Rancho Canyon Music is UNDER SIEGE from the city of Rancho Santa Margarita and R.S.M. Development Services Director Kathleen Haton Rancho Canyon Music is facing the most serious threat to its survival in the 7-plus year history of the store. That threat, sadly enough, comes directly from its own city - Rancho Santa Margarita. "If you don't like the process here, you should try doing this in some other city in south Orange County" Quote from R.S.M. Mayor Neil Blais, during a conversation with Rancho Canyon Music owner Craig Ferguson regarding our "situation" In May 2006, Rancho Canyon Music began looking for a new location. We knew that we wanted to move to a location that was convenient for our clients. That meant staying within the city limits of RSM. We also knew that there were zoning codes that must be followed, and we didn't want to run afoul of those. We enlisted Lee & Associates to help us locate a new location. We made it very clear to them that locating to a zone where we would be approved for our operations was of primary importance. We started looking in RSM in a zone known as "RSM Business Park". The agent contacted the city and asked that someone come out and observe our operations and determine our suitability for that zone. The city sent Kathy Graham. She came out and then sent the following e-mail to the agent. From: Kathy Graham [mailto:kgraham@cityofrsm.org] Sent: Tuesday, May 23, 2006 1:32 PM To: Mark Jerue Cc: Kathy Graham Subject: Rock Canyon Music I visited the existing suites of Rock Canyon Music on Aventura. Based upon my review of the uses in the existing premises and the combination of services offered by the business (i.e. administrative offices, recording studios, sales of equipment and supplies and lessons) the City has determined that the use is a Permitted Use within the RSM Business Park and will not require an additional Planning permit for the relocation of the Use. If there will be tenant modifications to the new space, then of course building permits as appropriate will be required. All business operations must be completed indoors and noise must be attenuated to meet the City standards. I also spoke with Craig Ferguson, (Owner) and advised him of the City’s review of his use and our determination. Thank you for your inquiry and we wish your client the best in their new location within the City of Rancho Santa Margarita. Kathy L. Graham, J.D., AICP City of Rancho Santa Margarita It took another 10 months before we were able to locate a space that would be suitable for Rancho Canyon Music. That is the building where we are now located. In April 2007, we made a verbal agreement with the building's owner to move there. We would take possession of the space in December 2007 to begin planning our new home. We went through the city's Building Permit process, fulfilling all of their requirements. We ended up spending approximately $40,000 on Tenant Improvements and another $10,000 in other moving expenses. Once we had finished building exactly what the city told us to build, the inspector realized on final inspection that he failed to previously notice that we needed one additional fire exit in our building. More fees to the city, more permits, and an extra $5-6,000 that it will cost to add an additional fire exit, but he would allow us to open as long as we added that fire exit before June 30. We are certainly more than happy to comply with the new fire exit. That’s a safety issue, the city made a big mistake during their own planning check process, and completely missed it, but we’ll fix it. The strange thing here is that the architect who did the drawings claims that he had meetings with the city to discuss the very fire exit that needed to be fixed. The architect charged me for a meeting that he said took place. Really, um, strange... Rancho Canyon Music started operation in our new location on January 3, 2008. Now the REAL weird stuff started happening On Wednesday March 18 at 3:30 p.m., more than 2 1/2 months after opening in the new location, I received phone call on my cel from Curtis Randolph, the Building Inspector from the city who had "handled" all the plan checks and inspections up to this time. Randolph advised me that Kathleen Haton (City of RSM Planning/Development) asked him to look into the zoning of Rancho Canyon Music (RCM), because our business may be located in an area that we are not zoned to be in. I would now be required to submit an application to the city for a Conditional Use Permit (CUP). He then suggested that I contact Kathleen Haton for further information. This city, up to this point in time, had not ever officially contacted me via business letter or any “official” method that my business must comply with/or submit a CUP. In fact, if you look at the previous e-mail from Kathy Graham, it clearly shows that we did not have to submit to the CUP. I contacted the leasing agent at Lee & Associates with my concern, and he contacted Kathy Graham. Graham then sent the following e-mail to the agent: From: Kathy Graham [mailto:kgraham@cityofrsm.org] Sent: Wednesday, March 26, 2008 3:02 PM To: Mark Jerue Cc: Kathy Graham; Nate Farnsworth Subject: RE: Rancho Canyon Music Hi Mark, Thanks for your email. I am attaching a copy of my original email from 2006 regarding Rock Canyon Music. I didn’t realize that Rock Canyon Music is the same as Rancho Canyon Music. Since 2006, the City has amended the zoning ordinance and based upon the City’s initial review of this use, a conditional use permit is required. I have scheduled an appointment with you for tomorrow at 10am with Nate Farnsworth and myself here at City Hall to