Questions Raised About RBBA's Legal Status As It Cuts Ties with Farmers Market

The Rancho Bernardo Business Association voted to cut ties with the Webb Park farmers market on Tuesday, the same day a market manager capped the parties' ongoing dispute with an email raising questions about the association's legal authority to operate.

On July 1, 2009, the state Franchise Tax Board suspended the RBBA for failing to pay taxes in 2006 and 2007. As of Tuesday afternoon, that status had not changed, according to a Tax Board spokesperson. It is against the law for a business to operate or use its name while suspended.

RBBA Vice President Marty Judge said the suspension is the result of a filing error made by the association's CPA five years ago. The CPA accidentally filed the RBBA as a general corporation instead of as a nonprofit with tax-exempt status, Judge said. It wasn't until about a year ago that the RBBA found out an error had been made, he said.

The state Attorney General's Office lists the RBBA as a mutual benefit corporation—a type of nonprofit that may qualify for tax exemption—but a Tax Board spokesperson said there is no record of the association applying for tax exempt status.

Judge said the association never received notice that it had been suspended and has paid the back taxes without penalty,  but expects to have the money refunded once the organization is recategorized as a nonprofit.

But even tax-exempt organizations must file tax returns. When asked why no one noticed the error during yearly tax preparation, Judge said, "It was handled by a person who did not tell the board what was going on and the board thought that everything was going along swimmingly and it wasn't."

Judge said the situation is almost resolved but could not immediately provide information about how much back taxes had been paid or when. He declined to comment when asked about the legality of the association's decision to continue operating while it remains suspended.

The suspension, though mentioned in the email from Webb Park Farmers Market co-manager Richard Knudson, is only one of several issues between the two sides. , business leaders said the market—for which the RBBA was a headline sponsor—was not providing enough of a return on their investment and they would consider ending their sponsorship. Knudson questioned what investment the RBBA had made, considering he and co-manager Claire Winnick had not yet been paid and market revenue, not RBBA money, was used to pay for storage, transportation and other expenses. The managers also have used thousands of dollars of their own money to pay for market expenses, they said.

The RBBA board on Tuesday voted 12-2 to immediately end its relationship with the market.

"We no longer wish to sponsor the market and we wish them well," RBBA President Larry McIntyre said of Knudson and Winnick. McIntyre said he had no further comment on the matter.

Since the market's October re-opening, the RBBA's sponsorship has primarily consisted of paying $6,000 for newspaper ads and fliers, and sending weekly emails to its network about the market, McIntyre has said. The market managers have said the ads and fliers have not been effective, based on their own informal survey.

Knudson, in reaction to the RBBA vote to split, said he likewise wishes the association well.

"The RBBA has a valuable place in the community. I hope they do well and I hope they continue to support their members to the fullest," Knudson said.

Winnick said the RBBA's decision "changes nothing" and she and Knudson will remove the association's name from market materials. The lingering issue is whether the market will be able to continue running at Webb Park.

The private park, owned by the Bernardo Town Center Property Owners Association, has been home to the market since the fall. Originally, the market ran on Tuesdays but switched to Sundays in January after . To date, the market has not had to pay rent to the property owners for the use of the park, but that was supposed to change this upcoming Sunday.

The property owners and RBBA were to split a $10 per vendor charge, which would roughly amount to $400 to $500 each week. The market managers have said they are willing to pay for the use of the park but cannot afford to pay $10 when they only average a little more than $13 gross revenue per vendor each week.

Ron Bamberger, the head of the property owners association, said he expects the board to decide within the next couple of days whether the market can stay at the park. As for the desired $10 per vendor charge, Bamberger said in business "everything is negotiable," but he does not know if the board will decide to accept a different amount. [Editor's Note: On Wednesday, the association also decided to end its relationship with the market. See the related story here. ]

Winnick said she fully intends to have the market on Sunday, whether it is at the park or somewhere else. She and Knudson have been looking for different options over the past two weeks since the RBBA first mentioned severing ties.

Winnick's company owns the business name "Webb Park Certified Farmers Market and Specialty Faire" until 2015, so even after the split with the RBBA the market can retain its name if the managers so choose.

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