It's not what was said but what wasn't at a recent San Diego City Council meeting that's creating a stir among city insiders and observers.
On March 14, the City Council approved granting naming rights to the city-owned Sports Arena to IPayOne, a local real-estate company. At the time, City Council members and citizens were concerned because a 1996 contract with the Sports Arena Group 2000, the private company that operates the facility, kept the city from partaking in 90 percent of the $2.5 million created by the five-year deal.
But it's the news that two members of the Arena Group's board of directors-Sports Arena operator Ron Hahn and San Diego real estate magnate Doug Manchester-are also stakeholders in IPayOne that's getting the attention now.
That the seemingly cozy deal caused nagging yet publicly undisclosed concerns for some city officials, and that Hahn and Manchester's business interests-disclosed in background information provided to the City Council-went unnoticed by others, is fueling criticism that the City Council, already besieged by the city's financial crisis, once again failed to do their due diligence.
Even those close to the deal say that given the current intrigue at City Hall and the interests of the players, they expected extra scrutiny and made an extra effort to mitigate conjecture. Hahn, who is on IPayOne's board of directors, said he disclosed all of the stakeholders in each company, as required by the city charter, and excused himself from subsequent negotiations, turning the matter over to his son, Ernie Hahn, the general manager of the Sports Arena.
IPayOne president and CEO Sal Benti said the companies took additional steps to avoid controversy, like hiring a consulting firm to assess the value of the naming rights.
"We were very cautious... so that nobody could point the finger and say that was a cozy deal," he said. "The [City] Council never asked for that type of information from either the Arena Group or IPayOne."
But City Councilmember Michael Zucchet, whose district includes the Sports Arena, said Hahn and Manchester's dual interests did raise some questions, and they were brought to Carrie Gleeson, a deputy city attorney, on the morning of the vote. Zucchet said he received a two-part answer.
"First, it was that [the city attorney's office] didn't like getting into the business of determining other people's conflicts," he said. "What we got out of them, and a lot of this was verbal... was, basically, if there is a conflict, it's not with the city. It would be between IPayOne and the Arena Group 2000... and it wasn't really the city's issue... and that's where I left it."
Gleeson could not be reached for comment. Contacted by CityBeat, City Attorney Mike Aguirre said he was unaware of Hahn and Manchester's dual interests or any related opinion issued by his office.
"I have now reopened this as an issue. There is no formal position that has been taken by the city attorney on this matter," he said. "We will review it and take appropriate action."
As of press time, both of the Hahns and Benti, who estimated the media exposure IPayOne will gain from the naming rights is worth $5 million annually, had not provided CityBeat with a copy of the naming-rights valuation despite promises to do so. It was also unclear whether the document, paid for by the Arena Group, had been provided to the city, making it a public document.
But City Hall watchdog Carl DeMaio said he'd like a copy to ensure the deal incorporated the true value of the arena's naming rights. And City Councilmember Donna Frye, who was out of town on the day of the vote, said that while she can envision a public-perception problem, she can't see any obvious improprieties in the deal. However, she's looking to Aguirre for answers.
"Whenever you are dealing with any kind of public land," she said, "there are always going to be questions raised, and there should be. At least have a discussion-I don't think there is any harm in that."
It's something the dealmakers say they now wish had happened."All I can tell you is everything was done at arm's length with full disclosure to avoid exactly what some people are looking at right now," said Ron Hahn, "and, frankly, they're looking at everything the city does because they don't ever seem to do anything right."