September 6, 2007

REQUEST FOR COMMUNITY INPUT
RELATING TO SCENIC DRIVE LANDSLIDE

Dear Guild Members,

In 1998, a landslide developed in the middle of town, resulting in seven houses being destroyed or condemned, closing two roads, and rupturing one of our water distribution pipelines. The County bought out those seven properties, and now owns that land, and the liability and responsibilities that come with it. Scenic Drive was restored by the County in 1999. In February 2005, during a very wet winter, the landslide reactivated, enlarged and moved. In the process, it destroyed another home, again closed Scenic Drive, and moved onto an undeveloped parcel of land owned by the Guild below Recreation Drive.

Our Landslide Committee, headed by Jill Briggs, in conjunction with the Board of Directors, has been working very hard to determine the right course of action so we can get this the landslide fixed. This has been a complex and thorny issue that has required enormous levels of work from the Landslide Committee, the Board of Directors and outside expertise from our attorney, Cliff Hirsch, and our geotechnical expert, Bill Cotton. The County of San Mateo has also undertaken several studies and related activities to develop and propose a repair solution.

There has been a great deal of positive progress towards resolution of the landslide problem in the past several weeks. This special communication to the membership is intended to bring everybody up to date on recent developments, and to solicit your input, suggestions, and reactions to help guide the Board in its decisions over the next 60 days.

If you wish to learn more or get involved, please attend the next Landslide Committee meeting on September 11, 2007, at 7:00 p.m.

Current Concerns.

The Guild has specific legal responsibilities both as a common-interest-development association and as the owner of real property within the development. The Board of Directors has been working with several attorneys and a geotechnical consultant in recent months to determine the appropriate response of the Guild to the multiple problems the landslide poses to the community. These problems consist of (A) current and future damages both to Guild property and to the Guild as a whole; (B) the potential liability for the Board of Directors and the membership should further land movement cause additional property damage, or worse, endanger the safety of people above or below the slide. More specifically:

1. The bottom end of the slide (toe) is currently on Guild land, and residents in the three homes immediately below the toe are concerned about its stability and their safety. The Guild has an issue of liability concerning this, because although the land movement started on County property, it is now on Guild property. Our geotechnical consultant, Bill Cotton, has said that given the elevation of the toe and the properties below it, and the local topography, that there is a low probability of a catastrophic debris flow that would threaten homes and people below. However, the likelihood of the slide encroaching on the properties below, and water and debris inundating Escondido Drive, and affecting the use and value of these properties is relatively high.

2. The upper end of the slide (head scarp) is only about 20 feet from the upper portion of Scenic Drive, and has been moving closer to it over the past several years. The latest geotechnical investigation by Parikh indicates there is displacement above the head scarp approximately 30 feet below ground on upper Scenic Drive. Scenic Drive carries another water main, power lines, phone lines, is access to the upper portion of town, and there are several residences directly above Scenic. With winter and more rain approaching, there is great concern that the slide could continue to move/damage or close Scenic Drive and pose a risk to properties and homes above the head scarp.

3. Water, silt and debris flowing out of the bottom of the slide flooded and intermittently closed Escondido Road last winter, and the likelihood of doing so again is high, according to Bill Cotton. A larger deposit of debris could close the road for longer periods of time. Combined with movement of the head scarp, there is a potential for homes between Escondido and Upper Scenic to have access cut off.

4. There is a risk of a legal judgment and monetary damages being awarded against the Guild (potentially resulting in increased assessments for all members) for liability resulting from the slide.

5. If additional homes are condemned as a result of further movement of the slide, there will be a loss of assessment income, placing a higher assessment burden on the Guild membership.

County’s Presentation to the Guild.

The County has worked with three different geotechnical consultants to investigate movement in the slide and to make recommendations for mitigation. On August 7, Supervisor Gordon and his staff presented their research, findings, and repair options to the Guild at the regularly scheduled Board meeting. A series of mitigation options were presented to stabilize the entire landslide mass. These options included installation of stabilizing structures at the head scarp, in the main slide body, and at the toe. The total cost was proposed to be approximately $6.3 million (see table attached).

Supervisor Gordon has specifically requested community input as to which of the options we consider the most important, and to what extent the community feels it could participate in funding the solution. He is committed to bringing the mitigation proposals to the full Board of Supervisors in late October or early November of this year. Pending funding, construction could begin next spring, as soon as the rains stop.

