HomeMy WebLinkAbout2018-06-12; City Council; ; San Diego Foundation Mitigation Endowment Fund Agreement for long-term management of the Poinsettia Station Vernal Pool PreserveCITY COUNCIL
Staff Report
Meeting Date:
To:
From:
Staff Contact:
June 12, 2018
Mayor and City Council
Kevin Crawford, City Manager
Rosanne Humphrey, Sr. Program Manager
Rosanne.Humphrey@carlsbadca.gov or 760-602-4689
CA Review Hs
Subject: San Diego Foundation Mitigation Endowment Fund Agreement for long-
term management of the Poinsettia Station Vernal Pool Preserve.
Recommended Action
Adopt a Resolution authorizing execution of the San Diego Foundation Mitigation Endowment
Fund Agreement and transfer of existing funds from the General Fund into the endowment
fund for long-term management of the Poinsettia Station Vernal Pool Preserve.
Executive Summary
The Poinsettia Station Vernal Pool Preserve (Preserve) was established in 1994 by North County
Transit District (NCTD) to mitigate the impacts to biological resources, including species
protected by the California and Federal Endangered Species Acts, resulting from construction of
the Poinsettia Lane Commuter Rail Station. In 2004, prior to construction of the Water's End
residential development, John Lang Homes was required to protect a small area adjacent to the
existing Preserve and provide $100,000 to the city to be used for long-term management of the
vernal pool habitat. To date, the funds have been held by the city and have generated $38,700
in interest. To use these funds for management, they first need to be transferred into an
appropriate endowment account. This will enable the city to use available funds for long-term
management and protect this most valuable resource. The City Council is being asked to review
and approve this action because of the amount of the transfer.
Discussion
In 1994, the Preserve was established by NCTD within its right-of-way adjacent to the railroad
tracks to mitigate the impacts resulting from co.nstruction of the Poinsettia Lane Commuter Rail
Station (Exhibit 2). The impacted biological resources included vernal pool habitat and several
species protected by the California and Federal Endangered Species Acts.
In 2004, John Lang Homes, the developer for the Water's End residential development located
adjacent to the Preserve, was beginning construction just prior to finalization of the city's
Habitat Management Plan {HMP). The HMP identified the Preserve as a "critical location" for
several vernal pool species. This means that the Preserve is critical to the continued survival of
the species. In this context, the biological analysis determined that, although the Water's End
project would not directly impact vernal pool species, it would impact the watershed of the
adjacent vernal pools on the Preserve. Therefore, as a condition of approval, the developer was
required to avoid and permanently protect the watershed area and provide $100,000 to the
June 12, 2018 Item #10 Page 1 of 18
city to be used toward long-term management of this area, which would be added to the
existing Preserve. No long-term management plan was prepared, and no specific long-term
manager was identified at that time. Currently, the $100,000 and $38,700 of interest earned is
still held by the city.
Due to the importance of the Preserve for the long-term sustainability of several vernal pool
species as identified in the HMP, it is in the city's best interest to take on responsibility of long-
term management. It is imperative to establish an appropriate account to fund management in
perpetuity. Once the San Diego Foundation Mitigation Endowment Fund Agreement is
executed, the city will transfer the funds into this account, the principal will be invested, and
the annual net interest earned will be used to fund annual management activities in perpetuity.
The San Diego Foundation has the highest capitalization rate, which is the rate of return less
inflation and account fees, for this type of account in the county. T~e San Diego Foundation is a
501(c)(3) nonprofit organization, and the fund management institution utilized by the city's
HMP Program and land managers to hold long-term habitat management accounts.
An appropriation from the General Fund balance in the amount of the principal plus interest
earnings is requested. $10,000 will be used by the city to perform invasive species removal on
the site. The remaining $128,700 will be transferred from the General Fund to the San Diego
Foundation Mitigation Endowment account. The current capitalization rate for this type of
account at the San Diego Foundation is 4.25 percent. Therefore, it is estimated that
approximately $5,440 would be generated annually for habitat management activities.
