Viability of project questioned after review of nonprofit’s finances

ENCINITAS — Several roadblocks have become evident in the EUSD (Encinitas Union School Board) agreement to sell the Pacific View Elementary site. 

Three groups out of 15 original proposals were selected to make their pitch to the trustees during a special meeting in February of this year.

San Diego-based nonprofit Art Pulse was chosen with a 4-1 vote in mid-February in part because the group plans to purchase the site for $7.5 million and has some funds on hand, according to trustees.

“As a school board, we have to be fiscal stewards of the district and protect our kids and their education,” EUSD Board President Emily Andrade said at the February meeting.

Envision the View and the Sanderling Waldorf School were also in the running. Both offered to lease the 2.8-acre oceanfront parcel.

Trustee Maureen Muir supported Envision the View’s plan to lease the land and turn the site into a community center. She has expressed reservations about Art Pulse’s ability to come up with the cost of the property.

Art Pulse Executive Director April Game said the organization partnered with local developer John DeWald who will pay the $300,000 deposit to enter into escrow.

He has also agreed to pay $3 million of the total purchase price of $7.5 million.

In return, Game said DeWald would own part of the land in order to develop single-family homes.

Art Pulse will only have to come up with $4 million plus the construction costs. She estimates the cost of arts center construction, including permits to range from $5 million to $12 million.

Game said DeWald has agreed to relinquish his ownership stake should the group be able to pay him back in full before escrow closes. “If we had a private donor or an arts group that wanted to donate, we could pay him,” Game said in a recent interview.

According to the organization’s tax returns, it took in just over $98,000 in 2010 and has run at a deficit since 2008. Game said a large loan given to the organization by one of its board members was going to be partially forgiven.

In 2009, tax documents show a loan of $92,684 was given to the group by Henry Moon. Moon was listed as a board member on the San Diego Fine Arts Society. The Society’s website, sdfas.org, redirects viewers to the Art Pulse website.

That year, the group reported gross annual revenue of $65,348, with assets of just $369.

In 2010 tax documents, two loans are listed for as “Operational Support.” Game loaned the group $236, while Moon loaned $664,010. The organizations that year were noted as $113,683, with $369 in assets.

Pat Libby, a nationally recognized expert in the field of nonprofit governance issues and the Director of the University of San Diego’s Institute of Nonprofit Education and Research said she thought the relationship between the school board and the group sounded “odd.”

“It’s very unusual especially given the apparent lack of fundraising expertise and operating viability of the group that it was awarded the bid,” she said.

While it’s not unusual for nonprofits to expand programming within the stated purpose of the organization, Libby said Art Pulse doesn’t have a “proven track record” in operating an arts center.

Game plans to involve the community in various planning meetings and initiate a capital fundraising campaign.

She has reiterated at various public meetings that the group has enlisted the help of a professional fundraiser and that she is confident the money will be raised.

However, no alternate plan has been disclosed should the group fail to meet its capital campaign goals.

Located on Third Street between E Street and F Street, the former school campus is surrounded by commercial buildings and smaller homes, with a few exceptions.

The school closed due to declining enrollment in the area in 2003.

The property was gifted to the city in 1883 for a school site. The original schoolhouse is located to the west of the property and houses the Encinitas Historical Society.

While several proposals have been tossed around regarding the future of the site, none have been met with success. In 2005, an advisory committee was created consisting of various stakeholders.

An initial proposal to build a medical complex with office space and condos was met with disapproval by the downtown community.

The school board sued the city after the City Council refused to rezone the property from semi-public to residential last year.

EUSD Superintendent Timothy Baird said in a previous interview that the board would drop the suit if negotiations with Art Pulse were successful.

However, he has since added a caveat to the promise. Baird said the school district sent the City Council a letter Sept. 26, promising to extend the tolling agreement the district has with the city should it decide to begin the rezoning process.

“I was a little surprised the council did not even start what is a lengthy process, especially given the letter they received from us,” Baird said in a recent interview.

The tolling agreement effectively puts the lawsuit on hold. “We (the district) have no desire to have a long protracted litigation against the city,” Baird said.

The board of trustees is scheduled to discuss the matter and provide direction at a special meeting Oct. 4.

Share

Filed Under: Rancho Santa Fe NewsThe Coast News

Tags:

RSSComments (1)

Leave a Reply | Trackback URL

  1. Lynn Marr says:

    Many in the public, who’ve been following the Pacific View issues and wish that the land should remain in the public domain, rather than being privatized, are well aware that a series of “bait and switches,” have been attempted in this ongoing “transaction.”