review the Music Store/Studio use. It will be helpful for you to bring a site plan of the space along with information about how the space is being used (i.e. retail sales-instruments & music; admin offices; parent’s waiting room; classroom space etc). One of the items we will want to discuss is class schedule and parking impacts. Typically, this item is the one that most frequently impacts the adjacent tenants who in turn call the City to complain about the use. I don’t believe that we have received complaint calls on this business and our goal is to see if this can be avoided in the future. Thanks for your help with this item. k Kathy Graham Kathy L. Graham, J.D., AICP City of Rancho Santa Margarita The Conditional Use Permit (CUP) application process is a VERY bad thing for a small business This is what I was trying so hard to avoid all along. I want to focus on my business and helping our musician clients. I did not start this business to spend all my days obsessing over city rules and regulations. Had I known that this location was going to cause me to submit to such a process, I certainly would not have accepted the location that we moved to. Conditional Use Permits and Site Development Permits require a deposit of $3,000.00. A Tract Map requires a deposit of $7,500.00. You also have to pay O.C. Fire Authority $330, and the County of Orange $50. Then the application process begins. Among the requirements in the application is one called "Letter of Justification". This is where I get to "justify" why I am in business and why I should be allowed to continue to stay in business. This does not sound very Constitutional to me. Suffice to say, there are many other requirements on that application that will take a while to satisfy. Oh, that $3,000 deposit? That's just the beginning. Every 30 days the city would send me an invoice, telling me how much of that $3,000 they used in that 30 day period, at which time I am to write another check to bring my deposit back up to $3,000. This process can go on for as long as the city wants to drag it out, and there is apparently no cap on how much they are allowed to spend or what they spend it on! If you would like to see the CUP application... well, you can't. It's not posted on the City of RSM website. That's curious. Here's the real kicker... you can go through the entire process, satisfy all their requirements, and they can still deny your permit. At that point you lose all money and you get kicked out of your location as well. A CUP is a real gamble, that's why it is so dangerous and that's why I tried so hard to avoid this situation! On Thursday March 27, 2 representatives from Lee & Associates met with representatives from the city. I was unable to attend the meeting due to health considerations - another matter that I'll get into later - but I did receive an e-mail from the leasing agents, detailing the meeting: Craig, We had a good meeting with the city. They need to look into their dates and make sure of our time lines. They are under the impression that you moved into the space and started conducting business prior to getting your business license and that you started tenant improvements without permits. They also saw an article in the news paper stating you have over 300 students. These are the reasons they are concerned with your use. They have requested information on the layout of each room and the open space, when you occupied the space, when you signed the lease, a brief business description, a schedule of your classes and how many people you will have in the space at a time as well as your hours of operation. Once they have reviewed this information, they will tell us if you need a CUP. Please contact me so a letter can be drafted and sent to the city. Regards, Craig Fitterer Vice President Lee & Associates Commercial Real Estate Later on that same day, I received a letter from the city of RSM stating that I must comply with the CUP by Tuesday April 8. There's a slight problem for me... I'm leaving on an 8 day vacation next Monday morning. There is no way that I will be able to assemble my defense and/or a CUP application before I leave, so I have to hope for the best. Here was our response to the e-mail from Lee & Associates: Since I am leaving the country and will be gone until April 8, I will not be able to deal with any of this until I return. Any vital messages may be left with my assistant, Sarah Coman at Rancho Canyon Music. I will be in meetings and unavailable by phone on Friday March 28. I will occasionally check my e-mail when time allows. This is the information that I am prepared to give at this time. They are under the impression that you moved into the space and started conducting business prior to getting your business license This is the most suspicious of the complaints against me, because it makes absolutely no sense whatsoever. First of all, this comes directly from City of RSM website: http://cityofrsm.org/faqs/answers.asp?id=582 The City of Rancho Santa Margarita does not issue a business license; however, you may submit the business registration form located at www.cityofrsm.org in the forms section. There is no fee associated with business registration. New Commercial businesses must submit Certificates of Occupancy to the Building Department. This tidbit from another RSM webpage: http://cityofrsm.org/faqs/answers.asp?id=474 A Business Registration form (voluntary/no fee) may be obtained from the Code Enforcement Division between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday. Either you are misinformed of their request, or they have no idea that their own city does not issue