As a benefit, additional funding could be appropriated in the future to provide a higher level of
management, potentially resulting in HMP coverage of several vernal pool species. HMP
coverage for vernal pool species would give the city the authority to issue state and federal
Incidental Take Permits for these species for public and private projects, thereby streamlining
the project authorization process.
Fiscal Analysis
The money provided by John Lang Homes cannot be used for long-term management while it is
in the city's General Fund. Approval of the Resolution will allow the funds to be used to
establish a mitigation endowment account that will generate annual interest income to fund
the long-term management of the Preserve. This would be a new source of revenue for the city
to provide for habitat management of the Preserve.
Next Steps
Once the San Diego Foundation Mitigation Endowment Fund Agreement is executed and the
funds are transferred, a contract will be initiated for invasive species removal. In future years,
management funds will be received by the city annually from the San Diego Foundation and a
contract with a qualified land management entity will be initiated to perform long-term
management activities within the Preserve.
Environmental Evaluation (CEQA)
The project is exempt from the California Environmental Quality Act (CEQA) per State CEQA
Guidelines Section 15307 -Actions by regulatory agencies for protection of natural resources.
June 12, 2018 Item #10 Page 2 of 18
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for public
viewing and review at least 72 hours prior to the scheduled meeting date.
Exhibits
1. City Council Resolution.
2. Poinsettia Station Vernal Pool Preserve Map.
June 12, 2018 Item #10 Page 3 of 18
RESOLUTION NO. 2018-091
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING EXECUTION OF THE SAN DIEGO FOUNDATION
MITIGATION ENDOWMENT FUND AGREEMENT AND TRANSFER OF
EXISTING FUNDS FROM THE GENERAL FUND INTO THE ENDOWMENT FUND
FOR LONG-TERM MANAGEMENT OF THE POINSETTIA STATION VERNAL
POOL PRESERVE.
EXHIBIT 1
WHEREAS, in 1994, the Poinsettia Station Vernal Pool Preserve was established by North
County Transit District to mitigate the impacts resulting from construction of the Poinsettia Lane
Commuter Rail Station; and
WHEREAS, the Poinsettia Station Vernal Pool Preserve protects vernal pool habitat and several
species protected by the California and Federal Endangered Species Acts, and has been identified by
the Habitat Management Plan (HMP) as a Special Resource Area; and
WHEREAS, in 2004, prior to construction of the Water's End residential development, and as a
condition of approval, John Lang Homes added a small open space parcel to the existing preserve and
provided $100,000 to the city to be used for long-term management of the vernal pool habitat; and
WHEREAS, the city has held $100,000 in the General Fund since 2004 where it has earned
$38,700 in interest; and
WHEREAS, city staff intends to use $10,000 of the interest earned to remove invasive species
on the Poinsettia Station Vernal Pool Preserve; and
WHEREAS, because ofthe importance of the Poinsettia Station Vernal Pool Preserve to the long-
term sustainability of sensitive vernal pool species as identified in the HMP, it is desirable to establish
a non-wasting interest-bearing account, so that the money can be used to fund long-term management
in perpetuity; and
WHEREAS, the San Diego Foundation is a 501(c)(3) nonprofit organization and the fund
management institution utilized by the city's HMP Program and resource agencies to hold long-term
habitat management accounts.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2. That the administrative services director is authorized to appropriate interest earned in
the amount of $38,700 to the General Fund.
June 12, 2018 Item #10 Page 4 of 18
3. That the mayor is authorized and directed to execute the San Diego Foundation
Mitigation Endowment Fund Agreement to establish a long-term management
endowment account for the Poinsettia Station Vernal Pool Preserve, attached hereto
as Attachment A.
4. That the city manager or designee is authorized and directed to use $10,000 of the
interest earned to remove invasive species on the Poinsettia Station Vernal Pool
Preserve.
5. That the administrative services director is authorized and directed to transfer
$128,700 from the city's General Fund into the San Diego Foundation Mitigation
Endowment Fund.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 12th day of June, 2018, by the following vote, to wit:
AYES:
NOES:
ABSENT:
M. Hall, K. Blackburn, M. Schumacher, C. Schumacher.
None.
