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NORTH SALT LAKE -- The development company that employs mayoral candidate Leonard K. Arave as chief financial officer is suing the city that Arave hopes to lead.
Arave's opponent in the Nov. 3 general election, Councilwoman Lisa Watts Baskin, says the lawsuit is an "inherent" conflict of interest for Arave that needs to be revealed to voters.
"(Arave) will be completely conflicted," Watts Baskin said.
Arave's name is listed in a complaint filed July 7 by Woodside Homes Corp., in 2nd District Court in Farmington. The complaint is asking for at least $500,000 from North Salt Lake as refunds on overcharged city fees paid by Woodside Homes.
Arave has been employed by Woodside for 25 years. He said he has no economic interest in the company and would not benefit personally in any way from the lawsuit.
"As mayor, I would have no conflict with protecting the city from this lawsuit," Arave told city leaders in an August memo obtained by the Standard- Examiner.
Arave said it is likely he will only be with the company through the end of October or the first of November because the company is going through reorganization as it emerges from a bankruptcy.
"I don't feel that I have a conflict. Any settlement would have to be approved by the city council. As mayor, what could I really do to settle this lawsuit in the company's favor? It would be pretty obvious if I tried," said Arave, who was the top vote-getter in the city's Sept. 15 primary.
The law firm of Rinehart Fetzer Simonsen & Booth, P.C., of Salt Lake City, filed a complaint against North Salt Lake on behalf of Woodside Homes, according to court documents.
Woodside Homes is requesting a refund of overpaid planned review fees, building permit fees and unspecified damages relating to residential properties developed in the city dating back to spring 2005.
Attorney Jason K. Nelsen, representing Woodside Homes, said the claim is based on a 2005 state law that limits city fees.
The two sides are trying to resolve the issue amicably, with the complaint filed to preserve the claim before the statute of limitations runs out.
Regarding Arave's involvement in the case, Nelson said as a registered agent for Woodside Homes, Arave merely served as a "dropbox for the company" in having to forward the complaint on to other officials.
North Salt Lake city attorney Mike Nielsen said the city has turned the complaint over to the city's insurance carrier, Utah Local Government Trust, for legal representation.
"Right now, I don't think the city has been served," he said.
Asked if a potential conflict of interest would exist should Arave be elected mayor, Nielsen said Arave has assured city leaders he has no economic interest in Woodside and does not benefit personally from the lawsuit.
Woodside has filed for bankruptcy in Riverside, Calif., federal bankruptcy court.
Arave said he has agreed to remain with the company through the effective date of the plan of reorganization, when the company will emerge from bankruptcy.
"After that time, I have current plans to pursue another endeavor."
Watts Baskin disputes Arave's view over his potential conflict as mayor.
The mayor is a government finance officer and must discharge those duties without favor, Watts Baskin said, which may be difficult for Arave if he represents the city in settlement discussions with Woodside.
The election is about who is trustworthy and transparent, Watts Baskin said, and on Arave's Web page, he states he is a 25-year business owner, but doesn't reveal the name of the business as Woodside Homes.
"The mud slinging is unfortunate," Arave said of Watts Baskin's claims.
