The Coastal Post - October, 1999

Lagunitas School Faces Financial Disaster

By Jim Scanlon

As predicted, the Lagunitas School District is "in deficit," facing a financial "meltdown" because of its alliance with the French Ranch Development. It has been stalled for months waiting to begin its waste water treatment systems until the developer gets a proper final OK from state authorities. The amount of its deficit isn't available yet, but probably is at least $120,000 and might go as high as $250,000.

Although the School has closed its books for the fiscal year, the French Ranch Development, which was originally supposed to pay all the District's septic tank pumping costs, and later agreed to pay a maximum of $12,000.00, has not paid anything.

When questioned at the Board Meeting of September 9, 1998 as to whether the French Ranch LLC had made its $12,000 contribution towards the $71,706 the school paid during the 1997/98 fiscal year waiting for the Developer's permits, Lucy Hicks the Business Manager said she hadn't gotten it yet but expected it next week. When asked the same question at the Board Meeting of September 22, 1998, she gave essentially the exact same answer: she expected it next week.

Hicks said at both meetings that she had been in contact with state officials who oversee grants for school construction, and was assured that the state will reimburse all expenditures from their hardship grant. She said she believes the state will allow all fees for legal council, engineering and design associated with the project. She sent a memo of understanding to state officials and requested confirmation in writing, but had not received anything [in writing] yet. "We are operating in a deficit," she said, "they [state officials] know all about it, and don't seem too concerned." (So, not to worry, the check is in the mail and the state will pay for everything.)

The document Hicks submitted to Trustees highlighted a passage claiming the French Ranch was obligated to pay the District's construction costs in excess of $375,000. "I don't think that is still in effect," said Trustee Reed Stockton, who inherited the joint sewage deal, "Would you please check that out?' (It didn't check. The only financial benefit to the District left is the $12,000.00 pumping maximum which will be paid next week).

All trustees present (Charrier was absent) seemed concerned although the possibility of a further delay in construction was not discussed---at least not in open session.

When the Board voted 3-1 last July to abandon its waste water treatment system (AIWPS) which required two large open sewage ponds, and opted for the present system of back to back sand filter mounds, the District's construction consultant repeated over and over that the two systems, that is the French Ranch system and the District's, would be completely separate. Well they are---but not really. The mounds are separate but they share a mile of common trenching.

Similarly, the Trustees were told repeatedly, that their waste water discharge permit, and the Developer's were separate. Well they are---but not really!

In official school documents sent to the State Water Resources asking that the citizens' challenge to the joint sewage plan be dismissed, the School District's Legal Council states, "...a stay [delay] in the matter will cause substantial harm to the District, its students and the taxpayers".

Larry Enos, the School Superintendent, in his declaration to the State Board goes further: He stated the District budged only $12,000 for pumping costs and expected to end pumping in September 1997. He states, "The District has spent more than $60,000.00 in pumping costs ...these... are being paid from the District's general fund, reducing the funding available for the students."

Enos also states, "Should the French Ranch be delayed in completing its System, even if the stay does not include the District, the District will be required to complete the trenching for its lines without sharing such costs with French Ranch." He estimates these additional costs at "in excess of $70,000."

What is questionable about this statement is that the second paragraph (B) of County's Enabling Agreement states, "Said plan proposes that the French Ranch and the Lagunitas School District use separate individual sewage disposal systems to dispose of sewage effluent." It's hard to see how 5,000 linear feet of common trenching can exist in a 'separate" system. So, it is separate if a powerful person says it is.

The lawyer for the French Ranch Development in his Declaration in opposition to the State Board's delaying the project states, " In view of the number of outstanding loans on the project, each day of delay ...will cost [the developer] in excess of $1,500 per day or approximately $46,500.00 per month in additional interest due on loans" Perhaps this is the reason the $12,000.00 payment is late."

The Developer's attorney mentions the harm a delay will cause the school due to extending pumping costs which he lists as "approximately $4,000 per month." He does not mention the cost to the school in trenching should only the Development be delayed.

Meanwhile, construction of the housing development is proceeding rapidly. There have been complaints regarding construction beginning without a county grading permit which was solved by the issuance of a retroactive permit to proceed. One nagging matter is the failure of the developer to post two signs notifying the public who is doing the job and where to call for information or to complain.

After weeks of construction activity, one small letter sized sign appeared on the fence behind some scraggly blackberries which has been flapping in the wind like a piece of trash caught in the fence. The Coastal Post has also received information that the bond covering the total cost of the project, required by the County to insure that it won't get stuck with paying should something go wrong, is not in place. We were unable to confirm or deny this statement since there was no one available to answer the question on Friday September 25, 1998 after lunch.

The Coastal Post has already questioned the ability of County Regulators to oversee a controversial, highly complicated development in which a county supervisor has been so intimately connected over the years. It remains to be seen if county officials are willing and/or able to enforce the rules on this project the same way it does on others.

With construction just barely getting started, the District is already in serious deficit, facing state reimbursement uncertainty and unanticipated additional construction costs. Even at this late date, both Trustees and School Administrative Staff are unclear about the terms and conditions of the contract they are in with the developer.

The "consensus building, win-win" alliance between the School and the French Ranch proposed by builder-developer Steve Kinsey, and a sub group of members of San Geronimo Valley Planning Group, has truly turned into a financial nightmare for the school. Only state bureaucrats can bail out and rescue Lagunitas School from default and bankruptcy. Nobody is winning. And we are all losing.

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