business licenses, which would be, uh, disappointing. Additionally, Rancho Canyon Music is OLDER THAN THE CITY. I am definitely NOT a new business. Look it up, ask around town… We have been in business in RSM since June 2000. I have ALL the paperwork needed to prove it. DBA files, checking account and tax info, advertising, a bill of sale from the previous owner, the works. I also have a State of California Resellers license and I’m registered with the State Board of Equalization. It’s ALL been that way since June 2000. I was under the impression that we are exempt (grandfathered) from requiring a business license, then I looked it up and found RSM doesn’t even issue business licenses. By the way, they ALSO thought my business was called “Rock Canyon Music”, so they were under a lot of false “impressions”. and that you started tenant improvements without permits. That’s completely false. As a matter of fact, I was stressing BIG time that we wouldn’t get approved in time to begin work, because it was approaching Xmas holidays. I played this whole thing, I thought, by the book. I never tried to “slide by” on ANYTHING, and I can produce character witnesses, extremely credible ones, to prove that. They need to check with Curtis Randolph, the city building inspector. We went through a lot of BS to get those permits, and I have the BILLS from the architect to prove that, too! (nearly $10,000 - $2500 of that in overages because of his meetings with the city to iron out all of this in advance, I did not get my money’s worth, apparently). I have completely paid for & done everything that I could, or knew to do, to conform to the rules of RSM in this entire matter. For them to even suggest any differently is negligent and reckless. They also saw an article in the news paper stating you have over 300 students. ALL lessons are Private 1-on-1. We don’t do any group lessons at this time. During our business’ daily “prime time” 3p-7p weekdays – only 20 hours per week, the students come ONE AT A TIME. We have 12 studios, thus 12 students each 30 minutes. They leave, another 12 show up… and that’s when we’re at FULL CAPACITY, which is definitely NOT 100% of the time. After 7pm, maybe 3-5 teachers are there, but usually not all slots are filled that late. Many students simply get dropped off at the store by their parents, they come in to take their lesson and get picked up 30 minutes later, thus there is NO impact on parking. Comercio is a very thinly travelled street, thus no traffic impact either. In the mornings/early afternoons, 9am until 3pm, the place is virtually empty. Only 2 teachers do “daytime students”, and there are not a whole lot of those, mostly stay-home adults and home schooled kids. We open early to provide a service to the local community - so Mom’s can get last minute supplies like reeds or strings, for their kids who are already in school!! Believe me, I don’t make any money opening early like that. It is very quiet on Saturdays – only 4-5 studios in operation, we’re closed on Sundays, but 1 teacher does teach that day. She’s like most of our teachers… music is her life, and she puts her entire being into what she does. These city officials can only DREAM of being half of the positive influence on their own children that our teachers are on their students. The reason we have so many students is because we’re that good, and there is a NEED in our community for a business like ours. We are unique, one of a kind in this town. A vital business, some would vehemently argue. Most of the other businesses in the Park seem to run 8-5, so our schedule runs basically opposite theirs, even BETTER for the parking situation – of which there has not yet been 1 complaint or issue, nor would we ever anticipate one. We have a very good relationship with our neighbors and a very “hands on” and well-liked landlord. They have requested information on the layout of each room and the open space The rooms vary, but all fall within:13x10, 14x14, 11x10, 15x13, 18x10 – extraordinarily large for the “usual” business of our type. Each room has the following: 1 teacher, 1 student, sometimes 1 parent, who are always welcomed to attend, sometimes 1 piano sometimes 2 guitars and a 10 watt amp, sometimes a drum set, sometimes 2 trumpets, sometimes 2 violins, etc. By the way, that info is on the drawings that you took to the meeting. Those drawings were completely approved by Curtis Randolph, Bldg Inspector BEFORE we started building, and according to Randolph, the work was done EXACTLY to the pre-approved plans. when you occupied the space, when you signed the lease We verbally agreed to the deal in either April or May 2007. There was a delay in getting the proper lease to me because of a series of misprints on the leases that were being sent to me by Lee & Assoc. I have copies of all of them. The lease has a reference date of June 1, 2007. I signed the lease on June 7, 2007. By terms of the lease, we occupied the space on December 1, 2007 but Joe actually gave us access to the space in November, so we could begin the planning/permit process. There were pre-existing offices that we were using in a limited capacity. We started TI the day or 2 after the plans were approved, that date is on the paperwork in your possession. The business was fully operational on January 3, 2008. That information IS ON THE LEASE, you did show them the lease, right??? a brief business description It seems so odd that they would request this, when the “red flag” that set this whole thing off was a newspaper article in the Trabuco Canyon News – that I wrote – which completely describes exactly what we do. I will refer