Bylaws and sweethearts in Hillcrest

The Hillcrest Business Improvement Association has been forced to rescind what has been an effective method at keeping whistleblowers or other non-desirables from becoming a member or joining its board. That strategy? Rewrite the bylaws.

In April, after more than two years of complaints, Mat Wahlstrom, who owns and manages Roberts Electric Services in Hillcrest, was granted re-entry to the association. Prior to the order from city staff, Wahlstrom had lodged numerous complaints against the nonprofit that administers the Hillcrest Parking and Business Improvement District over what he says have been sweetheart deals, misappropriation of funds, and, of course, the practice of picking its members.

But before his recent victory, the city had looked the other way, as it has done in other complaints against several nonprofits that hold city contracts to manage assessment districts.

The city has generally taken the backseat in Hillcrest and other areas, essentially giving the reins to nonprofit corporations, allowing them to do as they wish with little or no oversight. Failure to enforce the rules and provide adequate oversight has resulted in several lawsuits against the city, challenging the legality of its 66 assessment districts.

Issues for Wahlstrom culminated in June 2013 when his company contributed $500 for the installation and upkeep of Hillcrest’s Pride Flag Monument, which the association manages. A month later, the check had not been cashed. Wahlstrom contacted then–association director Ben Nicholls.

“I’ve called several times to the office to inquire on the status of [the] check that I delivered on [June 25] toward the Pride Flag Monument. It has not cleared our account and I just want to ensure that if there’s a problem I can help fix it,” he wrote on August 6, 2013.

Wahlstrom also inquired about wanting to take one of several open seats on the board. He had run, unsuccessfully, a year before.

Three days later, Nicholls responded, asking Wahlstrom where his business was located. Nicholls reminded him of a recent vote by the board that disqualified many businesses without active storefronts operating strictly within community boundaries from gaining membership to the business improvement district.

“In order to stand for the board you have to be actively conducting business in Hillcrest,” wrote Nicholls. “As you don’t have an office in Hillcrest and only serve customers in Hillcrest, as you do in neighborhoods all over the city, how can you demonstrate that your place of business is Hillcrest?”

Wahlstrom responded. “You are re-writing the Bylaws of the Corporation on the fly without authority. And you are doing this at the eleventh hour specifically to deprive us of our right to be eligible for stand for the board of directors.”

Wahlstrom copied city staffer Meredith Dibden-Brown on the emails, but his concerns went unaddressed.

Adding to Wahlstrom’s list of complaints were alleged sweetheart deals between the association and contractors. Most notable was the announcement that Nicholls would resign from the Hillcrest Business Improvement District to take a job with McFarlane Promotions/Communications, a company that holds several lucrative contracts with the association, including $49,000 per year to promote Hillcrest in addition to a $149,000 contract to push for parking improvements for the business district. The latter contract was awarded despite McFarlane being the highest of five bidders.

“Just last September, the board approved an annual contract worth $49,000 without competition to McFarlane. This was in full knowledge that this was the same company where outgoing executive director Nicholls had already been hired as Chief Operating Officer, and it was done with his repeated urging during the board discussion before the vote,” says Wahlstrom.

Other residents are now taking action. “McFarlane Communications had the highest bid for the contract, so it raises some serious questions, especially given Nicholls was hired by McFarlane after several years of passing contracts its way,” wrote Leo Wilson, a longtime Bankers Hill resident. “I will be requesting the Uptown Parking District budget not be approved until the question of potential conflict of interest in awarding the contract to McFarlane Communications is investigated and resolved.”

Wahlstrom’s resilience seems to be paying off. This past March, months after learning of the allegations, Dibden-Brown gave notice to the association’s new board president (and owner of San Diego Gay and Lesbian News), Johnathan Hale, to allow access to any paying businesses.

“[W]e request that you amend your bylaws or rescind the most recent change so that the members of Hillcrest Business Improvement Association includes those businesses within the District holding current business tax certificates that have also paid the appropriate [business improvement district] assessment,” Dibden-Brown wrote in a March 28 email.

Hale didn’t take the news lightly. “At issue is that the City is billing and accepting bid assessment taxes from businesses that are using post office boxes or paid boxes within the district but their physical location is outside the district.”

But in a follow-up email, Dibden-Brown reiterated the need to allow valid businesses that have paid the assessment and have a valid business license to be allowed to join and participate.

Council president Todd Gloria has also taken a position. “[B]usinesses who pay the assessments should be fairly represented,” Gloria’s chief of staff Katie Keach wrote in an email. “The Council President understands the Hillcrest BIA is working with City staff to ensure those who pay the business improvement district assessments are not excluded from participation in the organization.”

Victories aside, Wahlstrom and Wilson are lobbying the city to hold off on renewing the contract to the business improvement association.

“It is apparent that this Association has broken the [business improvement district] Management Agreement and violated the public trust. We ask that all 2014 assessment funds be returned, with no additional public monies to be provided to this association until it can comply with contract requirements in good faith and with transparency.”