RSFA May 13 Board Meeting: Budget and Regulations

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Christy Whalen and director Mike Gallagher started the meeting by saying they had received 22 member input submissions about the Ocio design for the restaurant. They dismissively derided “some blog” for publishing inaccurate information about it.

What?

First, we are called the RSF Post. Not “some blog”. I mean, how many online news sources cover Rancho politics? Just us. It isn’t hard to remember our name.

But beyond the dismissive attitude towards a publication that probably a majority of Rancho residents use to keep abreast of local news, there was a huge lack of self awareness going on. The only reason we reported on the Ocio design was because Holly Manion had her letter about the Ocio design read aloud at the May 6th board meeting. The Ocio information was at that point public information and neither the board nor the staff said anything to rebut the importance of the Ocio design. It was as if they completely ignored member input. 

Ignore member input and you get what you get. Don’t go blaming me for making member input more accessible to Rancho residents.

And when I received information that the Ocio design wasn’t being considered (even though I had reached out to board members before publishing my original article and got back information that led me to believe that the design was being considered), I immediately sent out an article giving residents corrected information

More Member Input

Once again, director Laurel Lemarie read out loud Holly Manion’s new member input, this time about exterior lighting. Manion wanted a lights out at 9pm policy, no timers, all lights on switches and asked that voting on the lighting regulation be delayed (which is what ended up happening, see below). 

Linda Leong once again gave member input opposing the Player’s Clubhouse board resolution that passed last meeting. 

Substantial” Fines

In summarizing actions during executive session, Christy Whalen made a point to inform us that a substantial fine was imposed on a homeowner that went ahead and did unpermitted construction. I would love to hear the backstory on that one if anyone knows anything.

Budget Highlights

CFO Seth Goldman gave a very comprehensive overview for next year’s 2021/2022 budget. My summary:

  • Dues stay at $0.14 per $100 of property assessment. Since housing prices have been rising, this is conservatively estimated to be a 4% absolute dollar budget increase.
  • Our restaurant service charge which had been at 20% (18% of which goes to the employees) is getting bumped to 22%, a stealth price increase.
  • We will continue to be fully reserved for all future maintenance (except for Osuna, see below).
  • Budget passed unanimously.

I want to highlight this chart. Take a look at the relative size of the various income sources for the Association:

2021/2022 Budgeted Revenues

Golf is by far the biggest activity by revenue. The restaurant is about 1/3 the size of golf operations, tennis is about 1/7 the size of golf and Osuna is tiny, at about 1/14 the size of golf. By the way, each activity makes money for the Association each year, except for the restaurant. Golf, tennis, Osuna and fiber optics are all operationally profitable. 

Goldman also shared various charts which basically showed that we are in excellent financial shape in this current 2020/2021 fiscal year. But let’s move onto the controversies, shall we?

Osuna

Kate Williams, the chair of the Osuna committee came into the meeting and to say she was agitated would have been an understatement. Her main beef/point is that about three years ago, the board started requiring Osuna to reserve against deferred maintenance, like it does for every other activity the Association runs. The problem is that Osuna was and continues to be really run down. It needs significant money spent on it now. By forcing Osuna to stick even some money in the bank for future maintenance, there isn’t enough money to perform all the maintenance that Osuna could use now.

This is a powerful argument, and I do feel for Williams, but it is flawed.

The board is correct to force Osuna to live according to its accounting methods. And Williams is correct that money needs to be spent on maintenance now. Where Williams is wrong is in not being aggressive enough in raising rates so that both maintenance and reserves can be funded appropriately. A 5% board increase for RSFA members next year is laughably low. And where the board is wrong is not recognizing that Osuna is falling apart and needs emergency funds now (as in more than the usual maintenance budget – it really needs a capital infusion).

As I’ve pointed out, Osuna’s rates are very low, evidenced by the fact that it is effectively full. If you substantially raise rates, in conjunction with capital improvements, you’ll put Osuna on a sustainable path. 

By the way, this might be a good time to point out that Osuna only boards 11 RSFA member horses. 11 members out of almost 2,000 properties pay boarding fees to use Osuna directly. One might wonder why we are running a horse boarding operation at all. 

