June 29, 2016
President Ann Simpson announced at the annual 2016 Community Meeting that in April, the BOD had dismissed Attorney Gary Shipman and engaged Attorney Hope Carmichael, who has the experience and specialized knowledge for our present circumstances. Ann then introduced Hope Carmichael, who began her presentation by reminding us that, in March, Federal Judge Humrickhouse had issued a ruling permitting MidSouth to sell its property clear of all restrictive covenants. Any sale would leave us with no control over what a new owner could do with the 385 acres within Fairfield Harbour it would now own. It was time, she told us, for our community to regain control over its destiny.
Ms Carmichael told us she had entered into direct negotiations with MidSouth to find a way for Fairfield Harbour to regain this control, and announced that at 3:30 pm, Tuesday, 28 June, she had inked a final settlement with MidSouth.
The POA, she told us, has agreed to purchase all 385 acres owned by MidSouth: the Shoreline property, the clubhouse, the anchor pool, the tennis courts, the Harbour Pointe golf course, the marinas – everything presently owned by MidSouth — for $2,750,000. She told us that she was now in discussion with BB&T to secure a loan for the purchase, a loan agreement she expected to be finalized by the end of this week.
Ms Carmichael stressed that this was an overview. The community will be provided with written details, three information sessions, and then, an opportunity to vote on the proposed capital expenditure. Approval or disapproval of the capital expenditure will be determined by a majority of those casting ballots on July 27th.
What does this purchase mean to our pocketbooks? Ms Carmichael explained the purchase would be made possible with an increase in dues of $100 per year ($8.33 per month), per property, for five years. The POA’s projected budget for the next five years does not contain an increase beyond this $100. For a five year increase of $8.33 per month, we would, once again, be in control of the properties within our borders.
The “Wainwright Decision” stipulates that the POA has the power to purchase “real property” provided that the purchase of that real property is not paid for by dues. The monies for the purchase of the property now held by MidSouth will come from non-dues income, revenues the POA will earn from the golf course and the marinas once we own them, and the present revenues earned from storage, property maintenance fees, sale of foreclosed properties, etc. Once the POA owns the property, income from dues can be used to maintain the property.
Hope Carmichael continued, saying that not only our Directors’ continued efforts, but the efforts of Dan Argentieri, Manager at Harbour Pointe, had been instrumental in arranging the details, and that Billy Casper Golf Course Management would be continuing in a long term management relationship.
She reminded us of the “red flags” that deter prospective buyers: the abandoned club house and cart shed, the deserted Shoreline property, the abandoned pool, and, most of all, the threat of litigation, and uncertainty over Fairfield Harbour’s future. These have lowered our property values by 20%. This purchase, she said, would give us the much needed opportunity to “stop the bleeding.” Fairfield Harbour, once again, would be in control of its future. As owners, we Fairfield Harbour property owners can make our own covenants, set our own restrictions on the use of our property, and begin to restore our community and our property values.
Once the community approves the capital expenditure, MidSouth attorney Hendron will file an amended Chapter 11 bankruptcy plan with Federal Court Judge Humrickhouse. No State court can overturn the Federal court, so individuals will have no recourse to litigation. Once Judge Humrickhouse approves the plan, the decision will be final.
Ms Carmichael’s presentation was interrupted throughout by bursts of applause from the packed firehouse. Fairfield Harbour’s future looked bright, at last!
Questions asked by property owners:
- What about the $1.5 million judgment we won against MidSouth? The judge erased the covenants for any purchaser (a ruling we have appealed). A $3 million judgment took precedence over ours, and it would have cost $4.5 million to satisfy Wells Fargo’s claim. We were not going to get our $1.5 million.
- What will it cost to maintain the property? That’s what the detailed budget and the three informational meetings will tell us.
- Why is this vote not a vote of the majority of the property owners instead of a majority of those voting? The By-Laws require only a majority of those voting to approve or reject a capital expenditure.
- Doesn’t the Wainwright Decision prevent us from buying property? The Court of Appeals (Wainwright) states that the POA can acquire real property. It can not acquire it using POA dues. The property will be acquired using non-dues income. Revenues will be more than sufficient to repay the loan with monies left over. Once acquired, our dues can be used to maintain our properties, as they are, now.
- Are we buying the property “As is?” Yes. The $2.75 million will buy the real property as it is, now.
- What will the extra $100 per year pay for? This addition of $100 to the POA dues for 5 years will supplement the maintenance and operation of the amenities. The dues next year, if the budget stays the same as it is this year, will be $898. The extra $100 is for five years only. The budget may be lower next year. We won’t know that until January.
- Will MidSouth open its books to the FH property owners? No.
- What we buying? Are we buying stock in MidSouth? Are there any liabilities we are assuming? No, to both questions. We are buying 385 acres of real property from MidSouth. Once the POA owns the property, property owners get to put covenants on it that make sense. The 1993 covenants have been stripped by the court. When the property owners own the 385 acres, they will determine what restrictions are put on those acres.
- Will someone be able to sue to rescind this agreement? No. This is a Federal Bankruptcy and whatever is tolled into a Federal Bankruptcy plan is not subject to any State court ruling.
- What is the duration of the loan? Hope didn’t know, yet, but she believes it will be ten years because BB&T said they would not issue a loan for more than ten years. The loan could not be repaid with dues, but other methods could include any non-dues revenue such as dock rental, lot mowing, sales of foreclosed properties, even donations by individuals.
- If we get the loan for 10 years, what will happen after the $100 for 5 years? The budget projection is for 5 years. That’s what BB&T asked for. There is NO guarantee that dues will either go up or down after those 5 years. Extenuating circumstances such as a major hurricane might trigger an assessment, or revenues could rise, which could lower dues.
- Would any homes have liens placed upon them because of this? No. A lien would be placed
- on a home only when an owner failed to pay POA dues.
- Have there been any appraisals made on the property? MidSouth had one done around 2008 that came back at $5 M; the POA appraisal came back at $2.2 M. Remember, there is only ONE buyer for the total package – the POA. If the property owners don’t buy, then Jack Shaw may decide to sell off the parcels however he can.
- If there is no lien on the property, itself, why is BB&T lending us the money? Because FH has very good credit, and the POA has the power to raise dues – in necessary. Essentially, the collateral is Fairfield Harbour’s good name.
- In 2013, the golf course was losing money. How is it going to generate enough revenue to repay the loan? The golf course lost money under MidSouth because it was not able to assess amenities fees. The revenue the golf course does generate (with revenues from the marinas, and other sources) will be what will repay the loan. The POA will help with maintenance. The POA has been in touch with Billy Casper and will continue to have them manage the course.
- If there’s no income from the golf course, where will the money come from? Read the budget, to come out shortly.
- This seems to have happened very really quickly – why? This had to happen very quickly because they (MidSouth) were under a 14 day order to come back with a plan. Everything is conditioned on it happening very quickly. If the loan goes through, and the vote is positive, then the closing could happen before the end of the year. That would be very beneficial because the POA could then call the 385 acres “common ground” so that there would be no property tax.
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