"It is true that no written city attorney opinion was ever issued, correct?" Gray's attorney asked Daniel Klutznick.
"Never one that I saw," he replied
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.
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"And that was consistent with what Councilwoman Neely had told [you], right, that no city attorney opinion would be issued?"
"I think that's what I relayed here," Klutznick said, referring to the March 2006 e-mail. "But, yes, that's what she told me."
When, for a moment, Klutznick suspected that the legal opinion was going to come out — and in favor of Gray — he called Neely, according to his testimony.
"And then you called councilwoman Neely to say . . . 'I thought you told me that the city attorney wasn't going to issue a report,' right?" Gray's attorney asked Klutznick.
"I think that might be what I said," Klutznick replied.
Neely also urged her staff to make decisions and recommendations that would benefit the Klutznicks and put a financial crimp on their competitor, Gray.
"Peggy made it very clear that she is not going to assist Gray in any way," John Klutznick wrote in a January 2007 e-mail to brother Daniel and others in his company. "She told Paul [Katsenes] that she would not lock 2003 rates for Gray but asked Paul to find a way to assist 'the Klutznicks' with impact fees."
Katsenes was the assistant director of Phoenix's Community and Economic Development Department at the time. Also, the city's impact fees, charged to developers to cover growth-related costs, were about to increase. Gray wanted to be locked in at the lower 2003 rate.
Neely wasn't going to let that happen. She made calls to the planning and economic development staff to make sure the Klutznicks were given extra considerations.
Klutznick also wrote that she wanted to find a "way to help us, and she asked Paul to find a solution." In January 2007, Neely suggested how the Klutznicks could make the planning staff "move more urgently" on their project by bringing in certain well-known real estate developers in Phoenix.
Along with the city attorney, city planners were on board with Gray's proposal. They recommended supporting his project and its 1,162 residential units.
Planning Director Debra Stark testified in her deposition that she received several calls about the planning staff's recommendation, including some from Neely. She testified in 2010 that she felt a lot of "pressure from all different groups," which resulted in her reversing her staff's position.
She acknowledged that this reversal had nothing to do with finding any flaws in Gray's plan, only that she felt "pressure."
And during the Gray/Klutznick civil trial, Gray's lawyer asked, "And from a conversation that you had with Councilwoman Neely . . . she expressed to you that she hoped that you would revisit the staff's initial determination, correct?"
Stark agreed that Neely had done just that.
Neely admits to New Times that she raised questions about the staff's recommending approval of Gray's larger project. "But if they didn't agree with me, they could have left it the way it was," she says.
But Stark, feeling that "pressure," issued her new staff recommendation and dumped Gray's larger project in less than 24 hours.
Another city planner said he, too, felt "pressure" and believed that politics played a part in the city's about-face.
As Neely was helping out the Klutznicks, they were generously funding projects in her district, sponsoring events she was hosting, and even rounding up contributions for her re-election campaign.
And in the middle of the back-scratching stood Chuck Coughlin. While a political adviser to Neely, he lobbied on behalf of the Klutznicks' interest in CityNorth, creating a situation in which one of his clients was supporting the other.
The Klutznicks donated nearly $30,000 to Neely's campaign between 2005 and 2009, the bulk of the money coming during time periods that overlap with her helping them by tossing obstacles in front of their competition.
During his deposition in late September 2009, John Klutznick revealed that Neely solicited money from his company.
About her requests for money, he said, "What has come up recently is her fundraising for her re-election." He referred to conversations with Neely in 2009, the year in which she was running to keep her council seat in District 2.
Campaign-finance reports show that both John and Daniel Klutznick gave Neely the maximum donations allowed by law. Their spouses and relatives also kicked in max amounts, as did employees of companies associated with CityNorth, such as architectural, engineering, and construction firms.
John Klutznick testified that he personally sent e-mails requesting money for Neely and that the developer's Phoenix office would forward the donations to her re-election campaign.
He said Neely also contacted him to ask for money for additional soccer fields at the Reach 11 complex, a project that the self-proclaimed soccer mom promoted extensively.
Neely now dismisses both the Klutznicks and Gray as "greedy developers," saying she has moved on to the lofty pursuit of running for mayor.
