By Joe Tash
San Diego city officials say they are working with the Fairbanks Ranch Country Club to resolve a dispute over a $169,000 debt the city has been attempting to collect from the club since 2007, while an audit conducted in February shows the debt has increased by $95,000.
The debt stems from a provision in the country club's lease with the city for the 400-acre parcel of city-owned property it has occupied since the 1980s. The club's facilities, including its clubhouse and 27-hole golf course, are located in the San Dieguito River Valley in Rancho Santa Fe.
While city officials have not explained why efforts to collect the money have been drawn out for nearly three years, some say it's time the club paid up.
"I guess it's called show me the money, and we want to see that as soon as possible," said San Diego City Councilwoman Sherri Lightner, whose council district includes the country club property. "We could certainly use the money."
Under the 61-year lease, which runs through 2044, the club is required to pay the city 3 percent of all memberships sold in excess of $25 million. City auditors determined that threshold was crossed in 2003, and that $169,400 was owed for the period from Jan. 1, 2004 through Dec. 31, 2006.
The city has been asking for payment from the club since May 2007, according to city documents. But the club has maintained that the city is improperly including the resale of memberships in its calculations, which it says is at odds with the language in the lease.
From 1983, when the lease began, through the end of 2009, the club paid the city a total of $3,000 for the use of the city-owned land. City and club officials agreed that no rent would be collected until 2010 to offset the club's investment of about $25 million to build the club's facilities and golf course, which revert to city ownership at the end of the lease in 2044.
The club's first quarterly rental payment of $225,000 — which is separate from the percentage of membership sales — was due on April 30. Going forward, the club is expected to pay about $900,000 per year for rent, which, according to an earlier interview with Fairbanks Rancho Country Club General Manager Steve Wittert, the club is not disputing. The rent is a percentage of the club's income from food and beverage sales and other revenue.
Neither city officials nor Wittert could be reached by presstime to confirm whether the club's first rent payment has been received.
Meanwhile, efforts continue to collect the money city officials claim is owed from the club's membership sales.
Lightner asked Barwick about the club's debt during budget hearings in December, when the council ultimately voted to cut $179 million from the city's budget over 18 months, including layoffs, cuts to police and fire services, reduction of library hours, elimination of some lifeguard services and park maintenance cuts. Among those cuts was $317,000 to the budget of the San Dieguito River Park, a planned 55-mile trail from Julian to Del Mar.
The city is a member of the park's joint powers authority, and until this year, had helped fund the park's operations since it was founded 20 years ago. Lightner had asked officials if the money owed by the club could be used to pay part of the city's obligation to the river park.
Barwick told Lightner at the Dec. 9 budget hearing that a mediation effort with the club had failed, and city officials were meeting to determine their course of action.
In an April 13 e-mail in response to a reporter's inquiry, Barwick wrote, "We have been working with the club on this issue and believe we will soon have an agreement that will settle all past due rent."
An audit conducted by the city in February, covering the period from Jan. 1, 2007, through Dec. 31, 2009, shows the club owes the city an additional $95,302 for membership sales, and recommended the city send an invoice to the club.
That new amount brought the total owed to the city — according to the city's audits — to $264,702.
Lightner said she was told by city officials in January that the original $169,000 debt had been referred to the city treasurer for collections. While the matter is still "technically" in collections, said Lightner, "Real estate assets and the city attorney are still working with the country club to collect past due rent and they are very close to reaching an agreement."
Lightner said "it does seem like a long time" that the city has been attempting to collect from the club, but was not sure why city staff had not sent the debt to an outside collection agency, as it does in some cases.
When and if the money does come through, she said, she believes it is likely it would be used to help restore funding for firefighting or lifeguard services, which were trimmed in December.
Ann Gardner, vice president of the Friends of the San Dieguito River Valley, had another suggestion.
"Of course I would love to hear that they are making progress in getting the Country Club to understand their minimal obligations under the already recognized by all as a 'sweetheart deal' lease. Now is the time, and wouldn't it also be great if their payment would result in the Mayor finding money somewhere to fund the city's contribution to the River Park?" Gardner wrote in an e-mail.