Rancho Santa Fe Garden Club purchase: The debate continues

By Karen Billing

The votes on the Rancho Santa Fe Association’s Garden Club purchase will be counted on May 6. The member-triggered election has featured a fair amount of campaigning on both sides of the issue, one of the most talked-about being a FedEx mailer in opposition of the sale.

At the last RSF Association board meeting on April 17, some Garden Club members questioned the FedEx delivery of the anti-Garden Club purchase materials as well as it contents, with Garden Club President Helen DiZio asking RSF Association Director Craig McAllister how he could sign a letter that she felt was “11 pages full of lies.”

The authors of the anti-Garden Club purchase package that was sent via FedEx, Mike Licosati and Alex Kaiser, have spoken out that they felt their package simply included important information members needed for the vote.

“I took affront to (DiZio’s comment) because I don’t think there was 11 pages of lies in that letter,” Kaiser said.

While Director McAllister did acknowledge one inaccuracy in the mailer regarding the pool and fitness center, Licosati said that is just one, not 11 pages full of inaccuracies.

At Licosati and Kaiser’s request, DiZio went through the mailer and highlighted all of the statements she felt were misleading or damaging and found at least one on every page.

Kaiser and Licosati also defended their decision to go the FedEx route, sending to members’ private home addresses — they did not want to mail through the Association to avoid what happened with a previous mailer.

In March, resident Nick Krnich wanted to increase voter registration and raise awareness about the upcoming elections and said he requested that the Association distribute a letter to members. Krnich said the mailer was held up for two weeks and the Association attached a disclaimer that stated facts in Krnich’s letter were incorrect, as well as stating that the voter registration website the mailer directed residents to was not affiliated with the Association.

A mailer in favor of the Garden Club purchase was also included in a disclaimer notice, but Licosati said it was not the same.

“The reason we went with FedEx was because on the original mailer, they put a huge disclaimer that they couldn’t verify the accuracy of the letter. There were massive alterations to the standard disclaimer and HOAs aren’t allowed to alter a member’s message,” Licosati said.

Licosati said that, according to California Civil Code Section 5105, a homeowners association may send communications on behalf of its members and can include a statement that it is not responsible for the content, but “shall not edit or redact any content from these communications.”

Association Acting Manager Ivan Holler informed Krnich that they do not edit member mailings but his was unusual in that he created his own website for voter registration. Holler said he worked with Association counsel to help prepare language in the disclaimer.

“We clarified some of the facts and that the web site mentioned in the letter was a third party web site and not affiliated with the RSF Association,” Holler said.

The Association’s executive committee reviewed the other clarifications; Krnich said he had wanted the opportunity to make the clarifications himself.

The FedEx method allowed the opposition to avoid the disclaimer and any potential edits.

“It got people’s attention,” Kaiser said of the FedEx decision. “And it prompted a large number of new residents to go get registered.”

The opposition feels that the purchase is “an enormous waste” of Association money that adds nothing to the value of the Covenant and uses resources that would be far better used elsewhere.

Licosati said he is not against the Garden Club.

“The Garden Club is great, we love the Garden Club. We just don’t want to buy an outdated, overpriced building,” Licosati said. “The Association is not in the property management business, let’s stick to what the Association is good at…this is way beyond our mission.”

Licosati said he is also concerned that the purchase was never vetted by the RSF Association finance committee, which he also believes to be true of the Association’s last big purchase, the Osuna property.

Association Acting Manager Ivan Holler has stated that the Garden Club purchase was discussed by the finance committee at several meetings, although not always formerly agendized. The purchase was on the February finance committee agenda.

Those in support of the Garden Club purchase, like DiZio, feel that the building helps define the community and is a key amenity to preserve. It has been difficult finding volunteers to maintain and manage the facility but DiZio and her husband, Steve, took over to help turn the club around and get it on strong financial footing. However, in order to protect the clubhouse as a valuable community asset, the club could no longer afford to go it alone.

DiZio said the only major change from the original talking points for the purchase is a benefit to the Association, not the Garden Club. The original talking points imply that the club should be able to use the building in perpetuity, with no method to remove the club. The deal is now structured so that if Association members feel the building should be used in another way it would take a vote to do so.

The Garden Club can terminate the lease only by giving a two-year notice and the Association can terminate the lease and all other rights of the Garden Club at any time just with a vote of the membership.

The mailer alleges that the transaction was “cloaked in secrecy” and spun by those who have an interest in the sale going forward.

