Rhodes distances himself from Kenny

KINGMAN, Ariz. -- When admitted felon Erin Kenny disclosed last month that she was receiving $201,000 a year to provide government consulting services to developer Jim Rhodes, red flags shot up from Las Vegas to Phoenix.

Members of an Arizona regulating panel deciding whether Rhodes can operate a water company to serve a residential community he's developing in northwestern Arizona, recently asked for more information on Rhodes' relationship with the former Clark County commissioner. Kenny pleaded guilty in 2003 to pocketing cash bribes from Las Vegas businessmen.

Rhodes submitted an affidavit to the Arizona Corporation Commission on Monday, hoping to address any concerns that might interfere with the panel's decision on whether he should be permitted to operate water and wastewater utilities to serve his master-planned community in Golden Valley, Ariz.

In the affidavit, he distanced himself from Kenny, who testified on June 28 that she received $16,800 a month to provide consulting services to Rhodes.

"Ms. Kenny is no longer being compensated for such consulting services by me or by any of the companies I control," Rhodes wrote in his affidavit. Rhodes further stated that Kenny never has, and never will have, any involvement with the utility operations proposed in Arizona.

Rhodes said Kenny consulted with him on such matters as real estate investment and business strategy.

Both Rhodes and Kenny said the business relationship was established after she left office in January 2003.

Kenny revealed her generous Rhodes salary to jurors when she testified during the criminal trial of real estate consultant Donald Davidson.

News traveled quickly to Phoenix, where hearings concluded last spring on the July 2005 permit applications submitted for Rhodes to operate the Perkins Mountain Utility Co. and Perkins Mountain Water Co.

Rhodes has recently become a big player in Arizona residential development.

In addition to his Golden Valley development, he spent $59 million in December to buy more than 1,000 acres of land in Apache Junction, Ariz., east of Phoenix. The purchase, from the Arizona state trust land, gave Rhodes the right to master plan 7,700 acres, which are seen as key to the development of 275 square miles of land east of the Phoenix metropolitan area.

Administrative Law Judge Dwight Nodes was close to issuing his recommended order for consideration by the Arizona Corporation Commission when panel members William Mundell and Kristen Mayes caught wind of Kenny's testimony. Citing concern about the employment arrangement, Mundell asked that the Arizona case be reopened.

"Additional questioning of Mr. Rhodes and possibly others, under oath, regarding Mr. Rhodes' connection with Ms. Kenny will be necessary for me to be able to make a determination whether or not the Perkins Mountain companies, which are fully controlled by Mr. Rhodes, are fit and proper entities to operate in Arizona," Mundell wrote in a July 3 letter to Arizona Corporation Commission colleagues.

Mayes then joined Mundell in calling for further scrutiny of the Rhodes-Kenny connection.

In a motion filed Monday, Rhodes' attorney Jeffrey Crockett said information available to the commission during previous hearings already noted Kenny's involvement with Rhodes. He argued that the commission had ample opportunity to explore the relationship when Rhodes testified for hours at utility-related hearings held in March.

"Information regarding Ms. Kenny and her connection to Mr. Rhodes was in the record at the time Mr. Rhodes testified," Crockett said. "To further delay a decision on these Applications by reopening the record at this late stage, based upon news stories regarding Ms. Kenny, is unfair to the Applicants. ... Further testimony would serve no beneficial purpose and would only result in additional delay."

Lace Collins, governmental affairs consultant for the commission, said it is unclear how soon Nodes will decide whether to reopen the hearing or complete his recommended order on Rhode's utility permit applications.

Review-Journal writer Adrienne Packer contributed to this report.