Who Owns Your Facilities and Assets?
By Kim Lefner
At the May 13, 2014 meeting of Laguna Woods Village’s United Board, Golden Rain Foundation (“GRF”) attorney Chris Robinson surprised Homeowners when she made the following statement; “GRF does own the facilities...they are not owned by the mutuals...”
Laguna Hills Mutual One (the Cooperatives or “Coops”) is the Trustor of the original Trust and the beneficiary owners of all the land, improvements, assets and money held in trust by the Trustee (GRF) at that time.
Residents who have studied the Trust documents and CC&Rs also question the following actions which they claim were undertaken by the GRF with respect to the management of members’ assets and funds:
· GRF’s purchase of a new Administration Building outside the boundaries of Leisure World/Laguna Hills (“Laguna Woods Village”) for $14 Million. Some residents question the legality of such a move without the vote or written consent of 67% the Homeowners, which they claim violates Article XIV (2) of the 1988 CC&Rs and Terms of the Trust.
In 2013, GRF obtained a $10 Million loan from Bank of America with the new Administration Building as collateral for the loan. The $10 Million loan is to be used when or if GRF undertakes the new construction in the “Recreation Master Plan”.
The Homeowners are paying a substantial amount of interest each month to Bank of America on the $10 Million Administration Building loan, which was not necessary until GRF was ready to build. To date, say the residents, the $10 Million loan has cost the Homeowners close to a half million dollars in interest and no one has been held accountable for what the residents claim is a violation of the Trust and the CC&Rs.
· Rossmoor Leisure World Laguna Hills was completely developed in 1982. Residents claim that per the Terms of the Trust Amendment dated April 6, 1964, GRF is prohibited from building additional improvements not listed in the original plan filed by the developer for the “Senior Citizen Cooperative Housing Development of Leisure World Laguna Hills”.
· At an October 3, 2000 GRF Board meeting, property manager PCM's Finance and Administrative Director, Legal Counsel Hart, King and Coldrens, and the Tax Managing Director of KPMG presented a “GRF Tax Status Report” to form a new “For-Profit Corporation” for the Community. The GRF Board transferred $20 million of the Cable TV assets to “Leisure World Communications”, the new for-profit corporation.
For thirty five (35) years Rossmoor Electric had operated the Cable TV System. In 2000 Leisure World's Cable TV System operator was replaced by PCM and GRF's Broadband Services.
In 2003, after PCM and GRF's Broadband Services were formed, Leisure World Communications was quietly disbanded and GRF moved all of the Cable TV's $20 million in assets into GRF's non-profit Corporation instead of back into the GRF Trust where, residents insist, it should have been placed.
In this way, say residents, the GRF (illegally) took $20 million of Trust money to form a corporation to own and manage Broadband Services which runs the local TV station that PCM now manages.
In the next installment, we will explain how and why the GRF (and by extension, PCM) was founded and structured, and what governs their actions. We will also offer solutions for retaining control of YOUR assets. Please see enclosed subscription form should you wish to continue to receive the Community Common Sense.
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