Rosansky cleared by letter

An independent investigation has determined Newport Beach Mayor Steve Rosansky has no conflict of interest in regulating rehabilitation homes, but a local activist says the mayor has tried to cover up past business dealings with a rehab home operator.

A letter obtained by the Daily Pilot to Rosansky from the city’s independent legal counsel Richards Watson & Gershon seems to vindicate the mayor of any wrongdoing.

“Not only do I not have any conflict of interest, but I’ve gone out of my way to be very careful in my dealings,” Rosansky said Friday.

The letter states an investigation by Richards Watson & Gershon shows Rosansky’s business dealings are not at odds with his role as mayor. Rehab home activists have accused the mayor of having a financial interest in rehab homes, which they feel are over-concentrated in certain areas of Newport Beach.

“Mr. Rosansky can claim no vindication in this report,” rehab home activist Bob Rush said. “As it apparently shows, he knowingly entered into a contract with a rehab business operator in 2004 and was compensated for it while voting on it. In the months that followed group home ordinances caused over-concentration of rehab homes in Newport beach and mostly in his own district.”

Area residents say Balboa Peninsula is infested with rehab homes because of lax city ordinances. The homes cause public nuisances such as excess trash, traffic and noise, activists say.

“Residents should consider whether Rosansky is a leader who will truly put the community needs above his own now that the city is revising group home ordinances to resolve the over-concentration dilemma,” Rush said. He added that he believes the letter shows Rosansky had a financial interest in a rehabilitation business up until earlier this year.

The investigation revealed that Rosansky provided property management services to his friend, Karl Princic, until April 2007, according to the letter. The mayor helped Princic broker a deal to purchase a duplex on the 200 block of Cedar Street in the late 1990s. Rosansky later helped Princic lease in 1999 on one unit of the duplex to a man the mayor later learned operated a group home in Costa Mesa.

Rosansky brokered another lease on the other unit of the duplex in 2004 with the same group home operator, who told the mayor he wanted to use the unit as his home office. Concerned the duplex could be used for business dealings of the rehab home, Rosansky stipulated in the lease the second unit could not be used for that purpose. The terms of the lease, obtained by the Daily Pilot, states “premises are not be used for recovery housing.”

“If I was trying to get rich on recovery housing, I wouldn’t put those terms in the lease,” Rosansky said.

Rosansky was supposed to collect a fee of about 5% of the rent for property management services on the duplex, but has not submitted a bill or been paid for his services since 2004 or 2005, according to the letter.

Rosansky discovered the duplex might have been used as an office or a counseling and testing facility for the rehab home earlier this year after neighbors complained. Although the city did not find sufficient evidence to cite the tenants for code violations, Rosansky terminated his business relationship with Princic in April. Princic still owes Rosansky about $4,000 for his services, according to the letter. Rosansky said he feels accusations against him have wasted the city’s time and money while the rehabilitation home issue remains unresolved.

“It’s like a witch hunt. Bob Rush and others are focusing on extraneous things,” Rosansky said. “I don’t even know how much that letter cost the city but it’s a waste of the city’s resources. They attack the messenger not the message.”

BRIANNA BAILEY may be reached at (714) 966-4625 or at [email protected].