Masthead
November 29, 2016

Dear Sea Pines Property Owner,
 
As you can imagine after last week's announcement of a Special Assessment for emergency funding following Hurricane Matthew, we received a number of questions and comments regarding the decision and the costs of the storm.  I hope to answer many of the questions we received in this letter.  I know that answering these questions and providing the information included in this letter will create additional questions.  We will continue to address your questions in our future email updates.  These updates will be sent out to you, our property owners via our email communication system and will also will be posted to our website at www.SeaPinesLiving.com . Before sending this letter I reviewed its general topics with members of the CSA Executive and Finance Committee and solicited their input.  I have also tried to incorporate their input into my comments below.

The Special Assessment was reviewed and recommended by the Finance Committee after a review of CSA's cost to date related to Matthew, as well as the known future costs that we will incur. The Finance Committee also discussed and asked staff what expenses have not yet been determined and staff tried to provide information on possible additional future costs. After much discussion and consideration the Finance Committee, which is comprised of 10 residential property owners, unanimously determined and approved (with one absence) the recommendation of the Special Assessment to the CSA Board of Directors.

The Finance Committees discussion of the Special Assessment included review of and comments on several consequences of the Storm. During this discussion it became apparent to the members of the committee that the associated costs of Hurricane Matthew would exceed the revenue generated by the Special Assessment.  The Committee recommended that the Special Assessment be billed in conjunction with the 2017 Annual Assessment to minimize the cost associated with an additional billing and to be in position to fund necessary storm damage remediation efforts. 
 
Additional discussion assured the committee that this one-time assessment due to Hurricane Matthew related expenses would be billed to all residential property owners, Commercial Owners and the Sea Pines Resort and will be equal to their 2016 assessment amount.   The Finance Committee also established a task force made of up Sea Pines residents John Farrenkopf and Rob Marsac, to monitor and review the special assessment billing and revenues as well as all related distributions and expenses and follow-up with staff on any possible other Hurricane-related reimbursements (e.g., FEMA reimbursements, insurance proceeds, etc.).
 
The Special Assessment will be in the amount of the 2016 Assessment ($1,018 for Improved Lots and $607 for Unimproved Lots). Per our covenants, this Special Assessment can only be based on the 2016 assessment value and does not vary based on any other metric, for example home value, home size or property type, (i.e. single family or multifamily). The Special Assessment will be invoiced in addition to your 2017 annual assessment and will be due by January 13, 2017.  These invoices will be sent out the second week of December.
 
At the November 22nd, 2016 CSA Board of Directors meeting the Finance Committee Chairman, Dave Borghesi, made the Finance Committees recommendation and resolution.  After considerable discussion the CSA Board of Directors voted to adopt the resolution as recommend.  Approval of the vote required a 2/3 majority of the CSA Board which occurred (13 votes for approval). The voting CSA Board Members present, (which included 3 Resort Directors, 3 Commercial Directors and 7 Residential Directors), voted unanimously to approve the resolution.
 
The revenue that will be billed from this Special Assessment will be as follows:
 
Property Owner Type
Total Amount of Special Assessment
Residential Property Owners
$5,971,140
Commercial Owners
$65,927
Sea Pines Resort
$271,442
Total
$6,308,509
 
Our current and forecasted expenses for 2016 as of today Nov. 29th, 2016 related to Hurricane Matthew are $2.6 million. This total includes evacuation cost, cost to clear roadways, cost of rental equipment, cost to remove dangerous and damaged trees and debris, cost to clear leisure paths and the partial clearing of beachwalks and boardwalks, as well as other storm related recovery work. To perform this work we have utilized our own CSA staff and equipment, significant contracted services from multiple providers, equipment rental cost and other related costs.
 
