A city employee who led Bend’s Private Development Engineering Division resigned last month, on the heels of an internal investigation into ethics violations for her participation in a development group with former executives at Pahlisch Homes.
Deedee Fraley, an engineer with the City from 2017 until her November resignation, was the assistant city engineer in charge of a division that handled permitting for private development of public infrastructure, including sewers, water and streets.
In September, residents of a southeast Bend subdivision first raised concerns to city officials about Fraley’s involvement with the purchase and proposed development of a property in their neighborhood. Among their allegations are that she misled numerous homeowners about her intentions with the property, aiming to gain support for changing the neighborhood’s covenants to allow for the development of a quadplex on a lot where a single-family home currently stands, and that she never disclosed she was purchasing the property in partnership with developers. The same developers are also working on a major development behind the property.
During the Source Weekly’s investigation into the neighbors’ claims and the City’s response, we spoke with multiple people in the subdivision, a City employee directly involved with the investigation and Fraley and her partners in the development group. We also obtained and reviewed publicly available documents, from pre-applications on the properties in question to the subdivision’s historical and revised covenants, conditions and restrictions — as well as business entity filings. What we found is a story about an unconventional partnership, with motives that differ based on perspective.
The Partnership
In May, while searching for a potential property to develop, Fraley says she came across a house in a southeast Bend subdivision that looked promising. Getting into development, she told the Source Weekly, was a long-time ambition of hers, inspired by her in-laws, who are developers. To help her with the project, Fraley said she reached out to Jerry Jones, president of the development company Macher and the former director of land development at Pahlisch Homes, the largest developer in Bend. Fraley said she knew Jones because of her job at the City. To avoid possible conflicts, Fraley said she disclosed her potential hiring of Jones and her plans to develop the property to her manager at the City of Bend and was advised to “create a firewall” between herself and the permit and application process. According to Fraley, this is how other City employees have approached personal property development. However, when initial funding for her project fell through, Fraley said, Jones broached the idea of forming a partnership to buy and develop the property instead.
“Jerry suggested the partnering, as that is what he’s done with other clients to get funding,” Fraley said. In a statement to Source Weekly, Jones agreed that he was the one who initiated the partnership after her initial funding fell through.
“…Macher expressed interest in participating in the project, instead of a fee-based contract for hire,” Jones wrote.
This change, from potentially hiring Jones to forming a development group with him, was a change Fraley said she didn’t think she needed to disclose to the City, but it would prove to be a contentious difference.
“I didn’t think of the partnering as an issue, I guess. But after further discussion with the City, I can see their perspective on that, and that’s where my decision to resign really stemmed from,” Fraley told the Source Weekly.
To purchase the property, Fraley and Jones, along with Brian Gaskins — former director of finance at Pahlisch and now a managing partner at Brightview Capital — and realtor Nicolaus Jones formed Terra Development Group LLC. It is unclear at what step in the process the group came together. According to Deschutes County property records, the group closed on the southeast Bend property, 21005 Via Sandia, on June 17, but the property was listed as pending with contingencies on May 2, according to Zillow records. The house, a three-bedroom, one-bath, ranch-style home, is just over 1,000 square feet and sits on less than half an acre. It sold for $560,000, according to records. The property is part of a small subdivision of 22 homes in southeast Bend, an area of the city that is the focus of large developments by multiple developers — including a proposed 42-unit subdivision by Macher Development on the 5-acre lot just behind it, along Cabin Lane.
The Purchase, the Neighbors
Toward the end of May, before the Via Sandia purchase closed, Fraley went around Tara View Estates, the subdivision where the property is located, asking homeowners to amend the neighborhood’s CC&Rs to allow for development beyond one unit on a lot. According to multiple neighbors’ accounts, Fraley told them she wanted to buy the property for her family and needed the amendments made so she could add an accessory dwelling unit. She brought a notary with her and personalized forms for each homeowner to sign — a move that some in the neighborhood say felt aggressive, but that Fraley told the Source Weekly was practical and meant to ensure that no one felt coerced into signing.
The forms, filed with Deschutes County Clerk’s Office, show that between May 22 and June 10, Fraley made at least four trips to Tara View Estates for signatures, with 11 of 22 residents signing off on the changes. The last signature on record is from Gaskins on July 30 on behalf of Terra Development Group, the owner of the Via Sandia property by that point.