DiZio said there were two town hall meetings called, several Garden Club meetings and a mailing with extensive information before they spent time and resources developing the transaction.

“There is no secrecy associated to this deal. All involved did not take a step without first asking for a vote of the community. We have been more open with respect to this deal than any previous deal in Rancho Santa Fe,” DiZio said.

The opposition also takes issue with the fact that the Garden Club members say how they care about the community and yet threaten to sell the property to commercial interests that would “denigrate the community.”

“The Garden Club is not threatening to sell to commercial interests. The club has spent considerable time and money to try and craft an agreement which meets the governmental requirements and keeps the facility as a community asset. It is a fact that the property can be sold and used as a private club with party rentals every night of the week, which makes it a commercial operation and a denigration of the community by definition,” DiZio said. “If the community decides they do not want the facility, the Garden Club will have no option except to sell to the highest bidder, who might likely be a commercial entity.”

Licosati and Kaiser said they believe better use of the Association’s Covenant Enhancement Fund monies would be to spend it on projects that would increase the value of Covenant homes and offer similar amenities to that of surrounding communities.

“Are we better off spending money for Osuna and fixing an old unused adobe? Or building high-speed internet? Or improving cell phone coverage? Or supporting a community center?” the mailer asked.

The opposition believes that rushing into a Garden Club purchase would prevent an open debate on how else they could use the funds to invest in the community, such as building a pool and fitness center.

“There is no evidence the community wants a pool and fitness center. There was one survey done by ClubMark in which 1,700 members were surveyed and fewer than 175 voted in favor of a pool,” DiZio said, “Fewer than 300 voted in favor of a fitness facility and no costs or financials were included. This topic is something to muddy the waters and confuse the voters.”

DiZio said following the purchase, the Community Enhancement Fund would be replenished in three years, allowing the opportunity for other projects.

The FedEx mailer proposes that the Association is overpaying for the property and Licosati said the $2.4 million appraisal is missing the “massive encumbrances” in the 73-page lease. He said the Garden Club gets use of the office and retail space for free.

DiZio said that the Garden Club desired no lease and would have been “delighted” to rent the basement on a month-to-month basis. She said the Association board sent a letter to the club requesting an option to purchase the facility at the appraised value with no rights attached, no club use or lease. DiZio said the club was prepared to sell with no strings attached, but the board chose to enter into the present agreement rather than give up its control of the proceeds and its financial benefit from the lease.

Licosati also questions why the Garden Club’s financials were never disclosed. He showed that the club has a large surplus and almost $500,000 in cash.

“The Garden Club is spinning that they need to sell because they can’t support it financially, but it sure looks like they can support it,” Licosati said. “Why was this information not disclosed before? It’s critical information.”

DiZio said while they did not give the data to the opposition directly, it has always been available for anyone who had the interest and took the time to look it up.

“It’s an immaterial issue in the decision to sell the building,” DiZio said. “The Garden Club has made the decision to sell.”

The opposition does not like that the purchase will result in an “incredible transfer of wealth and control to the Garden Club with little community input.”

DiZio said that there is not transfer of funds to the Garden Club. The funds will be managed by the Rancho Santa Fe Foundation and distribution from the fund will be under control of a five-member advisory committee consisting of two Association directors, two Garden Club directors and one RSF Foundation director with four votes required for approval.

Licosati said he didn’t like that the two Garden Club members on the board controlling the fund would be husband and wife.

The opposition takes issue with the fact that many of the arguments to support the sale relate back to the fact that 85 percent voted in favor of the sale in the April 2013 vote. Licosati said because the vote represented 667 people of 3,200 potential voters, the vote represents more like 20 percent of the community.

“We’re told that this was one of the largest returns of votes for any election in the Ranch,” DiZio said of the 786 ballots returned of 1,700 cast.

DiZio said that the 3,200 number used by the opposition is misleading since people in the Ranch vote, not properties. Those who own multiple properties don’t get multiple votes.

Thanks to voter registration outreach, about 72 percent of the Covenant community is now registered to vote, a total of 1,945 members with 241 new registered voters have been added since Feb. 28.

Licosati said the “antiquated” voter registration process kept people from registering and many were not aware that the voting right wasn’t automatic. He said he feels that the crop of newly registered voters will vote overwhelmingly against the purchase.

Ballots on the RSF Garden Club purchase are due back to the RSF Association by Monday, May 5, at 5 p.m.

Come Tuesday afternoon, May 6, the community will find out. Look for results on the RSF Review’s web site: www.rsfreview.com.