them to our website for any information that they want: www.ranchocanyonmusic.com – or they could always just walk over and visit the business, but that’s a little too obvious. a schedule of your classes There is NO set schedule of “classes” Everything is PRIVATE 1-on-1, scheduled by Independent Contractors who have access to the facility 24/7. We do not offer group classes of any kind at this time. If a teacher wants to teach at 12 midnight, and a student wants to show up, it’s ok with me.. they are upstanding professionals whom I trust completely, otherwise they wouldn’t be there. There is NEVER anything “sketchy” or illegal going on at Rancho Canyon Music. We are a family oriented business 100% of the time. and how many people you will have in the space at a time I think I covered that above… as well as your hours of operation. Once again, that info is in the paper, on our website, in our newspaper ads and articles, on our voice mail, available by calling us…. The store hours are Monday – Thursday 9am – 8pm; Friday 9am – 6pm; Saturday 10am – 2pm; Sunday we’re closed because we’re busy praying for a better world. Good luck, I will expect a satisfactory result to this episode upon my return. Remember, “Diplomacy is telling someone to go to hell in such a fashion that they will enjoy the trip.” Craig Ferguson, Owner Rancho Canyon Music ...even "Baby Blue" thinks this is all a little too much bull... As you can tell from the tone of my reply, I am getting rather annoyed at this entire episode at this point. The city allowed me to extend the deadline for submitting the CUP, so we do thank them for that. Upon my return from my trip, I found out that word has spread to several members of our community about our situation. Some of these kind people have taken it upon themselves to contact the city to voice their concerns. I cannot express how grateful I am to these folks! We are going to once again appeal to someone at the city to realize that the CUP should be waived due to any number of reasons. We'll see how it goes. UPDATE ON OUR SITUATION I am now in possession of an e-mail that Kathleen Haton sent to all members of the city council. It reads: I believe you have been receiving some e-mails and messages from patrons of a local business, Rancho Canyon Music. The business has a few code enforcement issues that Planning and Building Staff has been working on with the owner, Craig Ferguson. Unfortunately, Mr. Ferguson sent a letter out to all his students telling them that the City is running him out of business with costs for permits that he perceives to be unnecessary.... Mr. Ferguson is well aware of the issues and was likely well aware of the regulations prior to moving and re-opening his business. I want to assure you that Staff will continue, as always, to work cooperatively with Mr. Ferguson to bring this business into compliance. Not only is she trying to force our business to comply to an unjust ruling, she is now out and out LYING to the city council regarding my situation. There is "lawsuit" written all over that e-mail, and it is an issue that I will explore in the future. Up to this point, I was only interested in making this C.U.P. problem go away, but now I am convinced that Haton should be fired from her position with the city. She obviously does not have the personal skills or professional aptitude necessary to hold a position that deals directly with the public. I was advised to speak with Tony Beall, one of our City Council members, and he has been a tremendous help to Rancho Canyon Music. He seems truly concerned about how the city is handling this situation, and he turned the matter over to the City Manager for investigation. On May 13 I received a Voice mail from Haton. In her message she explains that she has now been "brought up to speed" by her staff on our situation. This is to imply that she had been "out of the loop" until now, playing stupid, as it were, which is apparently not too much of a stretch for her. She stated that the city would like to find a solution "that works for [Rancho Canyon Music]", and that the C.U.P. is "just a process", there are not any "issues" that the city has with Rancho Canyon Music. She further explains that the city is interested in having Rancho Canyon Music go through the process, but they will do this WITHOUT charging Rancho Canyon Music any fees. Based on how far we've already come with this fiasco, I suppose this is as good as it is going to get. On May 14, 2008 I sent the following e-mail to Haton, and also copied it to all members of the city council and to the city manager: I received your phone message of May 13, 2008 regarding your requirement of a Conditional Use Permit for Rancho Canyon Music. In order to avoid any further misunderstandings between our business and the city, I request that you mail your proposed solution to our offices on city letterhead. Please cc: the letter to the R.S.M. City Manager and all members of the city council. Rancho Canyon Music 30085 Comercio Rancho Santa Margarita, CA 92688 Once I have received and reviewed the proposal with my advisors, and if the written proposal is in fact the same as your verbal proposal, I will then contact Nate Farnsworth to move forward to explore the C.U.P. process. This request IN NO WAY is to be construed to be an acknowledgement that Rancho Canyon Music had any wrong doing in this entire situation (as was clearly alleged by Haton in an e-mail that she sent to the city council), nor does it imply that I feel the city is justified in its requirement of a C.U.P. for Rancho Canyon Music. It simply confirms that I am willing to work with the