Brea’s Foundation Proves a Solid Fund-Raiser

Four years ago, the City of Brea had two unused buildings in desperate need of rehabilitation: an old city hall and a former police station.

In stepped the new Brea Foundation, a nonprofit corporation that rented the aging structures to tenants who rehabilitated them. Both buildings now are national historic sites.

But the buildings were only the beginning. Donations soon came in from developers seeking to build in the city. Then the foundation became owner of a piece of the Brea Mall parking lot in an unusual court settlement between the city and the mall owners, and dollars recently began to roll in from a hotel project on the mall property.

“Money is coming in faster than we can spend it right now,” said John W. Francis, the attorney who set up Brea’s foundation, which funnels money to the city’s cultural arts, recreation and human services.

Novel Idea for Cities

While many universities and school districts have used foundations to collect money, the idea is fairly novel for municipalities, said Francis, whose practice in La Habra deals solely with setting up foundations. He said Brea paved the way in 1982 by becoming first in the state to establish a foundation that funnels money specifically to the city, and, in this case, the city’s cultural arts.

Several Orange County cities are looking at the idea, and a few now have foundations, said Bob C. Dunek, executive director of the Orange County division of the California League of Cities. But none appears to be as successful as Brea’s.

“It’s taken a while to get the ball rolling,” Brea City Manager Ed Wohlenberg said. “It’s only significant when they can generate a lot of money--and they’re starting to do that.”

In addition to bringing money to the city, the foundation is expanding its work beyond money-generating activities and is now sponsoring cultural activities itself. On Jan. 25, the group sponsored its second annual “A Night of Music.” This year’s black-tie affair featured soprano Sunnie Walton.

The foundation next plans annual or biannual lectures by prominent national speakers. The first one will be March 17, when the foundation plans to bring former Secretary of State Henry A. Kissinger to Orange County. And for the first time, the foundation plans to ask city businesses to help foot the bill for the dinner-lecture affair.

The foundation has three primary sources of money: the two buildings it leases, developer donations and ground-lease payments from the proposed Brea Mall hotel. In addition, individuals contributed less than $5,000 to the foundation since its creation, Francis said.

Rent from the old City Hall and police station--now leased by the American College of Law and the Emergency Ambulance Service Inc.--provides the group with about $70,000 a year, foundation board director Richard A. Collender said.

Donations from developers vary, Wohlenberg said. The idea is to elicit help from the corporations that derive lower interest rates through the city’s participation with industrial development bonds: companies get their bonds and the city gets donations.

Not an Arrangement

So far, three companies have contributed: $41,600 in two lump sumps and $300,249 during a 10-year period from a third developer. Contributing to the group’s coffers is “not a condition” to the city’s participation with the developer, Francis said. “It’s not something where the city says if you don’t enter into this arrangement, then you don’t get the money.”

Ronald Isles, who was mayor at the time the foundation was created, is a partner in one of the companies, California Joint Venture Partnership, that have donated to the foundation. Isles said a $20,000 contribution from him and partner Don McBride was “an investment in the community” and done “under no contractual obligation.”

“I’m in a unique situation because I’ve been on both sides of the table,” Isles said. “I can see the benefit to the public. On the other side of the coin, I’ve been the one who has had to cough up a $20,000 check. So I have mixed emotions about it.” He added that the contributions are a means for developers to make a commitment and say they’re not out to “make as much money as possible, as quickly as possible, and then leave town.”

The third source of revenue will become the foundation’s most profitable: a 10-story, 200-room hotel that is expected to be under construction by March. The foundation receives $140,000 a year in ground-lease payments, foundation Chairman Carol Weddle said. The City of Brea receives 80% of the foundation’s $140,000 and targets that money for city-financed arts programs, recreation and other human services. The remaining 20% is left to the discretion of the foundation, which distributes the funds to community groups sponsoring arts programs, among other uses. The 80%-20% formula was negotiated last summer after City Council members met with the foundation’s board of directors to ensure that the city would receive a large chunk of the group’s budget.

1983 Settlement

The two-acre property on the mall lot was part of an out-of-court settlement reached in August, 1983. To settle a 3-year-old lawsuit filed by the owners of the Brea Mall, the city agreed to rescind a special 20-year tax assessment against the mall and to abide by a master plan for its future expansion. As part of a master plan outline, mall owners agreed to deed a parcel of the parking lot property to the foundation, Francis said. By the time the hotel is built, the city can expect to receive directly about $500,000 annually from a percentage of room and sales tax, officials said.

By comparison, Anaheim, Orange County’s largest city, raised about $28,000 for a proposed therapeutic center last year, the first year Anaheim’s new foundation received tax-exempt status, said Chris Jarvi, city parks, recreation and community services director.

In addition, Anaheim receives about $100,000 a year in contributions from companies, Jarvi said. Through its newly created foundation, Anaheim plans to target companies more aggressively. Prior to the foundation, officials found “some resistance on part of corporations to become involved” because they wanted a tax-exempt status on their donations and because they were “a little hesitant” about giving money to a public agency, Jarvi said. Now, when companies contribute to Anaheim through its foundation, their donations are tax exempt.

“I think there’s been some desire on the corporate side for some time, but they haven’t had the vehicle,” Jarvi said.

Contributions to Be Sought

The Brea Foundation has not yet resorted to soliciting contributions from companies, but it plans to ask the business community to support programs such as the one featuring Kissinger, Francis said.

Placentia recently also decided to set up a foundation to support recreation and cultural activities. Other cities considering such a move include Santa Ana, Francis said.

Cities also resort to setting up corporations for specific programs or events. In Orange, for example, the city every year enters into a formal agreement with the Street Fair Corporation, which sponsors the annual Labor Day weekend bash, said Sabine Wromar, Orange administrative analyst. Every city department that provides support to the Street Fair submits a report and bills the corporation for the services, Wromar said. Two years ago, the corporation “became totally self-sufficient” and had $10,000 left over after expenses to give to charities, Wromar said. In Buena Park, a foundation was set up to provide local programming through Group W Cable grants, said Sue Williams of the city manager’s office. Cities with foundations to fund local access programming include Long Beach and San Diego, Williams said.

Beginning to Take Hold

But foundations such as the one in Brea, aimed at financing an entire department or area instead of just one event, are just now beginning to take hold, officials said. Brea’s was “the first of any foundation formed for this purpose in the state of California,” Weddle said.

“I think it’s unique and I think it’s ideal from a financial standpoint,” Mayor Clarice Blamer said.

Francis agreed that the foundation’s role and success is unique: “It’s quite unusual but I don’t see why other cities don’t find opportunities to do the same.”