M. Packard.
(SEAL)
, City Clerk
June 12, 2018 Item #10 Page 5 of 18
_;}~/~ TheSanDi<;go
! :{\ Foundation ~~¥..-., Growing a Vibrant Region
FUND AGREEMENT
for the
Poinsettia Station Vernal Pool Preserve
(a Mitigation Endowment fund)
ATTACHMENT A
TH IS FUND AGREEMENT is made and entered into on 1-(o -JOl ~ , by and
between THE SAN DIEGO FOUNDATION ("TSDF"), a California nonprofit public
benefit corporation under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, and CITY OF CARLSBAD ("Founder").
RECITALS
A. Pursuant to the Waters End Open Space Monitoring and Maintenance
Letter of Intent dated August 9, 2004, John Laing Homes, the developer of
the Waters End project, issued a check to the City of Carlsbad in the
amount of $128,700 (the "Endowment Amount") to be used for the sole
purpose of creating an endowment for the maintenance of Open Space
Lot 227 (the "Property"), which is a component of the Poinsettia Station
Vernal Pool Preserve, in perpetuity.
B. The Founder is a California municipal corporation, and it is an organization
described in Section 170(c)(1) of the Internal Revenue Code.
C. To facilitate the matters described in Recital A, Founder and TSDF are
entering into this Fund Agreement.
DEFINITIONS
The following terms, as used in this Agreement, shall be defined as follows:
(1) Agency: The lead governmental entity issuing a permit for the
mitigation project and requiring the establishment of the mitigation endowment.
In this Agreement, the Agency is the Founder and such terms may be used
interchangeably.
(2) Habitat Manager: Nonprofit or governmental entity contracted to
perform habitat management tasks.
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June 12, 2018 Item #10 Page 6 of 18
(3) Property: Open Space Lot 227 in the Poinsettia Station Vernal Pool
Preserve.
(4) Resource Management Plan: The plan describing the management
activities to be performed on the Property.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. NAME OF FUND
Founder transfers the Endowment Amount irrevocably to TSDF to establish in
TSDF the Poinsettia Station Vernal Pool Preserve (the "Fund") as an endowment
for the purpose described in paragraph 2 below. An endowment is a permanent
fund. Endowment funds are pooled for maximum benefit and invested to achieve
long-term capital growth. Contributions are irrevocable and become assets of
TSDF. As an endowment fund for the purpose described in Paragraph 2 below,
the Fund shall be operated and administered in accordance with (i) Sections
65965, 65966, 65967 and 65968 of the California Government Code, as may be
amended from time to time, and (ii) the Uniform Prudent Management of
Institutional Funds Act, California Probate Code Section 18501 et seq.
("UPMIFA"), as may be amended from time to time, except to the extent TSDF
may adhere, from time to time, to more rigorous standards or requirements than
those proscribed by UPMIFA. Expenditures from the Fund shall be made in the
manner described for endowment funds under UPMIFA Section 18504. TSDF
may receive additional irrevocable gifts of property acceptable to TSDF from
time to time to be added to the Fund, all subject to the provisions hereof.
2. PURPOSE
Founder and any Habitat Manager that Founder may designate are organizations
described in Section 170(c)(1) or 170(c)(2) of the Internal Revenue Code of 1986,
and subject to the limitations of paragraph 4 below, the primary purpose of the
Fund shall be support the Founder in furtherance of the long-term stewardship
of the Property in accordance with the Waters End Open Space Monitoring and
Maintenance Letter of Intent and the resource management plan to be
developed and approved by Founder ("Resource Management Plan"). In the
event that in the future the Habitat Manager Ci) no longer constitutes an
organization described in Sections 170(c)(1) or (2) of the Internal Revenue Code,
(ii) becomes subject to bankruptcy proceedings under state or federal law, (iii)
liquidates and dissolves or otherwise ceases to exist, (iv) fails to submit to
Agency and TSDF in a timely manner (or within such reasonable period as
determined by Agency and TSDF) the annual income and expense report (the ·
WEST\223059296.8 2
June 12, 2018 Item #10 Page 7 of 18
"Expense Report") along with reimbursement to the Fund of any unused funds
from any previous distribution(s) and an annual certification, signed by the
President or Chief Financial Officer of the Habitat Manager, certifying as to the
accuracy and completeness, in all material respects, of the Expense Report and
the Habitat Manager's compliance with the requirements imposed upon it under
any agreement with Founder (the "Annual Certification"), or (v) proves unable to
fulfill substantially all of the duties described in the any agreement with Founder
as determined by either Founder or a court of law, then the assets of the Fund
shall be applied as described in paragraph 5 below.
