Questions arise over city leaders’ investments

Mathis Winkler

NEWPORT BEACH -- Assistant City Atty. Robin Clauson said Thursday that

she plans to ask the state Fair Political Practices Commission if the

city’s Planning Commission chairman violated regulations by participating

in discussions about a project proposed by a company in which he owns

stock.

Although Commissioner Edward Selich said Thursday that he was unaware

that he still owned shares of Conexant stock, his failure to recuse

himself from hearings on the company’s proposed 556,000-square-foot

expansion near John Wayne Airport could have disqualified him from taking

part in the discussions.

Supporters of Measure S -- one of two growth-control initiatives on

the November ballot -- have marked the Conexant plan as one of the

projects that would drastically add to the city’s traffic problems. If

approved, the measure would give voters the last say on developments that

exceed the city’s general plan.

Councilmen Gary Adams and Tod Ridgeway also own Conexant stock, but

the company’s development proposal has not yet made its way to the City

Council. Councilman Dennis O’Neil previously owned Conexant stock, but

sold his shares in February.

If elected officials own more than $1,000 of stock in a company that

has a project before the city, “I believe there is a conflict,” said

Clauson.

“I didn’t know that [Selich] owned Conexant stock,” she said. “My

understanding is that he was under the impression that he didn’t own it.”

Selich said the Conexant shares formed part of his managed retirement

fund. He said once he realized that the company would put a project

before the commission, he asked his fund manager to sell the stock during

a phone conversation in February.

Instead of following his instructions, Selich said, the fund manager

did not sell the Conexant shares.

“I probably should have checked more thoroughly on it, rather than

assuming that it was [sold],” he said. Selich also said he would have

sought advice from the city attorney’s office on whether he could have

participated in discussions about the Conexant project if he had been

aware that he still owned the stock.

The Planning Commission discussed the project six times between May

and August.

Selich, as well as Adams and Ridgeway, were members of a committee

that participated in negotiations for a developers’ agreement for the

Conexant expansion.

Mayor John Noyes said he appointed Adams to the committee because of

his involvement in the general plan update, and Ridgeway for his skills

as a developer. Selich appointed himself and Planning Commissioner Larry

Tucker to the committee.

There has been no action taken on the agreement or the project --

Conexant asked the city to remove it from its calendar for unrelated

reasons.

Ridgeway, who said in January that he bought 365 Conexant shares as

part of his retirement fund, said he, Adams and Selich had done nothing

wrong in owning the stock while negotiating with Conexant

representatives.

“Why wouldn’t I buy an investment in something that’s in my backyard?”

he asked. “The only issue is recusing myself from any voting, and I have

not voted on anything. ... I have a right to make investments as everyone

in this community does. Why should I be precluded from benefiting in a

successful company? But in this case, it’s not a benefit.”

The price of Conexant stock skyrocketed in February to about $120 per

share. On Thursday, it traded at $29. Ridgeway said that since he

purchased the stock in January, he has lost about $14,915.

Ridgeway also said he would sell the stock as soon as possible.

Adams, who removed himself from the development agreement committee

after the city attorney advised him of a possible conflict of interest,

said that he would sell his 1,000 shares.

“I usually buy stocks for the long term,” Adams said, adding that he

bought the Conexant shares about a year ago on the advice of a business

colleague.

“Because of this controversy, I will probably sell it if the

opportunity is right,” he said.

Adams said that because Conexant is located within his district, he

would want to vote on the expansion project when it comes before the City

Council.

“It’s a great-opportunity stock,” Adams said. “It’s unfortunate that I

am not able to make an investment, but I will do what I need to do, I

guess.”

Adams declined to comment on the expansion project while he still

owned Conexant stock. He added that he had asked City Atty. Robert

Burnham to determine if his involvement with the general plan update

committee represented a conflict of interest, as well.

Although that committee’s duties are limited to devising a process for

updating the general plan, Adams said he wanted to make sure there was no

conflict. The committee will also look into establishing developer fees

for the airport area.

Councilman O’Neil, who owned more than $100,000 worth of Conexant

stock, according to economic interest disclosure statements, did not sit

on the committee to discuss a developers’ agreement for the project.

O’Neil declined to reveal how much Conexant stock he had owned, but

said he sold his shares in February in order to be eligible to vote on

the project when it comes before the City Council.

“I wanted to vote on this project. I had a responsibility to vote and

that’s why I sold the stock,” O’Neil said. “I’ve lost more money [on

Conexant] than I ever lost in my life, and I’m not happy about it.”

Conexant stock, publicly traded since late 1998, climbed up to its

52-week high in February and has declined in value since then.

O’Neil added that the committee members had done a “good job” in

representing the city in negotiations with Conexant.

“The fact of the matter is that the committee ... was hammering

Conexant real hard,” he said, adding that a developers’ fee of no more

than $10 per foot had been set for the draft agreement.

Planning Commissioner Tucker, the committee’s fourth member and the

only one who did not own Conexant stock, agreed.

“One of the ironies is that [committee members] have been very hawkish

at making sure that Conexant pays fees,” he said.