Improper payment for Barrio Logan maintenance district?

In April of this year, residents of Barrio Logan will once again see an extra fee on their property-tax bill. The pot of cash will go toward Barrio Logan's Maintenance Assessment District, which was officially formed in 2012.

One small problem: the association formed to administer the district hasn't been allowed to touch the money, not until the Barrio Logan Association obtains 501(c)3 nonprofit status from the IRS, leaving the association and Barrio Logan residents with no say as to where their money is going and what services should be performed. That task has been handed over to the city until the paperwork has been processed, which should be another six or seven months until that occurs.

When they do assume control of the district, the pot will be $25,000 lighter, now that the city decided to pay maintenance assessment guru Marco LiMandri the remainder of his fee to set up the district.

Some members of the Barrio Logan Association, which continues to meet as they wait for the nonprofit designation, feel that the city was wrong to pay LiMandri the $25,000 he charged to set up the association. In fact, boardmembers had voted against reimbursing LiMandri last year. It was around that time that city staff had also denied the payment. Despite that vote, last week boardmembers were informed that Scott Chadwick, chief operating officer for the City of San Diego, signed off on two checks totaling $25,000 to LiMandri.

In response, at least one member, Richard Russell, plans on filing a lawsuit against the city for spending the money.

Problems with the assessment district dates back to 2011. It was then that LiMandri and Kevin McCook, vice president of Shea Properties, teamed up to form the Barrio Logan Maintenance Assessment District. The vote, heavily weighted according to parcel size, passed. Out of the 200 votes, it passed with 70 percent of the vote coming from only 14 property owners. A total of 80 property owners out of the 200 property owners voted in favor of establishing the district.

Some members of the community opposed the assessment district as well as the methodology behind the weighted vote.

Among their first decisions, to perform the day-to-day operations, the Barrio Logan Association hired Urban Corps — not LiMandri's New City America. A follow-up vote then took place, recommending LiMandri not get paid the remaining $25,000.

LiMandri says the objections from the board regarding his payment are from the same people who fought against the formation of Barrio Logan's maintenance assessment district. He says they will look for anything to discredit him and question the district's legality.

LiMandri claims he was never required to file the nonprofit designation with the IRS. His contract with Shea Properties to set up the district does not mention filing with the IRS. And, even if he was, councilmember David Alvarez could have avoided the whole thing by asking councilmembers to waive the city's policy requiring nonprofits to have IRS designation before assuming control of assessment districts.

"[T]he repayment of the formation funds was adequately communicated through the engineer’s report, through the final plan summary to all of the property owners, and to the first three budgets that were submitted to the interim board," LiMandri said during a February 22 phone call. "If people stated they didn’t know about it, it was because they wouldn’t read their documents."

As for Alvarez dropping the ball, LiMandri said, "[Alvarez's] chief of staff told me that the city attorney advised his office that the provision requiring the IRS letter of determination could be waived when he brought the Barrio Logan Association to the city council for approval. It is was up to Councilman Alvarez to do that."

A spokesperson for Alvarez remembers it differently:

"The city attorney’s office advice was not to waive the city’s requirement for the IRS letter of designation because it would not be consistent with the requirement for all other [maintenance assessment districts] formed. There was also not support among other councilmembers to waive that requirement."

Staffers for Alvarez say they had nothing to do with the payment. The last they heard, the city attorney's office was handling the issue. According to city attorney Jan Goldsmith's calendar entries, he and LiMandri met in May and November of last year at Little Italy's Cafe Zucchero. The nature of the meeting, however, was not disclosed.

Assistant city attorney Mary Jo Lanzafame says her office had nothing to do with the payment.

"No, the City Attorney’s Office did not head up the issue; deal with Mr. LiMandri on the issue; or decide whether to pay Mr. LiMandri," wrote Lanzafame in a February 21 email.

"Our lawyers provided legal advice to City staff on legal issues raised by Mr. LiMandri’s attorney. Any decision to pay Mr. LiMandri would have been made by Chief Operating Officer Scott Chadwick."

Regardless of who ordered payment, residents of Barrio Logan will continue to shell out cash for an assessment district that they have no control over.

"LiMandri and the city totally went against us," said Kevin Russell, who attends every meeting and whose father, Richard, sits on the board.

"Everybody thought the whole issue was over with and the people in this community, many of whom didn't even vote for the assessment district, have to pay him for not doing his job. The Barrio Logan Association is essentially inoperative but he still gets paid? If you ask me it's unconscionable."

Russell says his family is discussing whether to file a lawsuit. Seems he won't have difficulty finding an attorney to do so. Attorney Cory Briggs said he would be willing to file a lawsuit if the city used the assessments to pay LiMandri the remaining part of his contract.

"Any public official who in any way allows or authorizes the disbursement will be sued, along with the city, in his/her personal capacity for recovery of the monies," Briggs wrote in a September 13 letter to the City.

"Furthermore, because much of what Shea and/or [New City America] is demanding appears to be part of a scam on taxpayers, my client will be filing suit against any public official who in any way facilitates disbursement of any monies to Shea and/or [New City America]. Public officials may be receiving legal advice that they cannot be held personally liable for improper public expenditures. That is false."

The Barrio Logan Association has filed the necessary paperwork and will assume control of the district from the city when the designation is finalized.