Records obtained from the County show that the changes to the neighborhood’s CC&Rs included deleting sections limiting land use and building type to residential purposes, requiring architectural approval by a neighborhood committee and stipulating setbacks for buildings. Fraley said the changes were made to bring the CC&Rs, enacted in 1979, up to modern-day zoning allowances.
In a written statement to the Source Weekly, Gaskins and Jones maintain that having the CC&Rs amended was critical to them moving forward with the partnership and development of Via Sandia with Fraley.
“For Via Sandia, they [we] expressed to Deedee for this one property we could include her once she completed some due diligence on her own (including revisions to CCRs) and [was] ready to move forward,” Gaskins and Jones wrote to the Source Weekly.
At an Old Farm District Neighborhood Association meeting in October, months after the revisions were made and the property sold, homeowners brought up their concerns over the scope of the Via Sandia project – a proposed quadplex. Several expressed frustration with the changes Fraley initiated to the neighborhood’s CC&Rs and questioned her role in the development, given her job at the City. By that time, several homeowners had already sent in letters and made calls to the City expressing their worries.
“I was completely blindsided, along with so many of us. We all thought it was an extra house, two homes not four,” said neighbor Terese Dingus.
“I just feel it’s so unethical, said Jenny Lacombe during the meeting. “She’s got an inside scoop… It’s something she shouldn’t be doing in her job.”
Bend City Councilor Mike Riley, the Council’s liaison to the Old Farm District Neighborhood Association, was at the meeting and assured neighbors that the City was investigating the matter, looking into ethical concerns and conflicts of interest.
A Quadplex and Sewer Connection
In separate interviews, a handful of neighbors told the Source Weekly, that they, too, believe Fraley misrepresented herself when she was looking to purchase the property. They said that in addition to their concerns over the scale of development proposed, they also worry that a driving force behind the purchase was to use part of the lot as a sewage connection for the proposed 42-unit Macher development behind it along Cabin Lane.
In response, Fraley told the Source Weekly that, to those who asked, she disclosed that she worked for the City and said she never told the neighbors she planned to live at the property or build an ADU on it. And, along with the other members of Terra Development Group, she maintains that the Via Sandia property and the 42-unit Cabin Lane development behind it are not significant to each other – that aside from the physical closeness and the overlap of Macher development leaders, they are unrelated.
“We can adamantly say that the purchase and partnership of Via Sandia has nothing to do with the Macher land and development project on Cabin Lane,” Jones and Gaskins wrote in response to Source Weekly questions.
However, in a June 18 conceptual plan that Macher filed with the City, a sewage tie-in to a mainline for its 42-unit Cabin Lane development was noted as being possible through the Via Sandia property. A property that by that time, Jones – president of Macher – owned through the Terra Development Group LLC.
According to Jones and Gaskins, the conceptual plan Macher submitted was a preliminary attempt to note all potential access points.
“At that time, Macher was trying to uncover every option to bring water and sewer to the Cabin Lane development,” they wrote. “At the time of pre-application, the City had been working on a much larger plan and construction project bringing sewer utilities to all the Southeast Area Plan, but nothing was 100% understood.”
Now, following a sewer analysis on Dec. 5 showing a forthcoming sewer line on Cabin Lane that was approved for another development on the street, Jones and Gaskins say a connection through Via Sandia is not needed.
Fraley told the Source Weekly she was not aware of a possible sewer connection. She said she entered into the Terra Development Group and purchased with the sole intention to develop an investment property, and she says she wasn’t even aware Macher was developing the lot behind it.
Possible Conflicts
Following complaints from the Tara View Estates neighbors, the City initiated an internal investigation. The details and findings from that investigation, as with other personnel issues, are private. However, Fraley maintains that City officials, including her manager in the Community and Economic Development Department, knew of her plans to develop Via Sandia and that it wasn’t a problem until neighbor complaints came rolling in.
“I had already talked to the City about wanting to do development, and so I disclosed the process, that I was trying to purchase the property, with the City. So, I attempted to disclose everything to the City,” said Fraley. What she says she did not disclose was that partnership.
Gaskins and Jones say they believed the City was informed about the partnership. “We were reassured consistently that Deedee had approval from her supervisors to be a part of the Via Sandia development.”
Colin Stephens, Fraley’s former supervisor and director of the City’s Community and Economic Development Department, spoke with the Source Weekly on Dec. 6 about the allegations against Fraley. He said the City initiated an internal investigation into Fraley’s development following the complaints and did not find any incidents of “undue influence” during her seven years with the City. When asked about whether the City knew of the partnership between Fraley and the developers before Terra View Estates neighbors came forward, and whether such a partnership was allowed, Stephens said he could not answer questions specific to the investigation but pointed to the City’s Employee Handbook and the section dealing with ethics.