3. INVESTMENT OF FUNDS
TSDF shall have all powers necessary or desirable to carry out the purposes of
the Fund, including, but not limited to, the power to retain, invest and reinvest
the Fund in any manner within the "prudent person" standard and the power to
commingle the assets of the Fund with those of other funds for investment
purposes. The fund however is subject to the requirements of Sections 5231 and
5240 of the California Corporations Code, as may be amended from time to time.
4. DISTRIBUTEES
Subject to paragraph 5 below, earnings allocated by TSDF to the Fund shall be
distributed exclusively for charitable, scientific, literary or educational purposes
or to organizations of the type to which an individual taxpayer may make
deductible charitable contributions, gifts, and bequests under the income, gift
and estate tax provisions of the Internal Revenue Code of 1986, as amended, and
of the Revenue and Taxation Code of California. It is intended by the foregoing
that at the time a distribution is made from the Fund, the distribution must be
made for a charitable, scientific, literary or educational purpose as described in,
or to an organization which is described in, Sections 170(c)(l) or (2), of the
Internal Revenue Code of 1986, as amended, and Section 17201 of the Revenue
and Taxation Code of California, or to a government entity acceptable to
Founder. Distributions from the Fund shall be within the purposes and
procedures of TSDF as contained in its Articles of Incorporation and its Bylaws.
5. DISTRIBUTION
Distributions from the Fund may be made from earnings and so much of the net
gains (realized and unrealized) in the fair value of the assets of the Fund as is
prudent under the standard established by Section 18504 of UPMIFA.
Distributions shall be made to the qualifying Habitat Manager to be designated
by Founder or such other permissible distributees and at such times and in such
amounts as may be designated by the Founder, subject to the approval of the
TSDF Board of Governors. Subject to the limitations of Section 18504 of
UPMIFA, distributions shall be made each year to be used for the management
WEST\223059296.8 3
June 12, 2018 Item #10 Page 8 of 18
and maintenance expenses for such year in accordance with the requirements of
the Resource Management Plan provided, however, TSDF is not, and shall not in
the future under any circumstances be deemed to be, a party to the Resource
Management Plan or any agreement between Founder and the Habitat Manager.
Neither TSDF nor Founder shall have liability or responsibility whatsoever for the
funding needed to cover such expenses to the extent such funding need is
greater than the distributable amount of the Fund. There shall be no
requirement that all earnings and net gains be distributed each year; earnings
and net gains may be accumulated and added to principal, and shall not later be
available for distribution.
Distributions shall be made to such distributees of the type described in Section
4 above as may be designated by the Board of Governors of TSDF except as
modified in accordance with Section 6 below.
In the event Founder notifies TSDF in writing that the Habitat Manager has
misused or diverted any monies from the purposes of the Fund or any of the
events listed in Section 2 above have occurred, TSDF shall Ci) within fourteen
days cease making any further distributions from the Fund to Habitat Manager,
and (ii) provide Founder with written notice of such misuse or diversion so that
TSDF and Agency can take appropriate action, and (iii) if Founder elects to
undertake the management and maintenance responsibilities over the Property,
make distributions from the Fund to Founder or make distributions from the
Fund to a distributee designated by Founder and approved the TSDF Board of
Governors as described in Section 6 below.
Without limiting the foregoing, all parties hereto acknowledge and agree that
distributions from the Fund are to be made only for the stewardship purposes
described in Section 2 above, and that the Fund is not intended to provide
distributions to address the effects of emergencies or natural disasters.