Following are recent pictures showing how run down Osuna is.

A horse wash rack with rotting wood.
This horse waterer has been dripping for a long time. I saw many waterers that needed maintenance.
Many stall fences had been chewed and need replacement.
This historic fire pit by the Osuna adobe doesn’t look very safe to be around.
Plaster is flaking from almost every wall on the Osuna adobe.

RSF Connect

We are up to 1,000 people connected to the fiber network, with 100 in the queue. The Association estimates we’ll be at 1,200 by the end of the summer, which is great. Race says they will start a marketing effort soon to sign up more people, but I’ve heard that for over a year now, so I’ll believe it when I see it. Why does this matter? Because the more people who sign up, the faster the loan to build the network will be paid off freeing up the Association’s finances to work on other community enhancements.

Laurel Lemarie once again asked that the RSF Connect connection points (ground level “flower pots” and rectangular cabinets) be moved off the horse trails before the infrastructure and the horses get damaged. Once again, she was ignored.

Regulations: Architectural Styles

I almost fell off my seat when Sharon Ruhnau pointed out that the Architectural Types regulation working draft really shouldn’t be a regulation, but should be regarded as a guideline and instead be included in a revised Residential Guidelines handbook. I’ve been advocating that for seemingly years. 

Since this is at the working draft stage, work on it shall continue.

Regulations: Exterior Lighting

Ding, ding, ding! And now for the main event fight you’ve all been waiting for! In the blue corner we have team Gallagher and Sapp advocating for a laissez faire attitude towards landscape lighting, and in the red corner we have Lemarie advocating for a dark skies policy. 

Gallagher comes charging out of the corner saying that like the solar regulation, we should have regulations that people are likely to adhere to, otherwise we risk that people will just ignore the entire regulation. Lemarie parries with an argument that if we allow lighting until 11pm, then that’s what we’ll get, a very lit up Rancho until 11pm. Gallagher returns fire pointing out that we are surrounded by very bright cities like Solana Beach and Encinitas. Lemarie throws down the gauntlet pointing out that Sapp’s lights are on every time she passes by his house at night. Sapp gives the funniest (in my mind) rejoiner of the day, “America, Laurel! I turn them off at 11pm!”. I guess you had to be there.

In the end, the building commissioner threw in the towel and called off the fight asking that she be given more time to commit seppeku, I mean, find consensus. Good luck, Maryam! We’re all rooting for you!

Incidentally, the RSF Post actually polled readers asking their views on this matter. Maybe a survey could be used to inform the board as to what to do? I know, I know, that’s crazy talk!

Regulations: Grading

And now for something completely different. The board actually passed a new regulation. Not unanimously, mind you. While this new grading regulation imposes more restrictions on us, director Bill Strong didn’t think it went far enough and was the lone vote against. He wants restrictions on the total amount of grading as a percentage of lot size, so even if you had a small lot and weren’t doing much grading at all, you’d be restricted from grading. (Update: Please read Bill Strong’s reply at the end of this article).

The major changes:

  • Maximum heights of Cuts and Fills has been reduced from 10 feet to 8 feet.
  • Maximum heights of retaining walls are defined and set at 5 feet.
  • Minor and Major Grading quantities are defined and set at 100 cubic yards or 3 feet of cut or fill within a 2-year period.
  • Minor 25% slope intrusion is defined for, and specified.
  • Fill slopes are softened form 2:1 maximum to 3:1 maximum. Cut slopes are increased from 1.5:1 to 2:1 maximum.

A full analysis along with the new (complicated) grading regulation is available here.

Regulations: Exterior Materials

Director Greg Gruzdowich questioned why we aren’t allowing Hardie Board. The board has repeatedly teased revising their 2019 resolution prohibiting its usage, but has done nothing. Director Ruhnau said it would take a covenant amendment to overturn the board resolution, which as I type this, makes no sense at all. I explore the prohibition against Hardie Board at length in a companion article

Saying The Quiet Part Out Loud

Director Bill Strong noted that the new Exterior Materials regulation would allow someone to build an entire house made of wood (just a reminder, wood is not prohibited in the protective covenant, just not preferred, mostly because it doesn’t weather well, unlike, um, Hardie Board which does weather well). Director Greg Gruzdowich stated that the amount of wood allowed should be under Art Jury discretion since it is an aesthetic judgement, and that’s what the Art Jury is for. Director Rick Sapp half yelled “We tried that, and it didn’t work!”.

