Foundation Splits From Laguna Festival

Even if the Festival of Arts moves to San Clemente, its $2.7 million in holdings will not, according to the board that administers the organization’s nonprofit foundation.

Officials of the Laguna Beach Festival of Arts Foundation, which is run separately from the festival and awards about $150,000 annually to Laguna Beach students and charities from the festival’s savings and investments, voted this week to essentially separate from the festival to ensure control over distribution of the money.

Board members also voted 4 to 0 at the special Sunday meeting, with festival president and foundation board member Sherri M. Butterfield absent, to give every member except Butterfield signature authority on bank accounts. The board has since notified its banks that Butterfield no longer has access to foundation funds.

Foundation board members--with the exception of Butterfield--want the festival to stay in Laguna Beach, where it began 68 years ago.

“If the [festival] board is successful in moving the festival to San Clemente, it would be a sad day for Laguna Beach,” board member Don Williamson said. “But at least if the funds are frozen, they won’t be able to take them.”

Butterfield contends, however, that the foundation’s actions are unenforceable. “What they’re doing is illegal,” she said, adding that she has contacted the banks herself about what she alleges are improprieties by the foundation.

It all comes down to a matter of legal interpretation, Williamson said.

“We have legal advice,” he said. “There’s no doubt we’re right. But it’s a shame it’s generated into this thing. It’s gotten so nasty.”

The foundation was established in 1989 to “ensure that whatever happened to the Festival of Arts in coming years, its legacy would live on in Laguna,” said John A. Rayment, a member of the foundation board.

“The foundation was established to benefit the arts in Laguna Beach,” said fellow board member Andy Macdonald. “The four of us squarely hold those beliefs.”

Foundation officials say they hope the separation is temporary and that they can work together again at some point.

“I think that the two belong together,” Williamson said. “But . . . I think it would be a total miscarriage of judgment to stand by and let the money be taken away from Laguna Beach.”

A recall of the festival board by exhibitors who want to stop the move to San Clemente, is expected to get underway next month.

The festival has tried for almost four years to negotiate a new lease with Laguna Beach, and its board voted earlier this month to move to a 22-acre site in San Clemente. The organization paid $585,000 in rent last year, and its lease with Laguna Beach will expire in September 2001.