Critical Infrastructure Referendum Fund Collection Update
December 13, 2021 – Unfortunately, because the Critical Infrastructure Referendum has been challenged in court by Ms. Jill Jinks, a residential property owner, the $600 assessment that was overwhelmingly approved by the residential property owners is not included in the assessment invoice. The litigation is still in the process of “Discovery” and we do not expect any decisions from the Court until sometime next year. We remain confident that the Referendum results will be upheld, and we will bill that separate assessment when we are able to do so later next year.
Referendum Official Results
We are very pleased to advise that we have received the official results from our auditors, confirming that the Referendum vote has exceeded the 75% threshold. As previously reported, the final tally of the 4046 votes returned is 3551 (87.77%) Yes Votes and 496 (12.23% No Votes. A copy of the Auditor’s letter can be found here.
- Sea Pines Referendum: The Basics
- Sea Pines Community Critical Infrastructure Projects For the Next Ten Years
- Fifth Amendment- 2021 Amendment to 1974 Covenants Critical Capital Needs Funds
- Sample Referendum Ballot Packet
- A Letter from Larry Movshin, CSA Board Chairman and Sam Bennet, CSA President, Dated 1/28/21
Referendum Ballots were mailed on 12/15/2020 to members who are participating property owners as of 11/17/2020. Please allow 5-7 business days for mail delivery. Ballots should be returned postmarked by 1/20/2021 to Elliott Davis, LLC, Attn: RC Lead, 100 Calhoun Street, Suite 300, Charleston, SC 29401-9945. If you have not received your Referendum ballot by 12/22/2020, please contact Sea Pines CSA at firstname.lastname@example.org with your name, Sea Pines property address and email address so that we may process your replacement ballot.
Sea Pines CSA has identified $51 million needed for critical infrastructure projects over the next 10 years. This amount reflects the cost of repairing, rebuilding and improving the community’s roads, bridges, leisure trails, beach access points and the master drainage systems.
Each year, CSA has approximately $1.6 million available to spend on infrastructure projects, so the Board believes the community can account for $16 million of this future 10-year need, leaving a $35 million deficit. This deficit is what must be raised over the next decade to complete this crucial work.
The Sea Pines CSA Board is currently trying to solve the community’s revenue problems through an increased assessment via a simple referendum. If the simple referendum does not achieve the required number of votes, the Sea Pines CSA Board will initiate the processes required to create a Sea Pines Special Tax District.
Below is a regularly updated list of frequently asked questions related to the referendum. If your question is not addressed in the documents and resources found on this page, please send your questions or feedback to email@example.com.
- Why is there a statement in the Preamble to the Fifth Amendment that Sea Pines Resort (“SPR”) is the successor in interest to Sea Pines Plantation Company (“SPPC”)?
- The mention that SPR is the successor of SPCC was included for clarification only since the Third Amendment to the 1974 Amendments, adopted in 2007, has already expressly acknowledged that SPR is successor in interest to SPCC. The statement in the Fifth Amendment was drafted by CSA’s attorney, and any argument that suggests the Resort demanded this phrase to resolve any contention regarding its, or its predecessor company’s, assessments is entirely false.
- Can you provide an overview of the Resort’s proposed contribution to the Infrastructure Improvement Fund? an you provide an overview of the Resort’s proposed contribution to the Infrastructure Improvement Fund?
- If the Referendum passes, the Resort will contribute 0.25% of its Adjusted Gross Resort Revenue, which will go into the newly created Infrastructure Improvement Fund. Added to the 0.50% that the Resort contributes to the general funds, the Resort’s total contributions will be the same 0.75% it would have paid had the 2019 referendum passed.
- What will be the percentage increase paid by the Resort, Commercial Property Owners and Residential Property Owners if the Referendum passes?
- Resort: The Resort will increase its total contribution by 50%.
- Residential Property Owners: The Residential Property Owner total assessments will increase by about 50%.
- Commercial Property Owners: Commercial Property Owners’ increase will more than double the amount currently paid on tenant-leased spaces.
- How much money will the Resort, Commercial Property Owners and Residential Property Owners generate if the Referendum passes?
- Resort: Based on the average Resort contributions for the last three years, CSA anticipates the .25% of Adjusted Gross Resort Revenue will bring in about $125,000 in 2022. This amount will fluctuate with its business revenues.
- Residential Property Owners: The aggregate total initial contribution from Residential Property Owners will be approximately $3.4 million in 2022.
- Commercial Property Owners: CSA anticipates Commercial Property Owners’ contributions will bring in about $40,000 each year, which will fluctuate as tenant occupancy changes.
- Why is the assessment subjected to a CPI increase each year if this amount meets the $35 million requirement over 10 years?
- The $35 million deficit was estimated based on current dollars, and as costs increase over the 10-year timeframe, those amounts will also increase. The CPI increase will cover some of the cost increase.
- Why doesn’t the increased assessment end (or “sunset”) after 10 years?
- While CSA identified a $35 million deficit needed for critical infrastructure projects over the next 10 years, both the 2016 Hydrology Study and the Sea Pines Capital Reserve Study that detail the community’s needs extend well beyond 10 years.
- CSA does not want to burden the community with an assessment reduction (i.e. a sunset) without evidence the identified problems can be fixed within 10 years or that new issues will not arise. This gives future Boards and the property owners who elect them the flexibility to deal with future issues without having to undertake another referendum. Moreover, if a future Board believes that the fund balance has grown too large, that Board can reduce the assessment to reflect future needs at that time.
