Too many questions need answers on proposed Rancho Santa Fe Garden Club sale

This letter was submitted to the RSF Garden Club board and to this newspaper for publication.

Re: RSF Association plan to buy RSF Garden Club April 19, 2013

Covenant members recently received correspondence from the Rancho Santa Fe Association regarding its proposal to purchase the Garden Club. Likewise, members of the Garden Club received a letter and documents from the club regarding this proposed sale. The Association sent property owners within 500 feet of the Garden Club a letter from the RSF Association regarding a Covenant modification affecting the Garden Club’s southern lot parcel seeking to change the current Class “A” Single Family Dwelling to Class “H” Public and Public and Semi Public Uses. A separate RSF Association Explanatory Letter will address the adjacent northern lot, which contains the Garden Club building. These proposed changes of land uses will affect the value of the property current owned by the RSF Garden Club.

As a long-time member of both associations, I expressed my concerns about the proposed sale at the April 5 joint meeting. I have reviewed the RSF Garden Club bylaws (dated Jan. 1, 2010), the Amended and Restated Articles of Incorporation (dated June 15, 2006), a Letter of Understanding (LOU) signed by the RSF Association President (dated Feb. 7, 2012) and the recent ballots from both parties to the proposed agreement. I have also requested the Garden Club board minutes from 2012-13. As a club member, I have not seen or been given a copy of the actual joint agreement executed by both the Association and the club.

My other concerns are primarily related to the Garden Club and the “Talking Points” provided with the Club President’s letter dated April 10, 2013. As proposed, a Garden Club Endowment Fund will be set up at the RSF Foundation from 100 percent of the proceeds of the sale. There will be an Oversight Committee to oversee our endowment funds annual disbursements. The committee of five members, only two of which represent the Garden Club, are to decide how they will distribute our annual endowment fund proceeds. These funds are from the proceeds of the sale of the Garden Club property, the sole property asset of the Garden Club and should be distributed at our sole discretion for our 501c-3 charitable purposes. (See our bylaws Section ll B — The specific purpose of this corporation is to further the development of charitable horticultural and charitable conservation activities, both within and outside the community of Rancho Santa Fe.)

The Garden Club has been donating funds to various groups, many of which are outside of the Covenant like Wounded Warriors, etc.; however, the wording in the “Talking Points” says our Endowment Fund annual distribution monies from the sale proceeds will be utilized solely for the benefit of the RSF Covenant community organizations, such as the RSF School, Historical Society, Garden Club, Library, Art Guild, Senior Center, Community Center and the RSF Association as determined by the Oversight Committee. Why should there be restrictions on who can receive these or any of our funds? Since when does the buyer of property tell the seller how to use the money earned from the Sale?

Under the current terms of the sale, the Garden Club will be given “priority use” for 10 days per year for their programs and have the ability to request additional days as needed. What is meant by “priority use?” It is mentioned that beyond the annual use provided by the “Beneficial Use” Agreement, the Garden Club may schedule other events at the facility on the same basis and at the same cost (if any) as any other community organization. Since we have not seen the “Beneficial Use” Agreement, it is unclear whether there is a charge for this 10-day “priority use,” the other 22 days outlined under description “Recent Garden Club Usage” and/or for additional days as needed except to mention that this is in return for the restriction on the use of our endowment fund. The club is asking for only 22 days a year, or less that 10 percent on an annual basis leaving 333 days wide open for others to use/rent?

A lease needs to be in place to insure our continued use of the Garden Club in perpetuity and/or some mutually agreed to renewable long-term arrangement must be established.

The lease that is mentioned in the “Talking Points” is for the retail space in the basement currently used for our resale store. The lease rent, as stated, will be at market rates as established by appraisal, the proposed lease is for 10 years, renewable at the Garden Club’s option, at a rate of $40,000/year inclusive. The lease rate will be adjusted every five years, according to the CPI. In the event of default (or cancellation) of the lease by the Garden Club, the Association will have the option to offset the remainder of the lease against the endowment. The lease at $40,000/year for a basement windowless facility is at market rates? How can our Endowment funds intended for charitable uses be used as collateral for the lease?

As a member, I mention these concerns to highlight the fact that this arrangement really needs more review. I have not been privy to any of the negotiations; however, I do have experience and have locally chaired several homeowners associations, charitable community organizations and public agencies over the years and am directly involved with property management. I also have many years experience with real estate property transactions. I am also still very concerned with the issues of conflict of interest with dual membership by many residents in both organizations and/or boards that need to be addressed as I stated at the April 5 joint meeting of the RSF Association and the Garden Club.

Where is a signed actual Letter of Understanding (LOU) executed by both parties outlining the terms of the agreement? It has not been circulated to members of the Garden Club, so how can we make an evaluation on this important issue without ever seeing the documents outlining the terms of a mutual agreement? We need all of the details of the proposed transaction before any vote.

As members of the Garden Club, we have sole responsibility to the Club to make the best deal possible for our 501c-3 organization. This is a big change in many ways and the Garden Club needs to step up and protect the best interests and assets of the club in this or any negotiation for its future.

Again, there are way too many questions and details that need to be cleared up before there is any voting on this important issue. We need to vote NO on this current proposal until we are told and understand all aspects being proposed in this sale of the Garden Club’s property and its sole asset.

Marion B. Dodson, member of the RSF Garden Club