By Karen Billing
More than 50 people showed up at the RSF Association board’s Jan. 2 meeting after a request was made from some Covenant members to discuss the delay of the RSF Association’s purchase of the RSF Garden Club, which was announced last March.
Last year the RSF Association announced plans to purchase the RSF Garden Club building for $2.4 million to preserve the “village gem” as the Garden Club has struggled with the costs to maintain it. Rather than the club selling the building to an outside source, the RSF Association’s purchase could keep the iconic facility locally owned. An advisory vote of the RSF Association membership in April reported an 85 percent approval of the purchase of the club by the RSF Association.
Jack Queen, a former RSF Association board president who spoke at the Jan. 2 RSF Association board meeting on behalf of 120 members who signed a petition, said the group was concerned about the failure to finalize the agreement made more than nine months ago and wanted to hear the progress of the sale in an open session rather than closed executive session.
Queen said he was pleased to hear that the terms of the deal had recently been finalized.
“We’re very excited that the deal is about to be done,” Queen said. “We think the purchase will be extremely positive to the entire community.”
As RSF Association Board President Ann Boon explained, the board was not trying to derail the purchase as some people might have thought, but instead took its time to craft a deal that honored the concept the community voted on and to fulfill the board’s fiduciary responsibility to conduct proper due diligence.
She said she learned in the process of making the deal that the devil is in the details.
Boon said that what was written to members in the ballot materials and the intent of the sale were “not clearly one and the same” and that disconnect was at the heart of the discussions had with the RSF Garden Club last year.
“The Garden Club expected access to the building and to keep the office space in perpetuity,” Boon said, noting it was a surprise to the board and they couldn’t agree to buy a building that was encumbered in that way.
Hitting that stumbling block of the terms “in perpetuity,” the RSF Association went back to the RSF Garden Club to arrange a compromise to lease the office space and that if any future RSF Association board wanted to change the club’s use of the building, it would have to go to a vote of the membership and the club would be given a year to vacate.
“I don’t know if I’ve clearly stated how difficult this was,” Boon said of the process to work through all of the outstanding issues. “It took a long time to do it.”
Now that the negotiations have ended, RSF Association Director Heather Slosar made a motion to have another community-wide vote on the purchase. It failed 3-4 with only Slosar, Craig McAllister and Boon voting in favor of another vote.
Boon said that the community voted in April on just the “skeleton concept” of the deal and now that there’s more flesh on it, the community should be allowed to vote again rather than give the community members personal assurances that the agreement is faithful to what they voted on.
“I do feel it’s important to have the community vote on the specifics and not just the concept,” Boon said.
RSF Association Director Larry Spitcaufsky disagreed and said the letter of intent spelled it out accurately and not one change has been made to the deal other than the eight days per year that the club would like to use the building being upped to 15.
RSF Association Director Jerry Yahr said the board did stumble over the terms “in perpetuity” but everyone worked tirelessly to come up with a solution.
“The current deal on the table satisfies our conditions and fairly represents what the community voted on last April. I don’t believe we need another vote at this time,” Yahr said. “It takes a long time to put these transactions together… I personally feel we’re ready to move forward.”
RSF Association Director Rochelle Putnam said they went into a bit of a “rabbit hole” on the office space issue but it has now been resolved and she doesn’t believe there is anything new in the deal that the community hasn’t already voted 81 percent in favor of.
The purchase documents will next be submitted to attorneys for a fairness appraisal; then the documents must be approved by the Attorney General of California. It is the hope that the approval and close of escrow would be complete by April.
During public comment, people shared opinions on both sides on whether a new vote was necessary.
Dean Curtis, a member of the RSF Association Finance Committee, said in the interest of full disclosure, if the terms of the deal have changed then it needs to be brought back to the membership for an honest report of what’s going on.
Some wondered if the vote was taken too soon, before all the deal’s wrinkles were ironed out. Many argued that the lease is a strong enough point and that the community should re-vote.
Other Covenant members felt it was time to move on.
“This deal, this opportunity to buy this corner and preserve it for Rancho Santa Fe and future generations is one of the most positive opportunities we’ve had since the Covenant Enhancement Fund started,” said former board member Anne McCarthy, urging the board to get the deal done.
RSF Garden Club President Helen DiZio wanted it to be clear that by purchasing the building, the RSF Association is not “saving the Garden Club.”
“What we are is a charitable foundation but it hasn’t been able to be that charitable organization because of the building…We’ve spent a lot of time taking care of this building and that’s not what we’re about.”
The RSF Garden Club once had more than 2,000 members, but now has around 300 members and some Covenant members say it no longer makes sense for the club to have a building of that size.
“[The building] makes sense for the community as a whole, it should be maintained for the community,” Dizio said.
The club will continue to use the building for events 15 times a year, utilize the office space and run The Upscale Resale Shoppe, under a 10-year lease with the RSF Association.
As stated in last year’s letter of understanding between the RSF Association and RSF Garden Club, proceeds from the purchase price will be deposited into a special Community Fund at the Rancho Santa Fe Foundation and an oversight panel will be in charge of awarding grant monies to Rancho Santa Fe’s nonprofit organizations.
The average net annual return on funds at the Foundation for the last 10 years has been a very positive 6.4 percent, according to RSF Foundation Executive Director Christy Wilson. Based on a 6.4 percent payout rate, the amount of funds available to community groups annually could be $152,000.
The projected net annual cost of operating the club, including reserve requirements, is $55,000 and will be covered from funds allocated to the Covenant Enhancement Fund, which is 2.5 cents from the 14-cent assessment rate. In the current fiscal year, that fund will generate $958,000.
As far as how the RSF Association board communicated the status of the deal to the public, former RSF Association Board President Bill Hinchy noted it’s a lot more difficult to let people know what’s going on when the board meets only in executive session and now meets only once a month.
RSF resident Deb Plummer said she recently read that the RSF Association staff is busier than ever and yet there are 50 percent fewer open meetings, giving the appearance that things are being done behind closed doors.
Boon said she agreed that they should have had more public conversations but said the board chose to keep the discussions in executive session.
“I’m a very big proponent of transparency of the board and discussions that are open to all points of view,” Boon said. “We’ve done a less than perfect job communicating to members and I hope we can correct that.”
Boon also said they had hoped that having one meeting a month would help out the staff but admitted it’s been difficult to conduct business and might not be the best way proceed going forward.