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JPA to discuss options in a closed-door meeting with legal counsel
By Miriam Raftery
Photo, left: Dr. Michael Hager, President, Friends of the Water Conservation Garden, and Lauren Magnuson, Interim Director of the Garden
January 30, 2024 (El Cajon) – Friends of the Water Conservation Garden and the garden’s new interim director, Lauren Magnuson, made impassioned pleas at a January 23 meeting, asking the Joint Powers Authority (JPA) to allocate additional funds through June to help alleviate a financial crisis.
The Water Conservation Garden is celebrating its 25th anniversary this year. Magnuson. said, “We supported the community during the pandemic. Now we are hoping that the community will support us.”
The Garden has over $1 million in financial obligations, including large loans taken out during the pandemic and some smaller grant funds slated to be returned. Questions have been raised by the JPA over years of inaccurate record-keeping practices and borrowing by Friends to cover the Garden’s operating expenses, among other concerns.
“The Garden has significantly cut our monthly budget by more than half,” Magnuson told ECM in an interview earlier this month. “We unfortunately had to furlough a good portion of our staff and lean on current staff to absorb those furloughed positions.” She has pledged full transparency and open communication with staff and volunteers, scrambling to pull together financial records and options to help the garden grow and thrive in the future—though the task is daunting.
The JPA, which has oversight authority over the garden, consists of members from several water districts, the County Water Authority, the city of San Diego, and the Grossmont-Cuyamaca Community College District.
Photo, right: Water-wise plant fair, a 2009 event at the Garden
Dr. Michael Hager, president of the Friends board, told the JPA that the Garden has taken “significant and challenging steps to tackle the financial crisis arising from long-term effects of COVID-19, government delays, and insufficient funding.” Noting that JPA’s contribution to the Garden has declined (from about $487,000 five years ago to $320,000 a year currently under an agreement drafted before COVID) Hager explained that the pandemic and rising inflation have had severe impacts. “We are seeking assistance from the JPA to continue to serve the community to learn about water conservation.”
From Dec. 15 to Jan. 23, 6 staffers were furloughed, with more since then, according to Magnuson. Remaining staff have had a 20% decrease in staff time and pay, while winter hours have been implemented to further cut costs. Magnuson indicated that without additional funds, the garden will run out of money.
Hager says the Garden is suffering the effects of “long COVID” since during the pandemic, the Garden remained open, memberships rose, and yoga classes were added to help people stay active outdoors and bring revenues in. But large events had to be cancelled due to the COVID lockdowns, and donations also fell.
Impacts of the reduced JPA funding were exacerbated when the Friends group took out an SBA loan of $509,000 for 30 years at a 1.2% interest rate, as well as applying for a federal Employee Retention Credit of$249,266. The IRS later placed all ERC funds on a moratorium, so two years later, the Garden has not received those funds. According to Friends, the IRS has again begun processing applications in the pipeline and asked for additional documents, which have been sent. But nobody knows when those funds will arrive.
To stay eligible for those funds, the Garden had to retain employees, which meant paying out hefty salaries. Using a federal letter promising the ERC funds, Friends got Mission Driven Finance to issue a $198,996 loan at 8% interest due Dec. 31, 2023. They are now in default on this loan, though Hager says that MDF has negotiated with them to extend payments. Friends also took out a $200,000 loan from the college district that will be due May 31, 2024, but currently the group lacks the money to repay that.
In addition, the Garden must repay $10,000 in grant funds from the American Water Charitable Foundation for a tree program that has been discontinued due to lack of staffing, and must pay the county back around $40,000 to $50,000 for unspent capital expenses through the Neighborhood Reinvestment Program Grant. Friends representatives have delayed signing a California Museum Grant for an Oak Grove project including Native American interpretive exhibits, due to a requirement to retain employees that it may not be able to afford.
The Garden also owes $55,000 to the San Diego Housing Commission, which prepaid the Garden for projects that were completed, but missing receipts and inaccessible bank statement resulted in being unable to document how some funds were spent. Additionally, an artist is still owed $10,000 for illustrating a book by Pam Meisner, “Ms. Smarty-Plants (TM) ,” after grant funds were put into a general fund and mistakenly spent on other projects, Meisner told the JPA board.
JPA board members greeted these revelations with frustration.
“What kind of oversight was there by the Friends board of what was going on here?” Chairman Mark Robak (photo, right) asked.