- What are the terms of the proposed referendum?
- The referendum proposes the creation of an entirely new Article V in the 1974 Covenants to create an “Infrastructure Improvement Fund” that may only be used for the repair, replacement, addition and improvement of the roads, bridges, bulkheads, leisure trails, storm water facilities and systems located in or servicing Sea Pines. If approved, beginning in 2022 and annually thereafter, residential property owners will contribute $600 per improved lot and $360 per unimproved lot, the Resort will contribute .25% of its “Adjusted Gross Resort Revenue,” and commercial property owners will increase their contributions for leased spaces initially at the rate of $0.36 per square foot for first-floor tenants and $0.27 per square foot for second-floor tenants. All of these contributions may be adjusted annually beginning in 2023 by the CPI, as our current assessments are also increased.
- What will the new 1974 Covenants Article include?
- We have reached agreement with the Resort and our Commercial Property Owner partners to create an entirely new Article in the 1974 Covenants to govern these new assessments. Rather than amending the existing covenant provisions to include the new assessment as mere additions to the base assessments, this new Article will create a new “Infrastructure Improvement Fund” that may only be used for the repair, replacement, addition and improvement of the roads, bridges, bulkheads, leisure trails, storm water facilities and systems located in or servicing Sea Pines. This approach should assure those who may be concerned that future Boards would seek to use these funds for other operating purposes.
- How did CSA determine the cost of what is needed to fund the community’s critical infrastructure needs?
- CSA has identified $51 million in necessary infrastructure projects over the next 10 years. The 10-year expenditure cost estimates were developed using several documents and resources.
- The 10-year expenditure cost estimates were developed using several documents and resources. The first is the 2016 Hydrology Study that examined our community’s drainage needs for the next 25 years. The second is a recently completed Sea Pines Capital Reserve Study. The Study, conducted by an outside consultant, itemizes CSA’s physical assets, including roads, leisure trails, bridges, facilities, vehicles and equipment, and estimates the cost and year of replacement of each asset based on its current condition. The Study looks out more than 10 years, but does not include repairs, improvements, or replacements of drainage infrastructure. Based on these two studies, current observations of infrastructure in the field, the actual reconstruction costs for the recently completed Greenwood Drive and Lighthouse Road projects, and the bids received last month to reconstruct and rebuild North Sea Pines Drive (Ocean Gate to Lighthouse Road), we believe we have a solid understanding of our infrastructure needs and their anticipated cost.
- What is a referendum in Sea Pines?
- A referendum refers to a vote of the Participating Property Owners, which is held to determine whether or not to amend Sea Pines’ covenants.
- Participating Property Owners are the owners of residential lots and family dwelling units.
- Why is the Board moving forward on a referendum now?
- Following the announcement of the Board’s recommendation to pursue a Special Tax District, many residential property owners indicated support for a simple referendum and the equally strong desire for the Board to pursue referendum before going the route of a Special Tax District.
- After hearing these sentiments from a significant number of residential property owners, the Board opted to try to solve the community’s revenue problems through an increased assessment as the primary route, rather than through the creation of a Special Tax District.
- What are the terms of the proposed referendum?
- The simple referendum proposes an increase of $600 in the annual residential property owners’ assessment beginning in 2022.
- What is the referendum process?
- The referendum is being brought forth to the community in accordance with Sea Pines covenants and CSA bylaws.
- Ballots will be mailed to the address we have on file for you, and you will have 30 days to complete and return your ballot to a designated independent accounting firm.
- Approval requires at least 75% of those voting on the referendum.
- If approved, the additional assessment will go into effect with the 2022 assessment.
- How much revenue will be raised by the proposed referendum?
- The proposed assessment increase is intended to raise approximately $3.5 million annually.
- How would funds raised from the referendum be used?
- Funds raised will be earmarked specifically for the repair, replacement, addition and improvement of roads, bridges, bulk heads, leisure trails, stormwater facilities and drainage systems within Sea Pines. These projects have been identified by CSA as the top priority and they must be addressed as such.
- Will the funds collected from the referendum be used to redevelop the Gallery of Shops at 14 Greenwood Drive?
- The CSA Board has expressly determined that funds collected from the additional assessment amount would not be used for the redevelopment of the Gallery of Shops.
- Why doesn’t the increased assessment end (or “sunset”) after 10 years?
- While the Board has identified infrastructure repairs, replacements and additions needed over the course of 10 years, it realizes the community’s long-term need will extend beyond this timeframe.
- These assessment funds will go into a Critical Capital Needs Fund, with uses limited to the repair, replacement, addition and improvement of roads, bridges, bulk heads, leisure trails, stormwater facilities and drainage systems within Sea Pines.
- Rather than impose a sunset, the Board believes it is better to allow future Boards to determine from year to year if the balance of the Critical Capital Needs Fund is sufficient to meet current and future needs. If so, they will be able to reduce the annual assessment if they determine that future funding requirements have declined.
- What happens if the referendum fails?
- Throughout the next few months, the Sea Pines CSA Staff and Board will continue working on the Special Tax District materials so that they will be ready to initiate the required processes should the referendum fail to achieve the required 75% of the votes.
- What is the status of the Sea Pines Special Tax District, if the simple referendum passes?
- If the simple referendum passes, then efforts to pursue a Sea Pines Special Tax District will cease.