city on resolving the issue. In early June 2008, I received a letter from Haton. In this letter, Haton states the following... "In retrospect, the building division should not have authorized or finalized building permits for the business without first requiring proper entitlement permits. The Building Department is not responsible for the review of entitlements, and unfortunately, the situation occasionally comes up. Despite the fact that this oversight occurred, Rancho Canyon Music must receive a CUP to properly permit the use and to continue operations at the current location." This statement begs at least a couple of questions... if the Building Department is not responsible for review of entitlements, then who is? What authority does Haton even have to force our small business to comply to her demands? If this "situation occasionally comes up", and the City is aware of the problem, why have they never created policy to deal with the "situation"? Later on in this letter, she starts becoming very inconsistent regarding the fees that Rancho Canyon Music will be required to pay to submit to the powers that be... "...we would like to expeditiously move forward with the process so that you may continue operations without interruption or cost." But just two sentences later, she does a quick about-face when she states that "...the process will be concluded as quickly as possible at minimal cost to the City and to your business." "Without cost" or "minimal cost"... which is it, Ms. Haton? And if we're talking about "minimal cost", who's definition of "minimal" are we talking about? For a business with millions of dollars, $3000 is minimal, for a small business like Rancho Canyon Music, minimal is under $50. At this point it seems pretty apparent that Haton is incapable of being coherent or consistent even within the same paragraph! On Wednesday, June 25, Haton hit a NEW all-time low We have begun the process of repairing the Fire exit. On Tuesday we completed the framing portion of the work and immediately called for our Framing Inspection. We fully expected that we would be scheduled for an inspection to occur on Thursday June 26, but on Wednesday afternoon I received a call on my cel phone from the Inspector who informed me that my inspection was "on hold". I asked the Inspector what that meant, he said that he was told not to do my inspection. When I asked the Inspector why, he said that he "didn't know". Then I asked who had called for the inspection to be put "on hold", he said the demand came from the Planning Department. I asked him if he was referring to Kathleen Haton, and he confirmed that yes, Haton was the one who put it on hold. Putting the inspection "on hold" was to have at least two major impacts. 1.) Delaying inspections would drag the project timeline out so that there would be no way that we would finish the project in time to make our June 30 deadline, which would then give the City the right to shut us down. 2.) Each day that the project was "on hold" would cause the construction crew to have to wait, but I would then be responsible for paying the crew their day rate even though no work was being done, thus running the cost of the project to such levels that I might not be able to stay in business. In the 27+ years that my construction chief has been in business, he had never heard of a Planning Department in any city put an inspection "on hold". When I later called other construction professionals, I found that none of them had ever heard of such an incident. I immediately put in a call to Councilman Tony Beall to find out what in the world was going on. He was completely unfamiliar with our Fire exit "issue", but he told me that he would call the City Manager and get to the bottom of the matter. At this point I informed Mr. Beall that I had reached my absolute "tipping point" and I would be aggressively pursuing a lawsuit against the City. He asked me not to call in a lawyer (naturally). I then went back to my office and awaited a phone call from someone who could explain to me what was going on. During the afternoon, while I was in a teaching session, one of my assistants came into my office and told me that I had a visitor. To my great surprise, the visitor was our local Building Inspector who was here to do the Framing inspection. The inspection took less than 5 minutes to complete, and we passed with flying colors. To this day I have never received an explanation as to why the inspection was put "on hold", but it got completed, so Haton was thwarted in this attempt to carry out further abuse of power. So this is where the entire situation sits right now. We are asking all members of this community who value the Arts to make phone calls, send letters or e-mails, or track down your "favorite" City Council member and let them know that you are disgusted with the manner in which the City has attempted this SHAKEDOWN of our only local Music school. Make NO MISTAKE this is a SHAKEDOWN, clear and simple. I know that this is a long, long story, and we appreciate the fact that you took time from your schedule to read it all the way to this point. We hope that we will be able to continue to serve the Music community here, but if one "bulldog" administrator - not even an elected official - has her way this City will lose its local Music school, 18 excellent Music teachers will lose their jobs, over 300 music students will lose the opportunity to continue their studies, and 400 other kids will lose the opportunity to rent instruments from us so that they may take music lessons at their public schools. Please help make R.S.M. safe for Private Music schools!