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If you’re borrowing all this money hoping to pay it back, counting on government subsidies,” JPA member Joel Scalzitti (photo, left) from Helix Water District said, “then you’re in trouble.”
In an email to ECM, Magnuson sent a letter from Optima, an accounting firm working with the Garden since 2021 to rebuild its books and establish improved procedures for the future. The letter, signed by consulting CFO Ute Peltzer at Optima, concluded, “I have not felt that there was any evidence of intentional fraud or wrongdoing, more a situation of lax oversight and understanding of proper accounting procedures.”
Still, the Optima letter cited troubling findings, including 990 tax forms from 2019,before COVID, which showed administrative expenses at 59% and program expenses at 36%, a challenge for bringing in donations. There were also insecure financial practices, such as leaving daily deposit envelopes with cash and checks in a small carrier safe with a key that all garden employees could access. Optima also provided a list of recommded procedural changes for the Garden to implement to prevent such issues in the future.
In an interview in January with ECM, prior to the JPA meeting, Hager said, ”The finances of the garden, until last summer, were never in good condition and we had to hire a forensic accountant to go back over previous years’ finances. It took us three years with outside accountants putting our accounting system together from previous years neglect...and we had to find the money to do that, amid COVID. It was Jennifer Pillsbury who led that effort, along with the finance committee.”
Pillsbury resigned in January, a move that enabled Friends to use much of her former salary to retain most of the education programming. Magnuson, who formerly worked in the education department, was named interim director at a reduced salary.
At a December meeting, Friends presented the JPA with a “Survive and Thrive" plan including cutting to a bare-bones budget while working to get the Garden back on stable financial ground.
At the Jan. 23 JPA meeting, the JPA was presented with five options:
- Boost the JPA’s monthly support by $65,000 a month for five months, a total of $325,000;
- Dismiss the Friends board and have the JPA operate the Garden;
- Contract with the college to manage the garden, located on the campus of Cuyamaca College;
- Have the JPA advance a consolidation loan at a low rate;
- Shut down the garden until June, cancel all educational programs, events and entry until a new agreement is created, with the JPA as an active partner in marketing, grants, education programs, outreach and funding.
None of the JPA board members spoke in favor of giving the Friends organization the supplemental funding requested, and some voiced opposition.
However, Nicole Beaulieu DeSantis with the city of San Diego observed that the $65,000 a month requested broke down to about $11,000 for each of the JPA member agencies.
JPA member Dan McMillan from the County Water Authority noted that even if they were to go back to their member agencies with such a request, it could take two months for it to be approved.
Chancellor Lynn Neault (photo, right), a JPA member, voiced concern after hearing about issues repaying the GCCCD, a public agency, by June. “That was a condition of the loan,” she said of the $200,000 interest-free, uncollateralized loan. She did not comment on whether or not the college district might be willing to takeover management of the Garden.
The Chancellor also told Magnuson, ”I commend you for your honesty and transparency,” drawing applause. ”We just want the Garden to succeed.”
Several people offered public comments, and some urged that the JPA take action to assure preservation of the Garden.
Stephen Zolezzi, (photo, left) president of the Garden’s approximately100 volunteer, urged the JPA to “lean on us,” noting that many volunteers have expertise. He said the volunteers “support keeping the garden beautiful moving forward.”
Rosalie Dosik, a 20-year volunteer, announced, ”This garden is now a museum.” She discussed plans to reopen the gift shop, which has been closed for months. “It will be a museum gift store” with “posh merchandise,” she said, adding that online sales could boost revenues.
Meisner (photo, right), urged the board not to blame the current board for mistakes made in the past. ”I think it would be very sad if we dropped the education program,” she stated.
Katleen Brand, a landscape architect and member of the Friends board, called the garden “an important asset to the whole county,” adding, “To not do something would be a disservice to your agencies...I hope that you do support the garden in the future.”
Friends of the Water Conservation Garden is planning a crowd-sourcing campaign, while continuing to apply for grants.
You can help by making donations at https://www.thegarden.org, hosting events such as weddings or parties at the Garden’s venues, or purchasing a membership, which includes reciprocal admission to some 300 other gardens across the U.S. You can also attend the Garden’s upcoming Tomatomania event March 8-9, billed as the world’s largest tomato seedling sale.
The JPA did not make a decision on the future of the Garden at its March 23 meeting. The JPA board will be discussing options at a closed-session meeting with legal counsel due to “significant exposure to litigation” according to a Jan. 31 agenda, however that meeting has since been postponed to a future date to be determined.
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