    Only twenty business days were allowed for Requests For Proposals by non-profits. More time should have been allowed to solicit more proposals. Moreover, the proposals were to be from non-profits, NOT a non-profit operating in partnership with a for-profit developer, who would provide the actual escrow deposit and a large portion of the financing, to purchase, based on his buying off a portion of the land for twin-home, MULTIPLE UNIT DEVELOPMENT, NOT single family homes.

    The reason the Art Pulse-DeWald proposal is being “pushed” by April Game and her supporters who don’t understand or care about the implications of privatization is because her organization supposedly had “cash on hand,” and deep pocket backers. While Art Pulse did have a large donor, Henry Moon, in the past, there’s no evidence he could provide more funding, and as Coast News points out, Art Pulse has been operating at a deficit since it was apparently formed as a “non-profit” in 2008. So Art Pulse’s financial stability was also exaggerated, another “switch.”

    The RFP asked for proposals in the same zoning classification that the surplus school site now has, public/semi-public. It’s important that the donated land, our irreplaceable asset, and part of our community heritage, should remain in the public domain, by retaining the public/semi-public zoning. We don’t want the zoning to be changed to mixed use, under the pretense of creating an entirely new zoning classification, which would require a great deal of the City staff’s resources, processing an application for amending the General and Specific Plans, doing a complete Environmental Impact Report, appealable to the Coastal Commission, also determining if a public vote would be required.

    While an Community Art Center could be a public benefit, it should be built, as envisioned by Council, particularly Maggie Houlihan and Teresa Barth in August of last year, about one month before Councilmember Maggie Houlihan’s tragic death, in the same public/semi-public zoning. Both Maggie and Councilmember Barth had also asked for an independent appraisal of the property, in part, so it could be determined if the Naylor Act did apply, tolling from when the school was initially closed down, in 2003, and leased to the City of Encinitas from 2003-2005 for a temporary public works yard.

    When the City leased the land for a public works yard, making a parking lot over the playing fields, that was the time when EUSD should have formally declared the land surplus school property, when an appraisal should have been done, and 30% of the site, or .84 acre should have been offered for 25% of its appraised value FOR OPEN SPACE! Both EUSD and the City have skirted this issue, yet EUSD sued the city using a related part of our State Education Code, which says the City should rezone property so that it is compatible with or consistent with the zoning of surrounding properties.

    The public/semi-public zoning WAS COMPATIBLE and consistent with surrounding properties in the current Specific Plan, as Maggie well understood. Further, she researched and determined that surrounding or adjacent does not necessarily mean contiguous. In other words, the property does not have to have identical zoning to residential properties bordering or touching the Pacific View site.

    So there is a great deal of pretense going on in the current proposal. Should the zoning be changed and Art Pulse and/or DeWald drop out of Escrow, there would be no going back. Once the zoning is changed, EUSD could keep the $300,000 escrow deposit, take back the land, and get another developer to take on a new mixed use category development.

    A mixed use zoning classification would allow the proposed single residential lots to be developed as a “strip mall” style development, with offices and retail stores, as already planned for the main structure(s) of the so-called mixed-use art center. If a new zoning category were set up to appease developers and please those putting short-term gain before the public’s long term interest in retaining an irreplaceable asset in the public domain, it would be a real shame, and would be a great disservice to the public.

    We won’t be fooled by the pretense, by the bait and switch tactics being employed by an out of town art organization that has no history of running an art center, nor has demonstrated the financial stability to do so. We do support a true community art center, in the public domain, not over-building and privatizing in the name of short-term profit and the personal ambitions of EUSD Superintendent Timothy Baird, only in Encinitas since 2009.

    Baird left Ojai Unified School District in 2008, after he unsuccessfully tried to develop a so-called “art center/strip mall” in Ojai, on surplus school land, which had been promised to the community for a skate park. Despite Baird’s machinations, the skate park was finally built, after he left OUSD to come to EUSD at more than $65,000 per year more, making over $200,000 per year, here. He recently was given a contract renewal by EUSD.

    Council was wise not to be leveraged by the bogus EUSD lawsuit. At the next public hearing on the Pacific View matter, Council should politely decline to direct staff to begin the long, drawn out and expensive process of creating a new zoning classification. Council unanimously turned down changing the zoning to mixed use in November of 2010!

Leave a Reply




If you want a picture to show with your comment, go get a Gravatar.