consultants were interested and that this group of consultants “came highly recommended from the City of Chula Vista, which is a key component in our ability to move forward.”
How did these consultants get their foot in the door?
In response to a Reader query about the city’s recommendation, a Chula Vista project manager said the connection came when E2ManageTech partner Chuck Diamond contacted Chula Vista’s assistant development director, Eric Crockett, in 2010. Diamond was representing Unisolar at that time. Crockett told Diamond the city already had a solar-panel arrangement but referred him to Sweetwater.
Aside from selling solar panels, Diamond has an interesting history.
A LinkedIn profile lists Charles Diamond of HTI as having previously worked for Kenneth Leventhal & Co. from 1968–1976.
In 1995, the Los Angeles Times ran an extensive article about a Chuck Diamond who worked for Kenneth Leventhal during the same time period. The subject of the article was Diamond’s bankruptcy and the fact that he had borrowed extensively from friends and invested in residential real estate projects. At the time of the article, the real-estate firms were $4 million in debt.
Despite the murkiness, Sweetwater’s real-estate deals keep advancing. Bids closed today (July 31) for the district’s Third Avenue property.
A number of residents — including several Sweetwater trustee candidates — say it’s time to call a halt to these deals and wait until the district has a newly elected board in November.