Presentation on theme: "“ This Trust may be referred to as the GOLDEN RAIN FOUNDATION TRUST”. TRUST AGREEMENT March 2, 1964 Recorded at Book 6953 page 519."— Presentation transcript:
“ This Trust may be referred to as the GOLDEN RAIN FOUNDATION TRUST”. TRUST AGREEMENT March 2, 1964 Recorded at Book 6953 page 519
This is a business trust A business trust is an agreement set up for the control and management of assets and property. This type of trust has trustees who take responsibility for the management of the assets in the trust. The trustees manage the assets not for their own gain and benefit, but for the benefit of one or more trustors/beneficiaries.
Why was the TRUST established? The Trust was established to meet requirements to finance a project to be known as Leisure World, Laguna Hills
BACKGROUND To better understand why the Trust was necessary
As land in the cities and suburbs became more scarce and more expensive, developers moved further out into rural areas. Moulton Ranch Circa 1960 courtesy of Orange County Archives
Rossmoor Corporation was a community development company headed by Ross Cortese. In the 1960s Cortese negotiated the purchase of some Moulton Ranch land to build a large-scale community. Rossmoor needed Capital to purchase the land, develop it, and construct the facilities. The acquisition of the property and the construction of Improvements would be financed by the sale of stock of Cooperatives and mortgage loans insured by the Federal Housing Authority (FHA).
Golden Rain Foundation (GRF) of Laguna Hills was incorporated in 1962 to provide services and community facilities to the housing corporations of Laguna Hills. The incorporating and early directors of GRF were employees of Cortese. The first resident was elected to GRF Board in 1966.
Trust Agreement The Trust Agreement was created with the GRF Board as Trustee and (a not yet member occupied) Mutual One as the Member and Trustor/Beneficiary. None of the lenders would have funded the development and FHA wouldn’t have insured the loans without a mechanism to insure the future development and management of the Trust properties and services.
In essence the GRF Trust is a “Construction Contract” To meet the demands of United California Bank (Mortgagee) assuring that specific Community Facilities and Offsite Improvements would be acquired, built, managed and operated by GRF/Trustee for the benefit of the Mutuals/Trustors.
Three Major Parts of the Trust The Agreement that actually sets up the Trust. Exhibit B which states the Terms of the Trust. Exhibit C (amended as Exhibit III) which was the Regulatory Agreement between GRF and the FHA.
Who Owns the Trust? The Trust is wholly owned by the Mutuals. It is an Asset of the Mutuals. The Golden Rain Foundation does not own the Trust. GRF manages the Trust assets for the benefit of the Mutuals.
GRF has a Dual Role As TRUSTEE Trust Agreement March 2, 1964 Regulated by Probate Code Mutuals – Trustors as well as Beneficiaries of the Trust The Trust Agreement specifies the purpose of the Trust along with the terms and conditions by which the assets are to managed and ultimately distributed to the Beneficiaries. All affected parties and the courts are legally bound by the provisions of a Trust Agreement.
The Mutuals’ Dual Role AS BENEFICIARIES The Mutuals provide the continuing funding to pay for the expenses of the Trustee in administering and operating the Trust. AS TRUSTORS The Mutuals have provided all of the funding to acquire or construct the planned Community Facilities and Offsite Improvements.
The Trust Estate includes: All Trusteed Sums received from the Mutuals to become Trustors/Beneficiaries. All parcels of land and all Improvements acquired or constructed. All sums paid to Trustee by the Mutuals to cover costs of maintenance of the Improvements. Any other money or property held by or received in Trust.
Trustee Duties are to: – Perform all acts contemplated, necessary or desirable to carry out the plan of operations of the Trust Agreement. – Provide annual financial reports to the Mutuals detailing the Trustee’s operations. – Retain all funds that are part of the Trust Estate in a separate bank account.
Trustee shall have, in addition to all powers, rights and privileges provided by law for trustees, all powers necessary to carry out the duties imposed on Trustee by the Trust Agreement and, in all such cases, Trustee shall have sole discretion. With respect to all such transactions Trustee shall have no liability except for willful and wrongful misconduct.
The Trust shall terminate 60 years from the date March 2, 1964 or 21 years after the death of specific named individuals (their birthdates are from 1954-1963). Project when completed will contain an estimated total of 18,000 dwelling units. Specific Improvements and Community Facilities were listed.
Other projects could become a Trustor and Beneficiary by adopting and agreeing to the terms of the Trust and depositing Trusteed Sums. In the event a project was not financed by FHA, GRF would determine the amount of the Trusteed Sums.
“Trusteed Sums” Trusteed Sums varied per Mutual ($600 - $5,230). As a result, the beneficial interest or percentage of ownership that each Mutual has is not in direct proportion to the size of its membership. MutualTrusted SumPercentagePeriod United$11,340,43058.5 %Mar. 1964 to June 1968 Third7,597,42839.2%Nov. 1969 to Sept. 1981 Mutual Fifty 450,9502.3%1974 TOTAL$19,388,808100.0%
2. “It is specifically understood and agreed that completion of all the Improvements as planned is dependent upon the development of Leisure World being fully completed….” “and Golden Rain shall not be obligated to construct the Improvements to a greater extent than required by the actual development of Leisure World, or to expend thereon any more money than it receives from time to time in trust as provided in paragraph 1 hereof” [instructions for Trusteed Sums]
4. “ No Cooperatives shall be obligated to pay for Improvements more than its respective increment contributed to said trust.” 3. “ In the event Leisure World is not fully developed, the Improvements will of necessity be proportionally reduced.”
