Phoenix Mayoral Candidate Peggy Neely Displayed Ethically Questionable Favoritism with an Out-of-Town Developer and Campaign Contributor

Phoenix mayoral candidate Peggy Neely pledges to rein in the influence of developers at City Hall and to strengthen ethics in government — but some of her past actions as a public official don't conform with her new political message.

Especially the former councilwoman's dealings with CityNorth, a $1.8 billion mixed-use community in North Phoenix, and its Chicago-based developer, Thomas J. Klutznick Companies.

Neely was an early advocate for the nearly $100 million performance-based tax rebate deal the Klutznick firm got from the city in exchange for public parking spaces in a CityNorth garage. And her longtime political consultant, Chuck Coughlin, is the same man who was on the Klutznicks' payroll lobbying for the controversial tax incentive.

Friends of Peggy Neely: The ex-councilwoman helped out Chicago developers John and Daniel Klutznick, who contributed substantially to her campaign.
New Times Photo Illustration
Friends of Peggy Neely: The ex-councilwoman helped out Chicago developers John and Daniel Klutznick, who contributed substantially to her campaign.

Court and city documents obtained by New Times, dated between 2006 and 2010, offer a behind-the-scenes look at how Neely pressured staff into helping the firm's owners — who contributed substantially to her campaign war chest.

The rare glimpse was made possible because of a lawsuit between two feuding developers.

Gray Development's Bruce Gray filed suit against Thomas J. Klutznick Companies in 2009, claiming (among other things) that the firm intentionally thwarted his efforts to build luxury apartments at Desert Ridge, another mixed-use development in North Phoenix that neighbors CityNorth.

As part of that legal action, attorneys deposed key figures — including Neely, her staff, city planners, and brothers John and Daniel Klutznick. They also subpoenaed internal e-mails and reams of other documents.

The crux of the case is that, as master developers at Desert Ridge, the Klutznicks had control over the projects that took root in that 5,700-acre complex, which features living spaces, shopping, dining, and entertainment.

The Klutznick brothers also were developers of neighboring CityNorth, and they had plans of their own to incorporate posh homes in their development. In an attempt to block the potential competition from Gray, the brothers wouldn't grant approval for his project.

And the Klutznicks worked with then-Councilwoman Neely to frustrate Gray's attempt to get city approval for his project and its 1,162 residential units. The Klutznicks wanted to cap his project at 882 units.

"Someone had to stand up for the residents," Neely tells New Times, in an attempt to explain her opposition to Gray's project. "We worked with Gray Development to find a way to make sure the neighborhood was protected."

She refers to concerns of some Desert Ridge residents about an increase in traffic that the additional 280 units would generate.

In July 2010, a jury sided with Gray and awarded him a $110 million judgment.

But before that landmark award, as Gray's proposal moved through the city's planning process, Neely kept the Klutznicks apprised of his movements within City Hall.

Depositions from Neely and her assistants reveal that they used their personal e-mail addresses to forward internal e-mails regarding Gray to the Klutznicks — a surefire way to keep the exchanges out of public view.

In her deposition, Neely claimed that using the city's e-mail system outside of City Hall was "cumbersome" and that such e-mails were "next to impossible to send."

But Neely's then-assistant, Sarah Dobbins, forwarded e-mails that Neely wanted her to send to the Klutznicks first from her city account to her personal Yahoo! account and then to the Klutznicks.

Despite Neely's calls for transparency in city government, the way she and her staff operated almost guaranteed that the e-mails would not be discovered during a public-records request. But it couldn't shield them from a court-ordered subpoena, which is how the e-mails eventually got discovered.

As they used private e-mail accounts, Neely's staff members were instructed to employ a special code to alert Neely that she had mail waiting for her.

The Arizona Republic reported on that system in 2007, noting that "the protocol tells staff members that after forwarding messages to her personal AOL account, they should send a subsequent message to peggy.neely@phoenix.gov with the code phrase 'just touching base. see ss.' That told Neely to check the AOL account."

In Dobbins' 2009 deposition, she confirmed that was how business was being done.