Unless Founder designates another person or entity to prepare an annual fiscal
report that complies with the requirements set forth in Section 65966(e) of the
California Government Code, TSDF shall prepare such an annual fiscal report.
6. CONTINUITY OF THE FUND
If any of the events referred to in Section 2(i), (ii), (iii), (iv), (v) or Section 5 (iii)
above occur, TSDF and Founder shall elect a new nonprofit habitat management
organization approved by Founder and the TSDF Board of Governors.
The Fund shall continue so long as assets are available in the Fund and the
purposes in the Fund can be served by its continuation. If the Fund is terminated
for any of the above reasons, TSDF shall devote any remaining assets in the
Fund exclusively for charitable purposes that
WEST\223059296.8 4
June 12, 2018 Item #10 Page 9 of 18
a. are within the scope of the charitable purposes of TSDF's Articles of
Incorporation; and,
b. most nearly approximate, in the good faith opinion of the Board of
Governors, of the original purpose of the Fund.
7. NOT A SEPARATE TRUST
The Fund shall be subject to the Articles of Incorporation and Bylaws of TSDF.
All money and property in the Fund shall be assets of TSDF, and not a separate
trust, and shall be subject only to the control of TSDF. Pursuant to Treasury
Regulations, the Board of Governors of TSDF has the power "to modify any
restriction or condition on the distribution of funds for any specified charitable
purpose or to any specified organization if, in the sole discretion of the Board of
Governors, such restriction or condition becomes unnecessary, incapable of
fulfillment, or inconsistent with the charitable needs of the community or area
served." Treas. Reg. §1.170A-9(e)(11)(v)(B) and CE).
8. COSTS OF THE FUND
Founder understands and agrees that the Fund shall share a fair portion of the
total administrative costs of TSDF. The administrative cost annually charged
against the Fund shall be determined in accordance with the then current Fee
Policy identified by TSDF as the fee structure applicable to Funds of this type.
Any costs to TSDF in accepting, transferring or managing property donated to
TSDF for the Fund shall also be paid from the Fund.
9. ACCOUNTING
This Fund shall be accounted for separately and apart from other gifts to TSDF.
10. CHARITABLE DEDUCTIONS
TSDF has provided no advice or assurance as to the tax treatment of the
amounts deposited in the Fund. Founder has been advised and given the
opportunity to seek independent advice as to such tax treatment.
11. DISCLAIMERS
TSDF shall have no duty of any kind whatsoever to monitor or determine the
Habitat Manager's compliance with the Resource Management Plan or any
agreement between Founder and the Habitat Manager other than to accept
receipt, annually, of the Expense Report and the Annual Certification. TSDF shall
WEST\223059296.8 5
June 12, 2018 Item #10 Page 10 of 18
have no liability whatsoever with respect to the performance of any of the
obligations of the Habitat Manager under the Resource Management Plan or any
agreement between Founder and the Habitat Manager. The responsibility for
managing and maintaining the Property is limited solely to the Habitat Manager.
TSDF shall have no obligation whatsoever to enforce the terms and provisions of
any agreement between Founder and the Habitat Manager. John Laing Homes
and Habitat Manager are referenced in this Fund Agreement as described below,
but they are not intended as third party beneficiaries of this Fund Agreement.
12. ATTACHMENTS
If checked below, the attachment(s) so designated shall be incorporated by
reference herein and hereby made a part of this Fund Agreement as if fully set
forth in this Fund Agreement (provided that the applicable attachments are
executed by Founder).
_X_ Addendum to Fund Agreement for Poinsettia Station Vernal Pool
Preserve
_X_ Endowment Distribution Election for Poinsettia Station Vernal Pool
Preserve
13. CERTIFICATION
Pursuant to California Government Code section 65968(e), TSDF certifies to the
Founder that it meets all of the following requirements:
a. TSDF has the capacity to effectively manage the Fund;
b. TSDF has the capacity to achieve reasonable rates of return on the
investment of the Fund similar to those of other prudent investors
for endowment funds and shall manage and invest the Fund in good
faith and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances, consistent with UPMIFA;
c. TSDF uses generally accepted accounting practices (GAAP) as
promulgated by the Financial Accounting Standards Board or any
successor entity;
d. TSDF will be able to ensure that the Fund is accounted for, and tied
to, the Property; and
e. TSDF has an investment policy that is consistent with UPMIFA.
