Recusals common on renewal board

John Stone faced a competitor when he approached the Lake City Development Corp. in 2000, requesting $1.5 million in urban renewal assistance for his Riverstone development.

The board’s chairman is Charlie Nipp, a partner in Parkwood Business Properties – one of Kootenai County’s largest commercial development firms.

Feasibly, Nipp could compete for the same types of tenants Stone hoped to attract to the mixed-use community he was developing along the Spokane River. Stone would also have to disclose proprietary financial information to another developer.

Urban renewal agencies are led by volunteer boards. In small towns such as Coeur d’Alene, that means board members often know, compete with, or have business dealings with the same people who come to them with applications for money.

At Stone’s request, Nipp didn’t participate in the Riverstone discussions or voting. Stone, who has received $8.2 million from the agency over the past seven years, said he has been treated fairly.

“I feel he (Nipp) has done a credible job on this, but it was the appearance of a conflict of interest that bothered me,” said Stone, a principal in SRM Development of Spokane.

Conflicts of interest are common among Lake City Development Corp.’s board members, according to a 10-year review of the agency’s minutes.

“When wildlife artist Terry Lee submitted a proposal for a studio and gallery to be built on property the agency owns in midtown, board member Deanna Goodlander recused herself from the discussions and vote. Lee is her brother. His proposal was accepted, but Lee later decided not to build the studio/gallery.

“Board member Dixie Reid, who owns an interior design firm, abstained from voting on two housing projects where the developers hired her for design work. She worked on the Indiana Arms condo project, which received $38,000 from the agency. Reid also worked for Victory Homes, which is associated with the Mill River project developers, who received $3.4 million in urban renewal funding.

“Board member Denny Davis abstained from voting on a $405,000 funding package for The Lofts, a downtown condo project. Dodge Construction, a partner in the project, is a client of Davis’ law practice.

“Both Nipp and Rod Colwell abstained from voting on $118,000 awarded to Northwest Place, a retail-office development. Nipp and Colwell, who is an executive vice president of Idaho Independent Bank, said they had professional ties to the project’s developers, John Beutler and Marshall Chesrown.

“Board member Brad Jordan recused himself from a 1999 vote that gave a $1,000 matching grant to his real estate firm for facade renovations. The money was part of a downtown improvement program. According to the minutes, Jordan is the only board member who has received money from the agency.

Board members are diligent about recusing themselves when conflicts arise, according to Tony Berns, executive director of the Lake City Development Corp. In addition to conflicts, personal and professional associations exist between the board and the applicants.

Through years of civic involvement, Nipp said he knows nearly everyone who brings funding requests before the agency. As an example, he serves on the board of Mountain West Bank with Mike Patano, a partner in The Lofts projects. The men’s social contacts date to their high school years, when they played football for competing teams. Because he doesn’t have financial ties to Patano, Nipp said he voted for The Loft’s $405,000 funding package.

During this year’s legislative session, state Rep. Jim Clark, R-Hayden, sponsored a bill that would have required elected boards for urban renewal agencies, replacing the current system of cities appointing the members. Clark said electing members would bring greater transparency and accountability to the boards.

The bill didn’t pass. Lake City Development was one of several Idaho urban renewal agencies that opposed it.

“We really need a specific skill set,” said Nipp, adding that the current system allows the cities to recruit board members with expertise in development, finance and real estate.