PROMOTING CORRUPTIONHillcrest Sign

How the Hillcrest Business Association under Benjamin Nicholls went from taking care of business to being in business for itself.


[Originally published: September 7th, 2013]  

In 1921, the Hillcrest Association was formed to promote commercial activity in the new neighborhood of Hillcrest in San Diego, California. This made it the first of many business associations in San Diego. As such, it was in prime position to take advantage of a new wave in promoting commercial activity: business improvement districts (BIDs).

In 1984 the Hillcrest Association entered into a contract with the City of San Diego to administer the newly-formed BID, the Hillcrest Business Improvement District. To match this new status, it changed its name to the Hillcrest Business Improvement Association (HBIA)—often shortened to the Hillcrest Business Association or, most often, the HBA.

With this new power to oversee programs such as parking and maintenance also came money: lots of it. In addition to the income from business taxes and parking fees, BIDs also receive non-voluntary fees charged on top of the taxes called assessments. These assessments can range from twice to thirty-five times more than the amount a business would pay if it were not doing business in a BID.

Because they are being paid with public money, groups managing BIDs are supposed to follow strict contractual guidelines for how they decide to spend it and report spending it, in addition to how they’re organized (for example, they must be not-for-profit and follow laws regarding conflict of interest). To help ensure that these guidelines are followed, the contracts to administer a BID are renewed annually.

But in exchange for helping the City to clean sidewalks, plant flowers, and send out newsletters, a group chosen to manage a BID is given a monopoly on most of what can take place within its boundaries, such as public events. And also in exchange, the City says any money a group can make from this monopoly it can do with what it wants. In other words, it can run two sets of books with two different agendas. This loophole was an opening to abuse, and into it entered Benjamin Nicholls.

Before Nicholls became the Executive Director in 2009, he was preceded by Warren Simon, a man widely known for his concern and tact—and lack of controversy. During Mr. Simon’s twenty years in office, the HBA performed its duties per the City contract and ran two annual events, CityFest and Taste of Hillcrest, to raise money for known projects, such as repairing and lighting the Hillcrest sign, a neighborhood landmark.

Nicholls soon began turning the HBA into a permanent, private fundraising machine. He first generated controversy by trying to take a larger share from the weekly Hillcrest Farmers Market. During the next three years, he added open-ended fund-raising events such as Taste n’ Tinis and the Hillcrest Hoe Down, each with hefty admission fees and a profit-sharing agreement with the promotion company.

The Amazing High Heel Race was first held to raise funds for the Hillcrest Pride Flag Project, but then was continued to fund a park and then a monument designed by a current HBA board member—and next to install a $20,000 rainbow cross walk.

Earlier this year, a dispute between the HBA and the Greater San Diego Business Association over control of the Mardi Gras fundraiser led to the HBA to pull out completely rather than compromise and decide to pursue a competing “Fat Tuesday” event in 2014. And as of this year, San Diego Pride was allowed to take on the Pride of Hillcrest Block Party—but only by splitting all profits equally with the HBA, using the HBA’s promotion company, and forbidding San Diego Pride from hosting any other parties.

All of these events are promoted for the public to attend to have fun while helping raise money for the “community.” But since there is zero oversight, this money can and has been used for pet projects with no input and against objections.

In the meantime, empty pep talks took the place of actual business development efforts, and businesses continued to fail at a faster rate than elsewhere.

As of August 6, 2013, it was announced that Nicholls is leaving the HBA to take a senior position at McFarlane Communications. If that name sounds familiar, it’s because for at least the past two years McFarlane has been the promotion company and public relations firm for the HBA. Last year this contract was worth $47,500-$49,000 in fees alone (variance based on profit sharing), but the actual value of the contract was double that, as the contract directed how much McFarlane was to spend on each event and then send the invoices to the HBA for payment. This would be a violation of the City contract that any project greater than $50K needs more than three bids in writing, but it definitely required that at least three be provided in writing.

Further, in 2011 the HBA authorized a huge promotion for parking in Hillcrest. Since the dollar amount authorized was for up to $150,000 and involved public funds, they had to put it out for at least five bids. Here were the results:

Hillcrest Parking Promotion Bids

Company

 Campaign

 Fees

 Total Bid

Lyons Design & Communications

 $  84,000.00

 $30,000.00

 $114,000.00

BAM Communications

 $  95,700.00

 $26,400.00

 $122,100.00

Nuffer, Smith, Tucker

 $100,000.00

 $48,000.00

 $148,000.00

J. Simms Agency

 $122,500.00

 $26,500.00

 $149,000.00

McFarlane Promotions

 $  99,369.58

 $50,000.00

 $149,369.58

Even though McFarlane was the overall most expensive bid, and had the highest fee cost, it was awarded the contract. So under Nicholls, the HBA has paid a quarter million dollars the last two years in sweetheart deals years exclusively to the company that just announced it’s hiring him.

On Tuesday, September 10, 2013, the HBA board is scheduled to award—once again, without competition, and in violation of the HBA’s own Purchasing SOP—next year’s HBA event promotion contract to McFarlane, in full knowledge that Nicholls is going to directly benefit from it.

If you think this is an true example of corruption, as well as a clear violation of the Brown Act, then here’s what you can do:

·         Show up at the HBA board meeting to voice your concern; meetings are open to the public and to public comment.

·         Contact the City of San Diego Office of Small Business, which oversees all the BIDs

                        Manager: Meredith Dibden-Brown
                        Telephone: 619-236-6700
                        Direct: 619-236-6485
                        Fax: 619-236-6703
                        E-Mail: MDBrown@sandiego.gov

·         Contact the elected representatives for the area of the Hillcrest BID to express your concern:

            Director of Business and Community Projects for District 3 Anthony Bernal

            Interim Mayor and City Council President Todd Gloria

            Assemblymember Toni Atkins

            State Senator Marty Block

·         Call or forward this link to local news outlets

·         Forward this link to your friends

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