[signature page to follow]
WEST\223059296.8 6
June 12, 2018 Item #10 Page 11 of 18
IN WITNESS WHEREOF, we execute this agreement on <June l't l rz.o \ 8
Founder: y /L
Matt ~ aydr
City of Carlsbad
CEO of The San Diego Foundation on
By:
Enc.: Program Guidelines
\VF.ST\223059296.8 7
APPROVED AS TO FORM
~1
Br.-~:;;..;;~~~~.-.-.--~eputy City Attorney
City of Carlsbad. CA
June 12, 2018 Item #10 Page 12 of 18
~\\~~,, TheSanDiego T~Z Foundation
\•~""' Growing a Vibrant Region
ADDENDUM TO FUND AGREEMENT
for
Poinsettia Station Vernal Pool Preserve
THIS ADDENDUM TO FUND AGREEMENT is dated as of the same date as the Fund
Agreement by and between THE SAN DIEGO FOUNDATION ("TSDF") and City of
Carlsbad ("Founder") and amends and supplements the Fund Agreement as
follows:
14. DISPUTE RESOLUTION
A Mediation. Founder and TSDF agree to mediate any dispute or
claims arising between them out of this Fund Agreement, or any resulting
transaction, before resorting to arbitration or court action. Mediation fees, if any,
shall be divided equally among the parties involved. If, for any dispute or claim
to which this paragraph applies, any party commences an action without first
attempting to resolve the matter through mediation, or before commencement
of an action, refuses to mediate after a request has been made, then that party
shall not be entitled to recover attorneys fees, even if they are otherwise
available to that party in any such action. Exclusions from this mediation
agreement are specified in paragraph 14C below.
B. Arbitration of Disputes. Founder and TSDF agree that any dispute
or claim in law or equity arising between them out of this Fund Agreement or
any resulting transaction, which is not settled through mediation, shall be
submitted for neutral, non-binding arbitration. The arbitrator shall be a retired
judge or justice, or an attorney with at least 20 years of experience, unless the
parties mutually agree to a different arbitrator. The parties shall have the right
to discovery in accordance with the Code of Civil Procedure Section 1283.85. In
all other respects, the arbitration shall be conducted in accordance with Title 9
of Part 3 of the Code of Civil Procedure. Exclusions from this arbitration
provision are specified in paragraph 14C below.
C. Exclusions. Any matter that is within the jurisdiction of any
bankruptcy court shall be excluded from mediation and arbitration.
WEST\223059296.8 8
June 12, 2018 Item #10 Page 13 of 18
IN WITNESS WHEREOF, we execute this agreement on :f"--\vte.. l q l ~ l 8
Founder:
Matt Hall, Mayor
City of Carlsbad
WESlU23059296.8 9
Date
APPROVED AS TO FORM
Celia A. Brower, City Attorney
Ir:~ Asst/Deputy City Attorney
City of Carlsbad, CA
June 12, 2018 Item #10 Page 14 of 18
~\ \ ~~, The San Diego --.:--! ~ \ Foundation
i;.,j>~ .._,l Growing a Vibrant Region
ENDOWMENT DISTRIBUTION ELECTION
for
Poinsettia Station Vernal Pool Preserve
Allocation of earnings are made semi-annually to each Fund in March and
September. Earnings are available for distribution semi-annually, annually, or on
request after an allocation period. Distributable earnings will remain distributable
unless it is requested that the earnings be reinvested. Earnings reinvested become
a part of principal and cannot be accessed in the future for distribution.
It is Founder's responsibility to request that TSDF end reinvestment in the fund
with adequate advance notice. For annual distributions, TSDF must be notified 15
months in advance of requested distribution date. For semi-annual distributions,
TSDF must be notified 9 months in advance of requested distribution date.
Please check one of the following: (If no selection is made earnings will be held
until distribution is requested by founder(s) or advisor(s).