When Gray requested information from the city Planning Department, Neely forwarded an e-mail to John Klutznick that she received from the director of the city's Development Services Department. When Neely wrote a memo to a deputy city manager asking him to revisit development fees that the Klutznicks were expected to pay, she passed that along to the developer. When Gray hired a public-relations firm, she also fired off an e-mail giving the Klutznicks a heads-up.

Her involvement didn't end there.

Before Gray's proposal went before the Phoenix Planning Commission on April 5, 2006, Gray and the commissioners asked for an opinion from the city attorney on whether Gray had a legal right to develop the 1,162 housing units he requested.

Apparently, Gray did have a legal right to build the units, the city attorney decided, but his opinion never was made public.

On March 31, 2006, Daniel Klutznick wrote in an e-mail that he "spoke with the councilwoman's office and . . . confirmed that the city attorney will not be putting forth an opinion on the approval process, as requested by Gray at the last meeting."

When the case between Gray and the Klutznicks went to trial, Daniel Klutznick's testimony reveals that Neely told him the opinion wouldn't be public.

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14 comments
Dumoudan
Dumoudan

Is this law Racist? Does it specify brown people?Are the people who agree with this law racist?Are those who want this law enforced racist?The law says nothing of little "brown" people but it explains what is illegal entry. It's not very hard to understand. Why is this law "broken"? Why can it be selectively ignored?Illegal alien includes all people who entered illegally, could be Croation, Russian, Chinese, Irish, Canadians and yes even Mexicans. No one single race or people is referenced in the law. Under Title 8 Section 1325 of the U.S. Code, "Improper Entry by Alien," any citizen of any country other than the United States who:Enters or attempts to enter the United States at any time or place other than as designated by immigration officers; or Eludes examination or inspection by immigration officers; or Attempts to enter or obtains entry to the United States by a willfully false or misleading representation or the willful concealment of a material fact; has committed a federal crime.Violations are punishable by criminal fines and imprisonment for up to six months. Repeat offenses can bring up to two years in prison. Additional civil fines may be imposed at the discretion of immigration judges, but civil fines do not negate the criminal sanctions or nature of the offense.Gordon could never understand this and has cost Pheonix and surrounding cities hundreds of millions to support the education, health and welfare of these illegal immigrants.

RICK THE PRICK
RICK THE PRICK

man she sure is butt-ugly. i dont want her face in newspapper everytime the mayor does something. Please Arizona, it's bad enough you voted a old, alcholic governor, do you need to add her sister. im telling ive seen Arizona poloitics and they ARE NOT PRETTY

Zaniedir2vili
Zaniedir2vili

This is so bad for Peggy. This finishes her aspirations for mayor. she is not fit to run, nor hold office. Tha she instructed staff to violate protocol is bad enough, lying during deposition? I would say jail is in her future.

Doug Bittle
Doug Bittle

Fuck you, Fuck you! You're a complete idiot.

mystery
mystery

And she want to cut fire an police salaries, staff, and pensions. And she says the unions are corrupt.

L D
L D

have yet to see New Times attack SEIU lap dog Wes Gullet...oh, wait they like that fool!

Mildred_Franks
Mildred_Franks

Tea Party piece of crap.

L D
L D

Talking about your mom again? Neely isnt Tea Party you fool! Jennifer Wright is Tea Party you ignorant chump

Fuckyou
Fuckyou

The fact this rag prints something on her makes me like her more even though she's endorsed by that curse of a female Mary Rose Wilcocks!

Phxvoter
Phxvoter

Enuff with the career politicians already. They really dont care about anyone but themselves....it's really sad.

Ron
Ron

man i really wasnt sure of the person i wanted to vote for to replace the man from mexico wannabe (gorden) but after seeing your article on peggy my mind is mad4e up peggy it is whoever you write negitive articles on is good for az

oldjohn
oldjohn

Any developer ( or even president) from chicago is suspect. I lived there for 60 years. It will soon be the next Detroit.

Walter Concrete
Walter Concrete

She's got all the experience and know how to fill any political office. Let's see, she's deceitful, dishonest, shady, stupid, two faced, a pocket stuffer plus she's willing to travel all the way to Hawaii to give her constituents everything they never wanted.

 
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