SAN DIEGO – Mayor Jerry Sanders demanded the resignation of Southeastern Economic Development Corp. President Carolyn Smith yesterday, the day her agency revealed it had paid its 15 employees more than $1 million above their approved salaries over five years.

City Council members Kevin Faulconer, Donna Frye, Ben Hueso and Tony Young joined Sanders in calling for Smith to resign or be fired by the SEDC board.

SEDC Chairman Artie “Chip” Owen did not meet a 5 p.m. deadline set by Sanders, telling the city that the board would consider the request at its next regular meeting, which is Wednesday.

“I think that (delay) will be fine,” Sanders aide Jay Goldstone said. “We don't know what decision they will make. Based on that, we will decide our next actions.”

At 5:11 p.m., Owen e-mailed the Mayor's Office nine pages of answers to questions that Sanders posed in a July 8 memo about compensation and budget issues at SEDC, which is responsible for revitalizing 7.2 square miles east of downtown.

The documents reveal that during the five-year period that ended June 30, 15 SEDC employees were given “additional compensation” totaling more than $1 million beyond their base salaries.

The extra pay swelled over time. In 2003, it totaled $107,000 and averaged 13 percent above base pay. By last fiscal year, the extra pay totaled $315,000 and averaged 37 percent above base pay.

Smith and finance director Dante Dayacap received the bulk of the extra money – $319,000 during the past two years alone, more than 50 percent above their salaries.

Carolyn Smith Title: President, Southeastern Economic Development Corp. Age: 51 Birthplace: San Diego Current Residence: San Diego Education: B.A., urban studies, San Francisco State University, 1977 Family: Daughter of the Rev. George Walker Smith, founder of the Catfish Club civic forum. Career: Worked in San Clemente planning department. Hired at SEDC in 1984 after being turned down five times for jobs there. Started as a planner, named president in 1994. Online: See an accounting of extra employee pay totaling more than $1 million, plus new memos, at uniontrib.com/more/documents

The SEDC president earned $261,392 last year, Owen reported, despite approved pay of $172,000. The chairman said all compensation paid to Smith was approved by the board.

It remains unclear how Smith will respond to the demand for her resignation. Neither Owen nor Smith returned phone calls yesterday. Owen has come under scrutiny for ties to a development company that does business with the agency he chairs.

Frye said she was not surprised by the delay Owen sought in answering the resignation demand.

“He's been the one approving their salaries and having an apparent conflict of interest,” she said. “I'm sure they're in no hurry to end that relationship.”

According to Smith's contract, the SEDC president collects no severance if she is fired for “acts of dishonesty, gross misconduct or fraud.”

SEDC board member Derryl Williams said Smith should quit “instead of forcing the board to do it. It makes it that much easier.”

Trustee Richard Geisler said Smith should take a “good, hard look” at the option of resigning. “There's been a lot in the dark for a lot of years that's finally getting some light shed on it,” he said.

Geisler is looking forward to the Wednesday meeting so he can have “some serious discussion with the board of directors about the future leadership of SEDC.”

Trustee Karen Howard said she doesn't have enough facts to make a decision about Smith. She said she hadn't received letters that Sanders and city staff members sent to SEDC this week demanding reams of internal documentation.

“For as long as I've been on the board, (Smith) has been forthcoming with information and responsible,” Howard said. “I don't see why she would behave any differently in this situation.”

Other SEDC board members reached late yesterday declined to discuss the situation.

“I think we do need to get together and talk,” Cruz Gonzalez said. “It's a personnel issue, and it should be dealt with in closed session and not in the press.”

The resignation demand from Sanders and council members was e-mailed to SEDC directors just after 1 p.m. It asks the SEDC board to fire Smith if she refuses to step down.

“We feel these changes must occur immediately so that we can return this agency of city government to its original purpose of serving the communities it was established to serve,” the letter states.

The SEDC was set up in 1980. Smith has worked at the city-owned nonprofit for 24 years and has served as its president since 1994.

Although SEDC is a city agency, Sanders lacks clear authority to remove the board members alone.

The SEDC governing bylaws, which allow the council to remove trustees for any reason with a two-thirds vote, were not revised after voters approved the strong-mayor form of governance in 2005.

Pressure has been building on SEDC and City Hall to respond to the pay and budget anomalies, as city accountants have found administrative overhead as high as 39 percent at the agency.

But Young, who represents the council district served by the redevelopment area, said he has been frustrated for more than a year with SEDC management – and the lack of will by Sanders to take action.

Young said he presented the Mayor's Office with a handful of nominees to replace SEDC board members who he thought should be terminated more than a year ago, but nothing came of it.

“I don't know what the issue was, but they weren't ever sent to the council,” Young said. “The mayor is not riding a white horse here.”

Mayoral spokesman Fred Sainz was unavailable late in the day to explain the delay in addressing Young's concerns.

Staff writers Craig Gustafson and Jeanette Steele contributed to this report

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Jeff McDonald: (619) 542-4585; jeff.mcdonald@uniontrib.com