Money or Nothing

Two million dollars can buy a lot, especially when it comes to city services or staff.

But not in Phoenix, where city prosecutors instead have decided to offset as much in criminal charges in exchange for running a Valley property manager and his financial partners out of town.

That's the strange, final note to the saga of Canyon Square Apartments, its embattled manager Steve Shepard and his deep-pocket backers from California, which included the former mayor of Beverly Hills ("Neighborhood Bully," John W. Allman, November 29, 2001).

Yet prosecutors are happy. They claim victory over a purported slumlord and they say that residents benefited in the process.

City Councilman Phil Gordon, whose District 4 includes Canyon Square, can chalk a notch on his slum-and-blight belt as part of his continuing effort to clean up Valley neighborhoods with Maricopa County Attorney Rick Romley.

Even Donna Neill, the outspoken community activist from Westwood, the neighborhood where Canyon Square remains, can cite a coup. As part of the court deal that dispatched Shepard and his backers, prosecutors extracted $40,000 in contributions for the Marc Atkinson Community Center, a pet project of Neill's that will be constructed at Westwood's Kid Street Park, which Neill also helped get built ("Welcome to Donnawood," John W. Allman, November 15, 2001).

"We really tried to achieve a just result," assistant city prosecutor Jo Ellen McBride told a gathering of Westwood neighbors last week.

But residents of the densely packed neighborhood between Indian School and Camelback roads that is flanked by 19th Avenue and Interstate 17 should be wondering what was really accomplished. In fact, taxpayers citywide would not be wrong to question the deal.

Because, in the end, taxpayers and the residents of Westwood helped foot the city's bill for a fight that lasted more than a year and netted next to nothing.

Despite facing $2 million in criminal fines for more than 900 alleged property violations at Canyon Square, Shepard and his partners walked away for just over $45,000. In addition to the $20,000 each side kicked in to the city's Park Foundation, the only other financial punishment levied against Shepard and his partners was $4,856 restitution to the city's Neighborhood Services Department for the cost of copies and photographs and $1,400 repayment of security deposits to seven former tenants of the 156-unit apartment complex.

Then there are the plea agreements themselves, which can best be described as incredible.

By meeting the terms of the agreement, Shepard will offset his entire $1.2 million fine, and Canyon Square Associates will offset the $770,000 fine rendered against its individual members.

The most amazing term, demanded by city prosecutors and finally executed last week at a Westwood Community Association meeting, involves a public apology.

Sitting on cafeteria benches in Westwood Primary School, more than 80 Westwood residents, Neill supporters, city officials and law enforcement officers listened January 10 as city prosecutors attempted to justify the deals.

McBride told residents that Shepard and his partners had lost their initial $800,000 investment in Canyon Square when the property was foreclosed on following a city raid in September 2000. She said that seven former tenants will each receive their $200 security deposits as a result of the city's action. And she said residents of Arizona can sleep soundly knowing that neither Shepard nor his backers will be involved with any other property statewide until at least 2004.

"Thank you for supporting not only this case, but the city employees working for your community," she said.

In all, it took McBride almost twice as long to try to explain the city's case as it did Shepard and his partners to apologize.

Though short, those statements were far more enlightening.

Neither Shepard nor the lawyer for his partners accepted any of the blame that city officials spent more than a year placing on them with public castigation, police action and extended court appearances.

Shepard, whose Ontologics Capital company managed Canyon Square in 1999 and 2000, admitted how bad his experience working with the city turned out.

"For various reasons, the funding for renovation of the property and completion of the project did not materialize," Shepard said. "It is unfortunate the plan was ultimately thwarted by outside powers."

Craig Henley, a lawyer for Canyon Square Associates, which includes former Beverly Hills Mayor Vicki Reynolds and her husband, who owned the complex, used similar words to describe the "actions and decisions of individuals, corporations and agencies" that ultimately kept any renovation from occurring.

While those in attendance offered weak applause following the apologies, the joke was on them.

Shepard and employees of his company believe that the city coerced Ontologics into assuming control of Canyon Square by falsely promising to provide hundreds of thousands of dollars in grants to make necessary repairs. And that the city then used threats, intimidation and trumped-up fines to oust Shepard and his partners from the property before any repairs could be made, allowing the city to assume control of the complex and seek a more cooperative owner/manager.

By making them apologize, the city unwittingly gave Shepard and his partners a public platform to say, in veiled phrases, exactly that.

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John W. Allman