Council members are mudslinging again in Portsmouth as Councilman Bill Moody accused Mayor Kenny Wright of using inside information for personal gain.
Moody last month told The Virginian-Pilot that the mayor failed to disclose properties he owned while advocating for a recreation center near Truxtun and Brighton. Wright owns properties within a mile of the new center and purchased more nearby before the center’s site was publicly announced.
Real estate and legal experts say Wright likely won’t benefit financially from buying these mostly distressed properties and, while he could have been more transparent, they see no breach of ethics.
“In principle, I can see what the issue is,” said Dale Miller, a philosophy professor and co-director of the Institute for Ethics and Public Affairs at Old Dominion University, “but if there is not much money really involved, if it is not really going to affect the properties in the area very much, it may be beneath the threshold of what would be ethically troubling.”
Moody called The Pilot about Wright’s property holdings in June, a few weeks after he and Councilman Danny Meeks suggested recalling the mayor. He said Wright should have told the rest of the council about the homes.
“I feel like we have been duped as a council,” Moody said at the time. “We had a mayor who failed to disclose that he owned property, and not only did he own it, he continued to buy it while he was lobbying to get the city to invest and now put millions more in (the recreational center). All that together will enhance the value of what he was buying.”
When asked last month whether he benefited from inside knowledge, Wright said, “Absolutely not, and I am not going to respond to it on the record because then you are going to try to make a story because you are listening to these one or two people. You need not get in here every time you get a wingnut who has a problem with somebody.”
Mark Flynn, general counsel for the Virginia Municipal League, said that if Wright had purchased properties that the city would have had to buy from him to build the rec center, that would have been a clear conflict. But, he said, these properties are too far from the center for Wright to benefit.
“I don’t see that really applying where he is buying property nearby,” Flynn said last month.
What’s more, even if a public official was benefiting financially from investing in property near a civic development, there would have to be proof of intent, he said.
“I think you have to have something of a smoking gun, something that demonstrates that he used that information as a basis for deciding where to buy,” Flynn said. “He already owned property in the area that he had owned for five or six years.”
Wright owned four rental properties by 2013, before the closed meetings about sites for the rec center. Since then, he has more than doubled his rental portfolio.
A map of properties purchased by Portsmouth Mayor Kenny Wright. The blue square is the rec center.
“I purchase property all the time,” Wright said. “How does a rec center have anything to do with property value? A rec center doesn’t add value or devalue.”
The council voted on June 10, 2014, to purchase 30 acres at 1801 Portsmouth Blvd. for the rec center. Wright’s company, Wright’s Holdings LLC, owned three rental properties a mile or less from the site.
Moody said Wright never disclosed his properties while advocating for building the new center in the Truxtun area. Wright did disclose his properties on his Statement of Economic Interests form, which is all the state requires.
According to council minutes, there were closed sessions in March and May 2014 about acquiring property for public purposes on Portsmouth Boulevard and in the Truxtun area. In May, Wright purchased two more properties within a mile of the planned rec center, according to deeds. After the council decided in a public meeting to purchase the 30 acres for $3.75 million, Wright bought four more properties near the area.
Wright did not buy any more nearby properties after the city bought the property for the rec center on Aug. 28, 2014.
State law says no state or local officer or employee shall “use for his own economic benefit or that of another party confidential information that he has acquired by reason of his public position and which is not available to the public.”
Three real estate agents who work in Portsmouth say the assessed values of the properties Wright bought wouldn’t increase because of the new center.
“I don’t think a rec center is going to help the values over there whatsoever,” said Cimi Jordan, a real estate agent for Rose Womble Realty Co.
She and Bill Kline, owner and real estate agent for Kline Realty Co., said the center might make it easier to rent the homes but wouldn’t increase their values.
Another state code prohibits state and local officials and employees from participating in transactions when they have a personal interest in it, which means there must be a reasonable, foreseeable direct or indirect benefit, Flynn said.
He said if he were a prosecutor, he wouldn’t pursue a case like this, where you have experts saying the benefits are “pretty remote.”
Jesse Richman, a political science professor at ODU, said there isn’t much of an issue because, according to the real estate agents, “the effects of building this rec center will be fairly modest.”
“It’s a mixed bag ethically,” Richman said. “There is some concern here, I think, about profiting from inside information. … I think it would be best to have recused or to have told other council members, at least, that he had this potential interest in the success of the project that was personal and pecuniary.”
Councilman Curtis Edmonds declined to comment. Council members Paige Cherry, Elizabeth Psimas and Meeks did not return calls.
Councilman Mark Whitaker on Monday dismissed the accusation of an ethical breach as politics.
“This is purely Councilman Moody participating in a smear campaign against the mayor in an effort to motivate the recall and also to support the agenda of the Tea Party.”
Johanna Somers, 757-446-2478