Four directors who served on the Golden Rain Foundation board have resigned amid disagreement on construction plans for the Performing Arts Center, a discussion that has spanned for four years.
Citing issues with leadership, Joe Fitzekam, Annette Sabol Soule, Pat English and Beth Perak submitted letters of resignation after a June 17 closed-session meeting.
The conflict stemmed from a June 2 closed-session meeting in which the GRF board split 6-5 in favor of a resolution that approved a $5.5 million contract for maintenance and upgrades to the Performing Arts Center, formerly known as Clubhouse 3.
Despite the majority vote — which requires two officer signatures, one being the president — Bunny Carpenter, of the dissenting minority, did not sign the document.
“By (Carpenter) not signing that, it stopped the whole process,” Fitzekam said in reference to the project.
Carpenter declined to comment for this story.
GRF secretary Judith Troutman, who served as vice president at the time of the vote, said that the resolution required approval by the corporate members — who voted the resolution down in a June 22 meeting — to assure its compliance with a GRF bylaw.
According to bylaw 2.1.4., GRF’s powers are limited in the engagement or activity of any expansion, construction or addition of facilities sized at least 1,000 new or additional square feet or appraised at or above the cost of $500,000.
Officially, a Village Management Services project log recorded the plan as “PAC Renovation Maintenance Upgrades” with allocations funded “for the maintenance and safety upgrades.”
The majority argued that the PAC project, budgeted at $3.8 million, was a matter of maintenance — not renovation. The GRF board’s attorney cleared the resolution’s compliance with bylaw 2.1.4, Fitzekam said.
Post-vote, a discussion ensued.
What began as differences in legal interpretation escalated to some members, including English, questioning GRF’s role in the community and who the governance branch fundamentally serves.
“We won the vote, but they did not respect it,” English said. “They’re allowing United now to have authority over GRF.”
The United Board added an agenda item during its regular meeting on June 12 to request GRF call the June 22 meeting of the corporate members. The motion passed 9-1 with Director Anthony Liberatore dissenting.
GRF called two meetings. The first, on June 15, discussed various legal matters and a code of ethics, followed by another meeting on June 17 in which a motion to recall Carpenter, the GRF president, failed.
Two board reassignments succeeded, electing Judith Troutman as secretary and Egon Garthoffner as vice president.
The four former directors filed for resignation immediately following the June 17 closed session.
Collectively, resignees took issue with the sequence of events and how they transpired subsequent to the split vote. Fitzekam, English and Perak agreed that a dangerous precedent has been set — one that effectively compromises the fiduciary function of the GRF board as a separate branch of governance in the Village.
“United and Third appoint us (GRF directors) to the board — they’re in charge,” Fitzekam said. “But GRF as a functionality has to be able to maintain itself.”
While concerned about the PAC and its emergent need for maintenance items such as above-stage rigging and roof installation, Perak noted her decision to resign was difficult but necessary.
“This means that any time that GRF had a vote and they voted in a manner that the housing mutuals weren’t happy with the way GRF voted, (dissenters) could then just go to the corporate members,” she said. “If this is possible, then that would set a precedent that (GRF) could always be overruled. So where is the power of GRF to make its own decisions?”
Troutman, who served as the original chair to the PAC Renovation Ad Hoc Committee, recalled how the arts center became a battle of the boards.
She returned to the PAC committee in November 2019, launching the project into a bid for a general contractor, but only one company responded in the first round. It’s customary to entertain at least three bids at a time, she added.
By the time GRF set out to re-bid, COVID-19 hit.
Round two concluded in April 2020 with the PAC project quoted about $2 million above GRF’s budget.
“That’s when the division came with the board — do we look at this again? Do we keep sharpening our pencils?” Troutman said.
The board consulted with its architectural team at SVA Architects, a Santa Ana-based company hired in 2016 for design development, asking, “Why the jump?”
SVA advised the board that COVID-19 created a bidder’s market, Troutman said, and revisiting a bid at a later date may reduce quotes.
“I wanted to go forward while the clubhouse is closed,” Troutman said. “But a $5 million contract is too much.”
In disagreement with the call made by GRF’s attorney — who was one of the original writers of the bylaw, Fitzekam said — all three attorneys representing the corporate members argued that bylaw 2.1.4 did apply in the case of the PAC project.
Both Troutman and Perak commented that although they sit on separate sides of this issue, both believe everyone involved acted in good faith.
“Our fiduciary duty is to the corporate members, not the members on the same board,” Troutman said, citing the GRF trust agreement.
However, she recognized that the governing documents are not perfect — in some instances, the bylaws conflict with the trust.
“It has been a struggle with the boards every two to three years to try to clean them up so that there are no questions and we’re not arguing with each other,” Troutman said. “But we’re going to recognize when the corporate members may have an issue and it’s not going to hurt to hold a resolution for a couple of weeks.”
GRF is now accepting applications for one four-month term, two two-year terms and one 2 1/2-year term.
Source: Orange County Register