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Rancho Santa Fe Association will be over budget for legal fees, director reports

By Karen Billing

The Rancho Santa Fe Association is racking up higher than normal legal bills, with a total of $151,555 in bills so far with “extraordinary expenses” relating to issues that have arisen this year.  Once the April bills come in, treasurer Larry Spitcaufsky said they will be over budget and estimates their legal expenses could be north of $200,000 this fiscal year.

“It’s very obvious to me that we need to get more information out to the membership on many of these major expenses,” Spitcaufsky said.

Spitcaufsky said that last year the Association budgeted $100,000 for outside legal services and this year they are budgeting $150,000, “which to me, for a homeowner’s association, is a ridiculously large number,” he said.

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The finance committee has put the legal fees into four “buckets,” Spitcaufsky said.

They have spent $42,400 on the RSF Garden Club purchase issue through the end of March. Until the vote outcome, Spitcaufsky said he does not see much more expense although if the purchase does pass, there will be closing costs for the sale. Much of the expense relating to the Garden Club comes out of the Community Enhancement Fund.

On the form 990 tax returns issue, they spent $14,272 and an additional $10,000 on community requests that came during the 990 time period.

RSF Association Board President Philip Wilkinson noted the error on the form 990 turned out to be an “administrative omission” that has since been remedied, but it was a process they had to go through to make that determination.

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They have also spent $29,000 so far investigating the legal expense of RSF Association Manager Pete Smith’s “formal written complaints.”

“That will be larger than $30,000, they still haven’t billed us for April,” Spitcaufsky said.

Spitcaufsky said he does think that they owe an explanation to members as to why they will be spending over $30,000 on the investigation of Smith’s document, but as they are under the non-disclosure agreement they are unable to reveal that information.

RSF resident Deb Plummer wanted to know who on the board was aware of the error on the 990 before Boon brought it up at the March 6 meeting and whether that could have saved the expense of looking into the issue.

The board did not respond to her inquiry as it was not on the agenda, but Wilkinson did say that it was their obligation to do their due diligence to see if something had occurred that was a liability.

“It seems legal and accounting expenses have been particularly heavy after Mrs. Boon became president,” resident Suzy Schaefer said. “I have observed that before July 2013 the board meetings had no lawyers or special consultant attending on a regular basis. We now have one to two lawyers and a parliamentarian always present. This all occurred after Mrs. Boon became president and I feel, that as a community, we rightfully deserve to know why.”

RSF resident Lisa Bartlett said that in the interest of openness and full disclosure, the board might consider asking Smith to waive his non-disclosure agreement. She also came to Boon’s defense regarding the legal bills.

“The recent spending has nothing to do with Ann Boon whatsoever,” Bartlett said.

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