6. “Golden Rain shall operate and manage the Improvements and provide administrative, recreational and medical services for the benefit of the members of the Cooperatives and their successors in interest at cost and on a nonprofit basis. The cost shall be included in the monthly [assessments]charged on a pro rata basis to the members by their respective [Mutuals].” 5. “Golden Rain in its said capacity as Trustee shall maintain the Improvements and the grounds and equipment in good repair.”
7. GRF, at its discretion, shall refund/credit to the members of the Cooperatives their proportionate share of sums in excess of the amount expended or obligated after the end of each fiscal year. 8. GRF, in its sole discretion, shall determine the rules and regulations relative to the use of the Community Facilities and the extent of services to be provided in connection with them. Use of any facilities by non-members shall be subject to the prior written consent of 2/3 voting power of GRF.
10. “Within 90 days following the end of each fiscal year GRF shall furnish the Cooperatives… with a complete annual financial report, prepared/certified by a Public Accountant or CPA and based upon examination of its books and records.”
11. Any Cooperative other than MUTUAL ONE may become a party to the Agreement upon the execution of an Addendum, by supplementing Exhibit I and by performing all other duties subject to the conditions and restrictions as an original party to the agreement.
13. Exhibit B “is not intended to end and does not diminish any obligations imposed on GRF by the Regulatory Agreement” (Exhibit C/III). [Regulatory Agreement terminated when the final FHA insured mortgages were paid.] In the event of conflict between the Amended Exhibit B and the Regulatory Agreement (Exhibit C/III), the Regulatory Agreement will prevail. In the event of conflict between the Amended Exhibit B and the Trust Agreement, the terms of Amended Exhibit B shall prevail.
Schedule C is the list of Community Facilities Planned for the 18,000 dwelling Units Only 12,736 units (70.75%) were constructed and no additional units are planned.
Exhibit II (Schedule C) Estimated Costs of Community Facilities 2 Club Houses with Pools$1,440,000 5 Clubhouses1,594,000 Auditorium570,000 Riding Stables158,750 Maintenance Building512,405 18 Hole Golf Course2,095,300 Guard Houses & Gates64,000 Administration Bldg.790,680 Improve Park260,000
Amendments to the Trust Trustee may not unilaterally alter, modify or amend the Trust, except if required by federal, state or local governmental agency. The Trust may be altered, modified or amended by written instrument executed by the Trustee and all beneficiaries of the Trust.
Trust Amendments March 30, 1964Book 6992 Page 599 – Amended “Exhibit B” by adding paragraphs 6, 7, 8 & 13 February 1, 1966Book 7838 – Amended Exhibit C, the Regulatory Agreement between GRF and FHA. October 4, 1968Book 8841 Page 215 – Amendments added to include condominiums - This amendment was cancelled and superseded September 29, 1971 September 29, 1971 Book 9845 Page 89 – Amendments added to Provisions to include condominiums – Amended Paragraph 8 of Exhibit B to specify that non-members could not use any facilities without prior written consent of the Cooperatives exercising two-thirds of the voting power of Trustors. March 30, 1964Book 6992 Page 599 – Amended “Exhibit B” by adding paragraphs 6, 7, 8 & 13 February 1, 1966Book 7838 – Amended Exhibit C, the Regulatory Agreement between GRF and FHA. October 4, 1968Book 8841 Page 215 – Amendments added to include condominiums - This amendment was cancelled and superseded September 29, 1971 September 29, 1971 Book 9845 Page 89 – Amendments added to Provisions to include condominiums – Amended Paragraph 8 of Exhibit B to specify that non-members could not use any facilities without prior written consent of the Cooperatives exercising two-thirds of the voting power of Trustors.
Termination of the Trust The Trust may be terminated at any time by the written election, delivered to Trustee, of all the Beneficiaries of the Trust. Promptly following the termination of this Trust, the Trustee shall render an accounting to each of the Beneficiaries and shall distribute all the Trust Estate, subject to any debts or other obligations, to the Beneficiaries, in the form of undivided interests proportioned to their respective Trusteed Sums.
Some questions need to be answered Where does GRF, as Trustee, get the authority to continue adding Community Facilities and Improvements? (See Exhibit B Terms, #2,3,4 ) What gives GRF get any authority to perform services in Mutual common areas? (See Exhibit B Term, #6) Should the Corporate Members give GRF consent to allow non-members to use Trust facilities? (See Exhibit B Term, #6) Is there a termination date or is it “not intended to end”? (See Exhibit B Term, #13) Can the Mutuals be Co-Trustees? When and how should the Trust be amended?
Thank You! You can read the original Trust Documents on: – The Laguna Woods Village website under GRF General Information/Governing Documents – Residents’ Voice Website – Association of Co-ops and Condos Website