Below you will find not only our total forecasted 2016 costs as well as our known 2017 estimated costs related to Hurricane Matthew:
 
Year
Description
Cost
2016
 Estimated Cost as of 11/29/16
$2,600,000
2017
Removal of Dangerous/ damaged trees and debris ( 1st Quarter Only)
$1,300,000
2017
Damaged and Destroyed Beachwalks and Boardwalks
$750,000
2017
Wren Pond Stormwater Breach
$500,000
2017
Fence Repairs
$100,000
Total Known Expenses
---
$5,250,000
 
In addition to the already known cost we anticipate that there will be additional costs that we do not yet have estimates for, including:
 
  • Additional debris removal and disposal fees once Crowder Gulf has completed its FEMA reimbursable services in Sea Pines.  Once Crowder Gulf leaves Sea Pines, (estimated sometime in March or April of 2017), CSA will reinstate our debris pick up and processing operations provided to our Residential Property Owners (RPO's). This service is not provided to any other community on Hilton Head Island, at least not to the extent CSA provides this service.  The service includes; pick up of RPO landscaping debris from the neighborhood drop off locations, the allowance of RPO landscaping contractors to deliver yard debris to our on-site processing plant and for the processing and disposal of all such debris.  We anticipate that our normal operations for this service will not be sufficient without significant additional Hurricane related cost for the remainder of 2017 and possibly beyond.
     
  • The cost of additional Stormwater Damage that will be determined once debris is removed and a full storm water assessment can be performed.
  • Replacement of irrigation systems along CSA managed properties and open space. 
  • Other landscaping repairs and replacements such as tree and plant replacement, sod replacement, concrete and asphalt pathways. Possible beach re-nourishment and dune revegetation programs.
     
  • Any other cost not yet identified. 
We anticipate that these additional unknown cost will easily exceed the difference between the Total Revenue from the Special Assessment of $6,308,509 less the total known expenses of $5,250,000 which results in remaining available funds of $1,058,509.
 
It is important to understand that although FEMA has agreed to reimburse the Town of Hilton Head for their debris removal from the road right of ways in Sea Pines none of the cost outlined above are related to this reimbursement.
 
CSA has applied separately for FEMA funding and we understand that the Town may apply for additional funding that may help offset some of the above described cost. Our current understanding of existing FEMA policies is that we are not a qualified applicant for these additional funds. Therefore, we can only anticipate that we will not receive approval for these additional funds, but we will absolutely seek all possible exceptions through all means available.
 
Specifically, we have asked for reimbursement assistance for our cost associated with the reestablishment of emergency services in the immediate aftermath of the storm. We will also ask the Town of Hilton Head for funds specifically related to the beach and for stormwater related cost.
 
Finally if we receive any reimbursements from FEMA, The Town of Hilton Head or any insurance proceeds or other proceeds related to these above expenses for Hurricane Matthew they will be credited back to the related expenses.
 
Any net proceeds after all expenses and reimbursements are realized are only eligible for a proportionate refund to the owner who paid the Special Assessment. These final net proceeds are not eligible for any future expense other than Hurricane Matthew related expenses. It would then follow that once all expenses are accounted for, the CSA Board of Directors would act to refund any remaining net proceeds to all owners who paid the Special Assessment proportionate to what they paid.
 
The CSA Board of Directors, the Finance Committee and the members of their task force as well as CSA Staff will continue to keep you updated on the status of all Hurricane Matthew related expenses and any reimbursements received.  If you have additional questions that we have not addresses here please email us at   info@csaseapines.com and we will do our best to address them in our future updates.
 
In closing, I would like to say that this experience has been hard on all of us and that none of us want to go through this again.  We know that this added expense to each of you is another burden you do not need now or at anytime.  We also know that we would not be acting responsibly, if we did not let you know what we now understand.  Matthew did tremendous damage to almost all property in Sea Pines.  As we continue to move through this recovery process, we hope you understand that we will provide you with the facts and information as soon as we can provide it in a comprehensive and clear manner.  The CSA Board of Directors, the Finance Committee and I all wish we had better news. 

Thank you for your continued patience and support.
 
Thank you,
 
Bret Martin
CSA President