POA Board members in attendance – Joe Schulties, Wayne Strausbaugh, Gloria Hodgert, Paul Hill, Sharon Henke, Ann Simpson, Jim Cline, Dan Engelhaupt ,Dan Argentieri, manager of Harbour Pointe for Billy Casper Golf, Hope Carmichael, Attorney for POA and Laurie Jones, with Hope Carmichael.
BACKGROUND AND SUMMARY:
The purpose of these information meetings is to give property owners an opportunity to refine the information found on the POA website. The proposed budget is also on website. The vote on 27th is to approve the purchase of 385 acres of land within the community that is currently owned by MidSouth. There were covenants covering those properties. The covenants and original restrictions were written with the idea the POA would eventually own the property. The amenity fees were ultimately determined to be invalid. Then properties started to decline. In 2008 everything was shut down.
Harbour Pointe is operating today, but not in the condition it once was.
Ideas have been circulating in the community about how the POA could control the property. The POA does have the right to purchase the amenities property; it cannot use dues to do that. Drez 2012 Court of Appeals; once we own the property, we can use dues to maintain and operate the properties.
MidSouth without amenity fee could not operate the business to their profitability satisfaction. Then POA sued MidSouth over Exhibit “E” Since that was not being done, POA was awarded a $1.45M which was expert testimony that it would take that much to bring the property back.
Ms Carmichael assumes people have read the documents on the POA website. History POA started foreclosure; MidSouth declared bankruptcy. Federal court order on March 29 declared the property stripped of the covenants. If POA does not purchase, MidSouth plans to auction off to highest bidder. Whoever buys the property can do anything with it.
Ms Carmichael was hired to appeal that decision and to negotiate with MidSouth attorney to work toward a resolution. The day before the POA Annual Meeting, the BOD came to an agreement with MidSouth to buy for $2.75M contingent on getting membership approval and a loan to purchase.
Why is POA purchasing the property? Mainly to stabilize property values and to start property values on upturn. We have suffered an average of a 20% decline of property values over the past several years. The Shoreline building and property are derelict; need to be torn down. We are spending lots of money on legal fees. Purchasing the property will stop the bleeding. Property values will slowly start going back up as things are fixed. It’s all about prospective purchasers and how people view the properties. Those are opportunities, not plans.
The Board has consistently said they are not going to make capital plans to do anything; get the property, get used to not being in lawsuits for a few months; and then start thinking about what to do. The storm water system was designed to be integrated with the 385 acres. If the POA cannot control the storm water on all the properties, including the MidSouth acreage, then many people will flood out.
Negotiated price – $2.75M. The budget which projects out 5 years, shows it can be done with $100 dues increase for maintenance and operations. The deal is structured so that the revenue to purchase comes from golf course and marinas; the assumption is that will be $635K per year. BC projections are higher; but Paul Hill is using a conservative number, the lowest number that MidSouth has had over the years.
Ms Carmichael still doesn’t have a loan commitment with BB&T, but she is working hard to get it done. She feels that the loan repayment would be around $340K per year. So there is a surplus; question whether that is enough to do it all, meaning purchase and operation – NO. That is why there will be a $100 per year dues increase. Everything – revenue and expenses – for the golf course and marinas is being folded into the POA budget.
If the POA defaults on the loan; there will be NO liens against individual homes.
Why can’t we get the $1.45M judgment; it has been deemed done away with because there was no secured collateral. Wells Fargo had a $3M secured loan against the property with MidSouth. The property is not worth the $3M plus the $1.45M . Therefore we will NOT get the $1.45M – ever.
What has happened to the $3M mortgage with Wells Fargo? Jack Shaw bought the note from Wells Fargo. If property goes to auction, then Jack Shaw will bid $3M and he gets the property by surrendering the loan. We do not want Jack Shaw to own the property. If it goes to auction; opening bid would be $3M. If we can purchase the property for $2.75M, that is less than $3M, so it is a bargain.
Q&A from Information meeting on Wednesday, July 13, 7-9 pm
Question: If we purchase, what happens to MidSouth’s bank loan? Answer: The lien is canceled, and the property is ours, free and clear.
Question: How can we be sure that this attempt won’t fail like HRC did? Answer: HRC did not have professional management. Billy Casper Golf has agreed to manage and maintain the properties.
Question: Are we zoned residential? Answer: Craven County has no zoning. We have deed restrictions. Our covenants protected us until recently. The Federal Court has removed those covenants, but if we own the properties, we can work to write new covenants that will protect us.
Question: What about the assessed valuation? Answer: Assessed property valuation doesn’t mean real value. The MidSouth properties we would like to purchase have very real value, to us.
Question: What happens if the bank says no? Answer: The voting on July 27 will be canceled. We can’t buy it if we don’t have the money.
Hope Carmichael expands upon her answer:
We are on a tight time frame. The bankruptcy court gives us this last bite at the apple. If we say, No, the properties will go on the auction block. (Donors are possible, but doubtful, especially within the 60 day time frame.) If we don’t get the loan, we’re done. We’ll have to move forward with an appeal of the Federal Court decision – more legal fees and a doubtful outcome. Even if we win the appeal, Exhibit E expires in six years. Realistically, this is our last chance to protect our properties.
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Question: What is the difference between a proxy and a ballot? Answer: If you can’t come to the meeting on the 27th, or, aren’t sure, assign your vote to someone you can trust to vote the way you want. If you don’t fill in a name, and turn in a blank proxy, the default is the POA president, Ann Simpson.
Written ballots will be issued on the 27th to attending property owners. If you are holding a proxy for someone, you’ll be given a ballot for that person’s vote as well as a ballot for your own vote.
