Fairfield Harbour’s 11:00 am appearance before Judge Humrickhouse began at 12:50 pm on Thursday, 10 November. In compliance with 1129A, the first order of business was to confirm that both parties agreed to the plan before the court. The court needed to approve – for the record – the debtor’s ability to sell the amenities and the buyer’s ability to purchase same, as well as the legal right of each to do so..
MidSouth’s lawyer affirmed that Jack Shaw, present owner of the amenities, stated that the $2.75 million was a :”fair price,” given the restrictions on the use of the land and the absence of amenities fees. Donny Shaw, manager for MidSouth, agreed under oath that it was, indeed, the best plan for MidSouth. If the Court approves the plan, he continued, “MidSouth should be free of problems.”
The buyer, Fairfield Harbour, needed, also, to prove feasibility. The POA’s lawyer, Hope Carmichael, presented several exhibits to support the POA’s right to purchase, and its ability to pay for the purchase. She also reminded the Court that the Court of Appeals overruled the part of “Wainwright” on which a resident present in the courtroom has based his objection. The explanation, Atty Carmichael stated, needed to be in the record. The Court was also informed that a group had withdrawn its pro se objection prior to this hearing.
In further support of the POA’s feasibility, BOD President Ann Simpson testified, under oath, about the community’s DOR’s, the Master Declaration, the bylaws, minutes of BOD meetings to approve securing a loan in the amount of $2.75M, and per the bylaws, to call a special meeting of the membership to approve the expenditure of $2.75M for the acquisition of all real property owned by MidSouth with loan repaid using non-dues revenues. Ann confirmed that the purchase had been explained at three community informational meetings, that those meetings had been well attended, and the community’s questions answered, that information had been posted on the POA website and was available in hardcopy at the POA Office, and that a copy of the projected budget with the projected additional expenses in bold had also been posted to the POA website and available in hardcopy at the POA Office to property owners. She affirmed that the professionally projected non-dues income was more than enough to service the debt. Ann then explained the voting process and the results of the vote: 1583 property owners voted. While 377 property owners voted against purchase, 1202 (76% of the ballots cast) had approved the purchase. The purchase had the support of the community.
The next step was to prove Fairfield Harbour’s ability to pay for the purchase it had voted to make. At present, Ann testified, the POA is discussing a bank loan of $2.2 million for 5 ½ % for a period of 10 years, contingent upon the bank’s appraisal of the property – to be completed by the end of November. The monies from all non-dues revenues would be deposited in a segregated account from which the loan would be paid. Ann assured the court that, should the BOD decide to accept the bank loan, the POA had the wherewithal to make up the shortfall, part of which would come from the monies contributed via Sponsor an Acre.
If the loan from the bank is not chosen, a second funding option for the POA was that of the investor group, Harbour 385, an LLP formed by property owners, which has raised the $2.75 M to purchase the MidSouth properties, then turn over the amenities to the POA , while holding the note at 6% interest for ten years. As per the purchase contract, once Harbour 385 takes title to the property, the POA is obligated to buy the property from the LLP.
Judge Humrickhouse expressed her satisfaction with the plan agreed to by both parties. She agreed to withhold her order to confirm until the funding had been guaranteed.
Your FACTS Reporter