In preparation for our Diocesan Convention on Saturday, I've been reviewing the "Guide to Convention" packet, including the various reports. I noticed that the Board of Directors' report refers to an attached financial statement, but no such statement is included. I hope that one will be provided on Saturday, because I have some questions about the management of our diocesan assets.
The Board of Directors' report refers to the fact that the Diocese, appropriately and per prior agreement, purchased Bishop William and Mary Swing's interest in their Lyon Street home in San Francisco, which was slightly less than 50% of the value of the property. The Report doesn't indicate what the actual value was, but I've been told it was appraised at about $3 million dollars. This would mean that the Diocese paid a little less than $1.5 million dollars for the Swing's share of the property.
So, I wonder: is this amount accurate? How was the purchase financed? It was entirely appropriate for the Diocese to purchase the house so that the Swing's could retire comfortably and so that we could maintain a residence for future bishops of California. It also is entirely appropriate to have a complete public accounting of the transaction.
This is particularly true, given that the Board of Directors also report that they decided to "diversify" the Diocese's portfolio by investing in real estate: investing, in fact, in the Swing's new retirement home! In the discussion of the retirement home investment, the Report indicates that it was "no more than 50% of the valuation of the property." So, how much was 50% of the value? Turns out it was approximately $927,000, although we are not told this figure in the Report. Did the Board consider any other real estate investment opportunities?
Evidently not, as they claim that, had they not invested in this retirement home, the Swing's would not have been able "to reside suitably in the Bay Area." They claim that this "investment" was "important as well as prudent," given the "future value of Bishop Swing's work on behalf of [the] United Religions Initiative" and "the benefits of having Bishop Swing remain a part of this Diocese . . . " I have three responses to this:
1. The nearly $1.5 million dollars from the purchase of the Lyon Street property was more than enough to provide for a comfortable retirement home. In fact, half that amount would provide for a comfortable retirement home, even in the Bay Area; though maybe not within walking distance of the Burlingame Country Club.
2. Plenty of bishops end up retiring to dioceses different from those they served. To date, all of those dioceses have survived.
3. Last time I checked, the United Religions Initiative was an indepedent nonprofit. It is not a ministry of the Diocese of California. It isn't even an Episcopal Charities partner agency. Since when is the Board of Directors, whose responsibility is to manage our assets for the benefit of the mission and ministry of the Episcopal Diocese of California, under any obligation to underwrite the housing for the founder of another nonprofit, however laudable its work may be?
This is what I believe is called a "golden parachute."
No wonder Bishop Marc Andrus, our new diocesan, has charged the Standing Committee with implementing a thorough governance review of the Diocese. No wonder we are having a contested election for the open seats on the Board of Directors for the first time in many people's memory.
I could imagine any number of ways to invest the more than $900,000 that is now tied up in a lovely house in Hillsborough. I sincerely hope I've gotten my facts wrong, or that there is some other compelling justification for the Board's action. If not, the Board of Directors has some explaining to do.
Addendum: I think it is important to add that, to my knowledge, the Board of Directors made this "investment" decision (which was really a decision to extend a generous retirement benefit to Bishop Swing) without consulting the Standing Committee or Diocesan Council. Upon reflection, I'm also struck by the incongruity of thinking it necessary to diversify the diocesan portfolio by purchasing additional real estate, when $3 million dollars or about 15% of the value of the $20 million dollar portfolio is already invested in the Lyon Street property; but then, what do I know. I'm just a simple parish priest.