And there you have it. The board does not like how the Art Jury has discharged their responsibilities and are taking over. They are constraining the Art Jury in purely aesthetic judgement areas through regulation. 

There is no basis to outright restrict wood as an exterior cladding material, but if it were up to directors Sapp, Strong and Gallagher (at least), that is what they would do based on the comments I heard at this meeting.

Considering that the board uses legal justifications for other things it wants (like the related ban on the use of Hardie Board), it is supremely ironic that they blithely trammel over the protective covenant’s obvious intent that the Art Jury solely be given the responsibility for adjudicating issues that require aesthetic judgement. In fact the Covenant explicitly gives the board only the ability to hear appeals based on very narrow criteria. And there are very good reasons for this, not the least of which is that electoral politics shouldn’t be directly involved with Art Jury decisions. The other reason being competence – five people that pour over more than twenty construction project plans every few weeks are much more qualified than any board director to render judgement.

In the past, the board has countered saying they are legally responsible for all decisions made by the Association including Art Jury decisions. But that’s a justification for the board to do anything it wants, regardless of what the Covenant says. You might as well throw out the Protective Covenant at that point if you rely on that justification.

In the end, this regulation was put back on the shelf for more back room arm twisting and/or a tactical retreat.

Power And The Pursuit Thereof

Another thing really stood out to me during this meeting as they discussed no less than four different regulations. No one asked whether the Art Jury had weighed in. No one asked if any member surveys had been done. It was just board members arguing among themselves what they thought was best for us. I was frankly appalled. This is what passes for governance here in Rancho?

I think the Post is the only entity that has actually asked a question recently about proposed regulations. When I have time, I will have to run more surveys since it looks like no one else will.

Update: Bill Strong Replies:

Phil, your current comments about the Grading regulations passed last week completely misrepresents my position on the matter. It seems you have strayed from journalism to advocacy, and are attacking without being knowledgeable of the issues.

While I was supportive of many of the changes to Reg Code Chapter 41 – Grading, two suggestions offered more than a year ago should have been included: a) No construction or grading in the side and rear setbacks to protect rural ambiance and adjacent properties, and b) Using the actual slope percentage of the lot to determine how much of a lot may be graded. The test case studies showed there were no “unintended consequences” from these suggestions, and our rural ambiance was protected. As passed, driveways and retaining walls of proposals on adjacent properties can be placed on your property line, and allow over-development.

Most of the basis for RSFA regulations is the need to protect natural landforms and restrict the height and bulk of buildings (as in the Preamble of the PC), yet even with hundreds of pages of regs, there is no guidance about what precisely is permissible. As a result members do not know what is required, and inconsistency will increase until it eventually could cause the loss of our architectural controls.

Two years ago the Board sent the CDRC a letter which stated: “members of the Board and our community have noted excessive grading, projects with unrestrained mass and scale…” The Building Commissioner admitted there was nothing in the new grading reg that would prevent the excessive grading many complain about on Montevideo. Lowering the amount of grading two vertical feet does not address the issue of the total area graded.

Phil’s Reply:

Bill, thank you for the clarification/amplification. I based my one-liner comment about what you wanted on the following section of the grading staff report. I believe you wrote these comments and I think these comments would indeed restrict the “total amount of grading as a percentage of lot size” albeit additionally based on how sloped the lot is. From the staff report, you suggested:

Limiting the amount of grading on a Sliding Scale, following a formula as follows:

  • Grading in slopes of up to 15%: maximum 80% of a parcel can be graded, but reducing the amount by 4% for each percent the average slopes exceed 5%. Thus, a parcel with 5% slopes can be 80% graded, 10% average slopes could be 60% graded, and 15% average slopes could be 40% graded.
  • Grading in slopes 15 to 24.9%: fills are not allowed, but instead, if necessary, pads should be created by “cut and export”.