Under “Conflict of Interest,” the section begins with establishing general parameters around relationships with people who also do business with the City.
“You may not solicit, obtain, accept, or retain any personal benefit from any supplier, vendor, customer/client, or individual or organization doing or seeking business with the City. This means you may not maintain an outside business or financial interest or engage in any outside business or financial activity that conflicts with the interests of the City or interferes with your ability to fully perform your job responsibilities.”
A Development on Pause
In November, records show — and Fraley and Terra Development Group members confirm — that Fraley left the LLC and is thus no longer an owner of the Via Sandia property. She said she is hoping to continue pursuing other development opportunities now that she resigned from her position with the City.
Gaskins and Jones say they are reassessing the timeline for when to continue with a middle housing development on the Via Sandia property. The plans Terra Development Group LLC submitted at the end of July for a middle housing development were denied due to an “incomplete application,” according to a letter sent to the group by the City on August 12. The application will be void on Jan. 18, 2025, if the group does not submit the missing information.
Last month, neighbors in the subdivision filed to change the covenants back to their original wording. They got the necessary number of signatures, but it is unclear if any changes filed with the County would be enforceable. For now, the possibility of larger developments on the lots in Tara View Estates remains.
-Editor’s note: The headline of this article originally stated, “City Engineer Resigns Following Internal Investigation into Partnership with Former Pahlisch Developers.” We have removed Pahlisch Homes’ name as the individuals referenced in the article are no longer employed by Pahlisch Homes and no longer have any direct employment connection to the company.
This article appears in Source Weekly December 12, 2024.
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Anyone with eyes can see that there has been a corrupt collusion between Bend officials and private developers for years. Just look at how dense our new housing is. We are in the middle of a vast forest here in the high desert of central Oregon! Why are we building small homes on small lots with the kind of density you would see in an urban environment? Greed.
As someone who has worked with DeeDee on a daily basis, I can say that every member of her surrounding city staff will confirm that she is an entirely corrupt individual who has been incredibly toxic to our city for far too long.
The city managers and her direct oversight are going to be investigated for allowing this for such a duration.
Been posting here forever on this very subject. The corruption in this town is out of control. Has been for a very long time. Brooks Resources is the head of the snake.
Until this town gets serious about saving it before it’s too late, we are going to lose what we all loved about Bend.
The development is out of control. We still have THOUSANDS of homes still to come on the Westside. Many more on the Eastside. Yet, no healthcare or other infrastructure to keep up with any of it.
City managers are corrupt and/or ignorant. Period!
Source: Dig into more of this. You’ll find much more shady #@$% going on!
I promise, a day is coming where groceries are going to be an issue. Simple stuff we all depend on. You can forget about Mt. Bachelor. IMO, we will never win out against the developers and corrupt managers. It’s sad. Going to drive a lot of us out of here who grew up here.
Great story by Jennifer and Julianna! This is exactly what most people suspect is going on between the city staff and major developers. Why is a city staff person “searching for a property to develop”? Is that what our tax $$ are going toward? No city staff person should be engaged in this behavior. It reeks of corruption. Why is she lying to homeowners to get them to change the CC&Rs? It’s hard to imagine that none of that was done without a self-interest. I’d like to see these intrepid reporters move up the chain to Colin Stephens and investigate why city codes were ignored and directly contravened in order to adjust the property lines of the COID property off of Brookswood in SW Bend. Not only that but a comment period for these out of code adjustments was not followed – approval was signed before the comment deadline – which shows that the mantra of the city council that the public has the right to comment on land use decisions and that those comments will be read and taken into account is a lie. Codes are ignored and the wheels greased if a prominent developer stands to make bank.
The City allowed the removal of a huge section of a butte on the 1800 section of SW Knoll Ave where we live. They allowed 6 buildings (1 original house, 3 multi-units and 2 being built right now). It took over a year of constant horrible pounding to change the land to make it possible. Parking will be an increasing issue. The units are designed to accommodate students. Our quiet little neighborhood is a dead-end and shaded so much that snow removal is difficult and last on the City’s list. Since this caused serious flooding issues, the City did put a lot of money and time into trying to correct the flooding for the neighborhood. Does this really make sense? Only neighborhoods with strong CCR’s can protect their livability. Does this make sense?