D Please distribute the earnings semi-annually. (March and September)
D Please distribute the earnings annually.
Circle one: March or September
D Please hold the earnings until distribution is requested.
Please note distributable balance earnings are not credited to the fund
JZl Please reinvest the-earnings.
Annual distributions will begin after the Conservation Easement
with corrected boundaries has been recorded or until otherwise
specified by the Founder.
(This selection can be changed at any time, but becomes effective on July 1 and Januaryl~J/1/ W/!4 /1 0
Matt Ha11,Mc( or Date
City of Carlsbad
WEST\223059296.8 10
June 12, 2018 Item #10 Page 15 of 18
TheSanDiego
Foundation
Growing a Vibrant Region
PROGRAM GUIDELINES
Revised September 2015
1. The San Diego Foundation. The San Diego Foundation ("TSDF") is a California nonprofit public benefit
corporation exempt from taxation under Section SOl(c)(3) of the Internal Revenue Code of 1986, as amended ("IRC").
TSDF is recognized as a public charity under IRC Sections 509(a)(l) and l?O(b)(l)(A)(vi) and operates as a "community
trust" under U.S. Treasury Regulations Section l.170A-9T(f)(ll). All contributions to and assets of TSDF are subject to its
Articles of Incorporation, Bylaws and Program Policies. TSDF reserves the right to modify the terms and conditions of its
Articles of Incorporation, Bylaws and Program Policies at any time.
2. Donor Advised Funds. As a community foundation, TSDF may establish for its donors a "donor advised
fund," which is separately identified by reference to the donor or donors. The fund is owned and controlled by TSDF and
the donor or persons appointed by the donor have the privilege of providing advice with respect to the fund's
investments or distributions. TSDF has final authority over the distribution of all grants from its donor advised funds, and
reserves the right to decline or modify a grant recommendation that is not consistent with these policies or TSDF's
charitable purposes. Gifts to a donor advised fund are irrevocable.
3. Other Funds. In addition to donor advised funds, TSDF also establishes scholarship funds (discussed
below), agency funds (for the benefit of a specified charity), field of interest funds (for a specified charitable purpose)
and habitat funds (to administer funds set aside to maintain ecological preserves). Gifts to these funds are irrevocable.
4. Fund Minimums. Generally, a minimum of $50,000 is required to establish an agency fund and
$25,000 for all other funds.
5. Providing Grant Advice to Donor Advised Funds. Once a donor advised fund has been established and
funded, the advisor(s) named in the agreement may recommend distributions to qualified charitable organizations.
(TSDF staff will perform due diligence to verify that the organization is a current, qualified charity.) The following rules
govern grant recommendations:
a. Minimums. Each recommended grant should be for at least $250.00.
b. Procedure. Unless otherwise restricted as an endowment, grants may be
recommended out of the original principal, as well as accumulated investment earnings, if any. Grant
recommendations can be made at any time during the year, except for designated endowment funds,
which make distributions in March and/or September. A maximum of four (4) grants may be made per
year from Agency non-endowment funds. Recommendations can be submitted by mail, facsimile or
electronic mail. Forms and instructions for making grant recommendations will be provided upon
creation of a fund, as part of an advisor orientation process.
c. Grant Restrictions. The following restrictions apply to grants:
i. No Indirect Benefit. Grants from donor advised funds may not be used to secure any
benefit from the grantee for the donor, the advisor or any persons related to them.
ii. Enforceable Pledges. Grants from donor advised funds may not be used to discharge
or satisfy a charitable pledge or obligation that is legally enforceable against the donor or any other person.
iii. Event Tickets. Grants from donor advised funds may not be used to pay for goods or
services of value received by the donor, advisor or their family members. For example, grants may not be used to
support any charitable event, including fundraising dinners, concerts, auctions, or other benefit functions when the donor
would receive a return benefit, such as the benefit of being able to attend a fundraising dinner or event. Further, no
grants may be used to pay for any portion of a split or bifurcated disbursement to a charity. A split or bifurcated
payment refers to the splitting of a payment to a charity, such as for tickets to an event, into two parts: the deductible
portion and the non-deductible portion.