Reminder: After determining whether a quorum exists, the meeting will just an opportunity to receive your ballot, and vote – similar to voting on Election Day, so, concerns about Community Center capacity are unfounded.
Question: How will the Timeshares vote? Answer: 207 packets were mailed to the representatives of the Timeshares who will vote as per their bylaws.
Question: What about the votes from the 150 properties the BOD has foreclosed on? Answer: The BOD has the ability to vote the 150 votes of foreclosed properties, but hasn’t decided whether they will exercise that ability. The BOD doesn’t want to be accused of “stuffing the ballot box,”so Hope Carmichael: The BOD has the fiduciary obligation to act in the best interest of the community. (A property owner later urged the BOD to do just that, to general applause from the audience.)
Question: Will residents be available to observe and tally the ballots? Answer: Yes, residents will be here to tally the results and make sure everything is done properly.
Question: What happens if we can’t vote and haven’t designated a proxy? Answer: A non-vote doesn’t count as a “no” vote. The result will be a majority of the votes cast.
Question: When will the proxies be sent out? Answer: The proxies have already been sent out. They can be used in place of ballots on the 27th if you are unable to attend the meeting.
Question: Why are there not 12 months of historical financial data? Answer: All prior budgets and financial data are on the POA website. This is the approved budget that was prepared by the POA in February. Dan Engelhaupt: We do have a staggered year; we go from March through February. We are budgeting the fiscal year.
Question: How will you make sure the tallies are correct? Answer: The BOD will be following Roberts Rules of Order and will make it happen transparently.
Comment from former Director: Several years ago, he, Joan Taylor and Paul Hill were elected to the BOD to purchase the property. He would like to congratulate this BOD for getting it done. (General applause)
Question: What’s the term of the loan? Answer: We do not know, yet. The assumption is 6% for 10 years. BB&T has said the term would be no longer than 10 years.
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Question: If 100 people each gave $27,500, would they get a lien on the property? Answer: If that’s a possibility, please approach the BOD and talk with them.
Question: Is there any other bidder for the property? Answer: The only one Ms Carmichael knows is MidSouth.
Question: Population of New Bern is declining. How will this affect purchase? Answer: Tom Mark, Craven County Commissioner told Director Strausbaugh that Craven County is still growing, although more slowly.
(A realtor adds…) We had a large spike in sales and construction in 2006 and 2007. Then, it went down again.
Question: Where is the section showing income and expense for the golf course? Answer: It starts with the small 1 on the budget page. Then, flip to the 3rd page from the end entitled “Nondues Income.” Look for Amenities operational income. Follow that line across: Projected for 2016
$668,425. Dan Argentieri stated the income for 2015 was $631,478 total revenue. The 2016 forecast is $669,443. The forecast for 2017 is more than $700,000. Paul Hill took a very conservative approach and kept the projection at the 2016 level. Ms.Carmichael: We will have to use $340,000 for 10 years to repay the loan, so, we will have some surplus, but not enough to cover all the expenses.
Question: What happens to the roads if someone else buys it? Answer: An easement allows everyone to use the roads. Drez vs Fairfield Harbour can be researched via 219NCAPP647: the date was 3/20/12, should anyone care to read it.
Question: Ann Simpson, if you are given proxies, how would you vote? Answer: Yes!! Comment: The BOD should vote the 150 properties, and I’m glad Ann will vote, “Yes!” (Applause)
Comment: Member of the new Stormwater committee confirms that we need the 385 acres to ge the stormwater system working properly. We need all of the property to make it work.
Question: The asset property that the POA owns – the Yardnique contract, equipment we have purchased over the last 5 years, what is happening to it? Answer: We still have the equipment. We were spending between $600k and $800k for everything. Yardnique and BCG both had maintenance contracts. Their bids were close, but BOD decided to go with BCG. They are still using the equipment, and will continue for the life of the equipment, then will begin leasing. They will save about $540K by using the same crews instead of two different crews.
Question: The bulkheads are bad; is there a number in the budget for repairs? Answer: Not yet. Repairs and upgrades have not been budgeted yet because they need to be prioritized. We don’t have enough money to do everything at once.
Question: If we get the loan, will we negotiate a new contract with Billy Casper Golf? Answer: Yes.
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Question: If 4668K is the gross revenue, and maintenance is $300K, they almost offset one another. Answer: The POA needs the $100 per lot, per year, for the 5 years to make it work. If the membership wants things to move more quickly, then the membership can demand that dues move up more than the $100 per year for the five years.
Question: Explain how it would work if we didn’t get the money from the golf course and the marinas. How would we pay the loan? Answer: (Ms Carmichael) the collateral will probably be the 385 acres or some portion of it. BB&T would be able to foreclose or force the POA to sell part of the property to satisfy the loan. However, the POA would be able to set the declarations to protect the property and make sure the property is sold properly.
Question: If one is named in the proxy for a friend, would that person get two ballots? Answer: Because one is named in a proxy for a friend, one would get two ballots: one for oneself, and one for the proxy assigned to that person. Gloria Hodgert, BOD Secretary will send a note or call the person named in the proxy so that he/she will know about the proxy, and the responsibility for voting accordingly.
Meeting was adjourned at 8:35 PM. Your FACTS Reporters
NOTE: A PROXY GIVEN IS NOT A VOTE UNTIL IT’S VOTED ON THURSDAY, JULY 27.
IF YOU’VE GIVEN YOUR PROXY, AND CHANGE YOUR MIND, SIMPLY COME AND VOTE ON THE 27TH. YOUR VOTE WILL NULLIFY YOUR PROXY.
PLEASE SCROLL DOWN TO SEE THE 385 ACRES (IN RED) THAT WILL BE OPEN TO DEVELOPMENT UNLESS WE ACT NOW.