Great reporting! Thank you. This says it all and confirms my thoughts and comments I have made about our city and developer relationships. They are ruining this town.
All of the people (“developers”) involved with her and the associated development that was trying to tie into the sewer access should have a 5-10yr ban on any future development in the city and or Deschutes county.
As a COB employee who has had the displeasure of working with Deedee this doesn’t surprise me at all. Although I wasn’t aware of how truly corrupt she was, I have witnessed the abhorrent way she treated her staff and the staff of other city departments. She’ll be a shoe in for the private sector. Jokes aside this is such a shame because of how seriously most city staff take public service. Instead of management using this as an opportunity to take accountability they instead say they, “did not find any incidents of “undue influence” and pretend nothing is happening internally either. I hope this is a wake up call not only for the citizens of Bend, but also city staff.
“I didn’t think of the partnering as an issue, I guess. But after further discussion with the City, I can see their perspective on that”. Anyone who has been in a position of working with private developers as long as she did knew quite well what the line for reporting relationships and interactions to leadership in the city. The “oops, I did not know” excuse was only going to announced if ever caught. The DA needs to look at potential prosecution even after the resignation as we know quite well that this disgraced public employee took their roladex of contacts with them when they departed the office. Disgusting behavior at best, highly unethical for sure and probably illegal.
As an employee of the city of Bend, I will let you know that the corruption runs from management up to the city manager. Most of them don’t even come into work and are supposed to be working from home but instead handle personal business all day and are impossible to even reach. As far as Deedee she is just as corrupt as the rest, and she was encouraged to quit so that she would be able to receive her severance package. The city knew about this months before being reported in the news and was actually working to try and sweep it under the carpet, so it didn’t get out. Other people at the city are also involved, who were notifying her of residence when they called complaining about her harassing them and she would send her goons out to go talk to them.
Somebody should really audit the jobs that go on and look at the millions that are wasted, and the kickbacks that are hidden as fees from the engineering firms that design the projects. Then the engineering firms take management out to lunches using the money that they have been given as fees. Talk about conflict of interest. Also, Taylor Northwest is one of the biggest thieves in the city and could care less about the city or the residence and swindle millions of taxpayer dollars. You as the taxpayer have the freedom of information act and should pull records and see really what’s going on with your tax dollars before more forced fees are forced upon you to feed the pockets of these corrupt officials.
As a CoB employee who understands this issue and the way the city works better than anyone else commenting, this was all handled pretty well. Management received complaints, investigated to determine the real facts, and the employee resigned. To say that there’s widespread corruption or that people at a high level aren’t working or aren’t doing their jobs is just false. This was a case of one employee that made some mistakes, had some issues, and when those came out the situation was looked at and the employee is gone. There’s no conspiracy here, just people trying to address the issue and get some accountability, which is what happened.
Unfortunately, this was par for the course in my experience. DeeDee went any length to assure her interests were met.
We had the displeasure of dealing with DeeDee on a project where a local developer who turned a single story home into 8 three story condos wanted to literally take away the driveways of two neighbors & build a wall in it’s place to build better access for said condos. After over a year of fighting this insane battle via email for our written records, DeeDee had the audacity to call us off the books & begged us to allow this wall to be built, say goodbye to our driveway access. She also had the audacity to say she would approve us to rebuild our driveway on our own dime in the front of our house (even though that is not allowed in our neighborhood). I was disgusted & appalled. In no world can someone buy a property just to bully neighbors into changing theirs…let alone have a city official coerce a resident like this off the books was completely unbelievable.
And, after she refused to heed evidence from YEARS of flood evidence & multiple City Sewer/Water employee reports & neighbors concerns about water & debris run off from this development onto lower grade properties & their strong recommendations for a drainage pump to stop this documented damage. Within a week of neighbors submitting their concerns formally through city council & her office, the building code Minimum Development Standards section in Chapter 4.2 MAGICALLY CHANGED & no longer held this developer (or her) responsible to place this system…and, maybe it also had something to do with the $200k “donation” the developer’s broker donated to City Council that same week…but, hey! that is a story for another time.
Great reporting & good riddens.
This should be surprising to no one. The big septic to sewer conversion that happened in SE Bend was immediately followed by a city employee creating a flag lot on their property. Permits went through and digging started the second the line was completed. All the neighbors were caught off guard as well.
Disgusting , but not surprising. The corruption runs all the through the City Council to
Melanie Kebler. I wish they had the honor to resign also, but they don’t. No values, morals, or leadership whatsoever. Pathetic