All in all, both Bill Cotton, and our landslide attorney, Clifford Hirsch, are encouraged by the County’s presentation. Mr. Hirsch has stated that it is unprecedented in his experience to see a government entity so proactive and involved, bringing a full mitigation plan to the community. Bill Cotton feels that the basic outline of the plan proposed is promising, but requires more detailed review. Financing the repair and mitigating potential Guild liability are the issues that have not been resolved.

Next steps.

The county has offered full access and communication to facilitate a cooperative approach going forward.

Our geotechnical consultant, Bill Cotton, has met with County Public Works staff and the consultants who have been working with the County. His and our concerns about the proposed mitigations have been discussed by the experts, with our concerns being aired.

Clifford Hirsch, our landslide expert attorney, will be in communication with the County Counsel's office on several issues of concern. Mr. Hirsch has also recommended that we extend the tolling agreement the Guild has with the County, which the board of Directors has approved.

The County will be doing some additional winterization of the slide, but there are concerns that it will not be enough to prevent more movement and potential damage this winter.

Guild representatives will meet again with the County group at the end of September, presenting what the community considers essential in mitigating the landslide.

We will also likely set up individual meetings with the other County supervisors, to lobby them on our behalf. Supervisor Gordon has made it quite clear that he will bring the community's wishes to the entire Board of Supervisors, but we need 3 out of 5 supervisors to approve funding.

The Board will gather input and opinions from the membership over the next few weeks.

Possible Outcomes.

We now have a proposed mitigation plan from the County, for an estimated $6.3 million. Considering where we were several months ago, this is a significant step forward. We could have envisioned spending several months simply arguing about the extent of mitigation and indeed if mitigation were even technically feasible. Instead, the County has now proposed fixing the slide from top to bottom, including restoring Scenic Drive.

What remains is funding the mitigation.

In the best case, we lobby the County supervisors, and in November they fund the entire fix, including the possibility of dealing with a changed situation after this winter's rains.

On the other end of the scale, the County declines to fund any of mitigation at all. In this case, the Guild may exercise one of several legal options to compel the County to fulfill what the Guild considers the County’s legal obligations. To date, we have spent approximately $40,000 in legal and geotechnical work on the landslide issue. In the short term, meeting with and discussing the issue with the County over the next several months will likely cost an additional $20,000. Additional legal strategies could climb to approximately $125,000 if the Guild pursues litigation, with an additional $50-75,000 for trial if a settlement is not reached. Additional appeals and associated costs are also possible. If legal costs mount much higher than the minimum projected, and the Guild pursues litigation, an increase in monthly assessments or a special assessment would be required to provide funds. The Guild’s potential liabilities for slope failure and/or the costs of repair could be greater than the cost of future litigation.

Legal developments and outcomes can’t be forecast with certainty. If a lawsuit is filed by any party, cross-complaints may follow, and all parties involved in the slide zone, and their insurance carriers, may be drawn into litigation. The matters might be resolved in court-mandated dispute resolution or might go to trial. It cannot be predicted how a “trier of fact”, be it judge or jury, will decide between competing geotechnical or legal positions, how “shared responsibilities” might be allocated, or how large any monetary damage awards might be. Of course, we and the County would both prefer to avoid legal action.

In between those two extremes is a wide range of possibilities such as the county requesting that the community participate in funding. One outcome, suggested by Supervisor Gordon, would be the formation of a Special Assessment District to finance some portion of the slide repair. Such a district would consist of property owners who benefit from the slide being repaired, and would be established if a majority of the benefited owners vote for its establishment. The assessment period could be for 15 or 20 years, perhaps with the option of paying a single up-front amount. The district would not necessarily include all Guild members, and might include Guild neighbors who use County-maintained streets within the slide zone. Nevertheless, Supervisor Gordon asked the Guild to help collect input on the “community’s” interest in financing slide repair through such a district, the more comprehensive the repair project, the higher the assessed costs.

What you can do.

Supervisor Gordon emphasized that community input into this process is desired and essential. We need your input on this, to determine both the desire and ability of the community to participate at some level. Please complete the attached survey and return it to the Guild office by September 15, 2007. The Board will compile the results and meet with the County. The survey is attached below.

We have made great progress in the past several weeks, and are encouraged by this. But it is still a risky situation, with many unknowns. Absent community input, the Board is working without all the information it needs. We would really benefit from and appreciate input from the community. If you are interested in the County handouts with maps and estimated cost options, please come by the Guild Office. There are printed copies available.

Thank you,

Cuesta La Honda Board of Directors