Burke School gets OK to expand summer programs

by Thomas K. Pendergast

A dispute in the Sea Cliff area between a private girls' school and a homeowners' association has apparently come to and end for now, after the city's zoning administrator decided in favor of the school's right to expand its summer camp program without having to ask the homeowners for permission.

The homeowners association has accused the Katherine Delmar Burke School (KDBS) of violating its Conditional Use Permit (CUP) when it expanded its summer camp program and then outsourced running it to a third party. Commercial activities are not allowed on properties with a non-profit tax status, like the school's property, and the third-party company, Galileo Learning LLC, was a profit-making entity, or so went the association's argument.

In a letter to the Lincoln Park Homeowners Association (LPHA) dated March 23, 2010, Lawrence B. Badiner, the zoning administrator at the SF Planning Department, stated: "The department does not have jurisdiction to dictate how the school should be run or by whom, or how much financial profit it should receive or not receive. Educational related activities are not considered as "commercial activities" and do not fall under the broad category of a commercial use. Commercial uses are typically considered as retail or sales related uses, such as beauty salons, restaurants, hardware stores, office supply stores or grocery stores."

Badiner's letter acknowledged that the city's Planning Code prohibited "the conduct of any activity of a profit-making or commercial nature, except as an integral part of the permitted principal or conditional use," but then went on to state: "It is my determination that KDBS may have summer programs, operated both by the school itself and leased to non-profit and for profit entities, as long as the number of children does not exceed 400 as required (by the Conditional Use Permit)."

"First of all, we don't rent our campus for any events. We haven't done that in the past, nor is it a practice of the school now," said Head of School Kim Wargo, in response to the association's allegations. "We do have a summer camp. We have historically had a summer camp program. We took a hiatus with that program while we were doing our construction project and our bringing the summer camp program to our campus this summer is a return to a practice that we've had for many years.

"We've had camp programs that were both internally provided through Burke's faculty as well as externally provided through other camp organizations; that's exactly what we're doing this summer, so it's no different than anything we've done in the past."

Two years ago, the school celebrated its centennial.

It's that 2006 construction project, however, that started all the problems, according to the homeowners association. They claim the school put itself into debt and created a situation of financial uncertainty when it took out a loan of about $15 million to fund a capital improvement project.

"Their debt service increased dramatically in 2006," said Karl Mayer, vice president of the LPHA. "With all that going on they need to raise money."

Mayer had a list of complaints about how the school has been operating in recent years, from parents parking on 32nd Avenue while waiting to pick up their girls, to bright lights on the north end of campus, to poor ground maintenance, and a lot of construction on top of all that. After a while, he said, it just got to be too much for local neighbors, who started a petition drive to look into violations of the school's CUP. It had 25 signatures when they presented it to SF Supervisor Eric Mar.

Mar accepted the petition but did not take a position, deferring to the zoning administrator.

"They've had more evening activities that run well into the dark hours," Mayer said. "If it's more than a rare thing, then each time they do it it's more of a burden on the neighborhood."

Mayer said the "presence of the school" has increased incrementally over the last few years, so that "each new increment becomes a new baseline."

So when the school announced it was hiring Galileo Learning LLC, the homeowners felt the CUP was already at capacity and couldn't hold anymore activities.

To add insult to injury, he explained, it was presented to the public, including the LPHA, as a done deal, with no other input required.

"This thing ups the ante a lot," Mayer said. "It was a fait accompli, without any notice, and we want it to stop."

Wargo denies that the school is in financial trouble or is on economically unstable ground.

"We have a 30-year bond, which the school took out to begin the project. It was a $15 million bond," she said. "We've raised $12 million of that $15 million bond in a capital campaign. The bond could be paid out, or at least part of it could be paid back, in 2012. That's the way it's structured.

"Our school is in probably the best financial condition that it's been in for a very long time."

She admitted that the school paid out $735,000 in interest payments last year on the $15 million bond but she also said "last year was the first year that it was in our operational budget."

Nancy Field, the school's director of development and communications, said KDBS charged about $15,000 in tuition in 2002 and today charges $25,000 a year, which Wargo says is competitive with other top girls schools in the Bay Area.

IRS records show that in 2003 the school had almost $13 million in total assets and almost $8.4 million in total operating expenses. In 2006, the year that construction of a new arts and sciences building began, along with the renovation of another building, the total value of its assets jumped to more than $23 million, while it's total operating expenses increased to $10.7 million by 2007.

Field says that when depreciation is factored in, the "book value" of the property, buildings and all other assets is actually around $16.9 million.

Wargo said the decision to hire Galileo Learning LLC to run the summer camp was based on the company's "very high-quality, well-know program" and also because "we aren't in the business of providing a summer camp program and we feel strongly that whatever is done here on our campus is as high quality as it can possibly be and this is a great program."

To pay for the construction, she admits, the school has been engaged in a variety of fundraising activities.

"We don't charge what it costs to provide the education for each student through tuition," Wargo said. "So we have an annual fund, which is an opportunity to support the school through tax-deductible donations."