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June 12, 2018 Item #10 Page 16 of 18
iv. Giving to Individuals. Donors may not choose a specific individual to receive a
benefit from a grant from a donor advised fund.
v. Prohibited Loans & Compensation. Donors, advisors or any related parties may not
receive grants, loans, compensation or similar payments (including expense reimbursements) from donor advised funds.
d . Restricted Organizations and Purposes. TSDF will not approve grant
recommendations that are for non-functionally integrated Type Ill supporting organizations; supporting
organizations that provide support to organizations controlled by the donor, advisor or related
persons; supporting organizations that are controlled by the donor, advisor, or related persons; private
non-operating foundations; lobbying, political campaigns or other political activities; or any purpose
that is not entirely charitable.
e. Remedial Action. TSDF will take remedial action if it discovers that grants
have been made for improper purposes. Remedial actions may include, but are not limited to, a
requirement that the recipient charity return the grant and/or termination of the donor's advisory
privileges.
f. Anti-Terrorism Provisions. As part of the grant review process, TSDF checks
all recommended grant recipients against the Treasury Department's List of Specially-Designated
Nationals, other U.S. and foreign government watch lists, and the IRS list of organizations whose tax
exemption has been suspended under IRC Section SOl(p). TSDF will not approve grant
recommendations to organizations that appear on such lists.
6. Scholarship Funds. Scholarship funds may have a scholarship advisory committee. All scholarship
advisory committee members must be approved by the TSDF's Board of Governors prior to making the first scholarship
awards and thereafter annually. The founder may participate on the scholarship advisory committee, provided that
neither the founder nor the founder's designees (related parties) may chair the scholarship advisory committee or in any
way control the selection process or constitute a majority of the scholarship advisory committee members. In the event
the scholarship advisory committee shall cease to be in existence, the Board of Governors of TSDF shall serve as the
advisor of the scholarship fund. All scholarships shall be awarded on an objective and nondiscriminatory basis using
procedures that have been approved in advance by the Board of Governors of TSDF and that have been designed to
ensure that all such grants meet the requirements of paragraphs (1), (2), or (3) of Section 4945(g) of the Internal Revenue
Code of 1986.
7. Income and Estate Tax Deductions. TSDF does not provide any advice or assurance to its donors as to
the income tax treatment of amounts deposited in a fund. Donors are advised to seek independent advice as to such
income tax treatment.
8. Investments. The fund advisors for endowment funds will have the assets invested in TSDF's
Endowment pool. The fund advisors for non-endowment funds with assets in excess of $25,000 may recommend that
the assets of the fund be invested in one of three investment pools (subject to liquidity requirements); information
regarding the composition of each investment pool will be provided to the donor at the time the fund is established.
Such recommendations are advisory, and TSDF has final authority over the investment of assets in its funds.
9. Fees and Costs. Each fund established at TSDF shall share a fair portion of the total administrative
costs of TSDF. The administrative cost annually charged against each fund shall be determined in accordance with the
then current fee policy of TSDF as the fee structure applicable to funds of its type. Administrative fees for charitable
expenses will be negotiated and incurred based upon the complexity of the transaction. Charitable expenses apply
exclusively to Field of Interest or Special Project Funds. In addition, upon receipt of assets upon the death of a donor, a
onetime estate fee will be assessed in accordance with the then current fee policy of TSDF. Any costs to TSDF in
accepting, transferring or managing property donated to TSDF for a fund shall also be paid from such fund.
10. Provision for Governing Law. These Program Policies, all fund agreements, and any program-related
agreement executed by a Donor shall be governed by California law. All gift agreements are deemed to be entered into
in the State of California, and all contributions to the TSDF are intended to be administered and managed in the State of
California.
11. Confidentiality. All information concerning donors' or prospective donors' gifts, including names of
beneficiaries, gift amounts, and other personal information shall be kept confidential unless permission is obtained from
the donor to release such information.
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Legend
PSVP Preserve
D Water's End Parcel
---NCTD Parcel
Poinsettia Station Vernal Pool Preserve
EXHIBIT 2
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