If another hurricane strikes South Carolina, Rep. Mark Sanford wants residents in private communities and neighborhoods with homeowners associations to be eligible for help cleaning up debris.
Congressman Sanford introduced a bill in early July – the Disaster Assistance Equity Act – that would allow common interest communities – neighborhoods, condominium complexes, and cooperatives that share amenities and infrastructure typically owned by an homeowners association (HOA) – to receive Federal Emergency Management Agency (FEMA) aid following a natural disaster.
“I find it strange that FEMA treats the 70 million Americans who live in common interest communities differently than it does those who live in other types of communities,” said Congressman Sanford. “In my experience, storms don’t discriminate between different kinds of communities. As such, it seems to me that FEMA should treat them all equally when it comes to the assistance available in the wake of a disaster. The simple aim of the bill is to treat taxpayers the same.”
Under current guidelines, Kiawah, like other HOA’s throughout the country, is not eligible for FEMA assistance following a natural disaster (i.e. hurricane, fire, earthquake, etc.). KICA COO Jimmy Bailey believes this should change and supports this proposed bill as a step in the right direction.
“Residents in private communities or neighborhoods with homeowners associations are citizens who pay the same federal taxes as everyone else. This is an issue of equity.”
Sanford’s bill is cosponsored by a bipartisan group of New York congressmen: Democrats Jerry Nadler and Eliot Engel, and Republicans Peter King and Lee Zeldin.
The Disaster Assistance Equity Act has been referred to the House Committee on Transportation and Infrastructure for discussion and a recommendation.
“I urge association members around the country to contact their elected officials expressing their support of this bill,” said Bailey. “We were lucky that Hurricane Matthew resulted in only a modest supplemental assessment for clean-up and repair, but a bigger storm could create a huge financial burden. Fixing this flaw in the current guidelines would prevent that from happening.”
KICA operates under a Policy Governance Model, which is critical for a community that has a constantly rotating, volunteer board. Policy Governance is intended to provide the board, staff and community clear understanding of who does what, along with philosophical continuity from one board to the next. Any board can change a policy, but it can’t ignore an existing policy. With effective policies in place, all stakeholders should know what to expect, unless a policy is changed. Thus, to change direction, a majority of board members must vote to rescind the existing policy.
Over the last few months, the Finance Committee and the Board of Directors have discussed the creation of a Debt Policy. After several iterations, the policy was approved by the board as presented below (along with a brief explanation of financial terms, as well as some of the beliefs and assumptions that were considered during policy development). However, as part of the process, community input is being sought on the substance of the policy, and can be shared by emailing email@example.com by Sept. 16. A report on feedback will be shared at the regularly scheduled Sept. 11 board meeting.
KICA’s debt policy will comply with the following principles:
– KICA may use debt for four main purposes: (i) to fund seasonal cash flow needs; (ii) to fund projects that KICA fully insures against natural disasters; (iii) to fund projects that cannot be insured against natural disasters: (iv) uninsured cleanup and major repairs and replacements following a natural disaster.
– Type (i) loans must be repaid within one year; type (ii) loans must be repaid in equal installments over the shorter of the useful life of the project or 15 years; type (iii) and type (iv) loans must be repaid in equal installments over no more than five years.
– Before drawing down any type (ii), (iii) and (iv) loans, the COO must provide the board a schedule which includes the source of funds for repayment, showing that sufficient funds will be available from this source to repay the loans as required by the repayment schedule.
– Type (i) loans may be executed without notifying the members, but any type (ii), (iii) or (iv) loan will require an advance communication to all members, including the purpose, the amount, the funding source, the key terms, the primary sources of funds for repayment, and the repayment schedule.
– With the exception of unplanned borrowings for type (iv) loans, the maximum outstanding total debt will not exceed the prior year’s revenue derived from Annual Assessments.
Type (i) loans are to cover needs related to seasonal spending and income patterns. This type of need could occur because most revenue comes all at once when annual dues are paid, while many expenses are spread evenly through the year, and others may come in large, sometimes unpredictable chunks at different points during the year.
KICA can obtain cost effective insurance for some assets, like buildings, but cannot for other assets, like beach boardwalks or docks at Rhett’s Bluff. If we borrow money to pay for uninsurable assets (type iii loans), it is important to repay these loans relatively quickly, to limit the risk of having to borrow to replace the asset while the original loan remains outstanding. Repayment for loans for insurable assets (type ii loans) can be stretched longer. This is because the cost of storm damage would be covered by insurance, thus we would never have the situation where the debt exceeded the value of the asset.
If a major storm does serious damage to KICA’s uninsured assets (roads, bike paths, docks, boardwalks, etc.) we need to be able to borrow money to replace the assets – type (iv) loans. The amount of these loans should not be limited, as we need to have flexibility to replace whatever is damaged. However, these loans must be repaid relatively quickly, as another storm could damage these assets. The goal of these loans is to spread the cost of a storm over a few years, if the board decides this is better than an assessment to cover the damage all in one year.
The debt principles are geared to provide KICA with the tools to fund its operations and projects, while maintaining sufficient borrowing capacity to fund uninsured storm damage, and provide reasonable borrowing limitations and accountability to members.
KICA has a $2.5 million line of credit to provide liquidity if needed, though it has never been advanced.
The board’s borrowing authority is limited only by the policies of organizations that would consider making loans to KICA. This limitation is generally a function of excess cash generated by KICA after collecting current revenues and covering current costs. Based on 2017 annual cash flows, KICA’s current borrowing capacity is probably less than $5 million.
KICA can increase its borrowing capacity without a member vote by increasing the annual KICA assessments to the maximum available under our existing restrictions. This would currently deliver about $300/year per KICA member (approximately $1.25 million/year) adding almost $9 million to our borrowing capacity.
Borrowing capacity can be increased further if members vote to allow a dues increase beyond the current maximum. For example, the board could generate approximately $30 million of total borrowing capacity if members voted to allow an additional $1,000/year in KICA annual assessment.
KICA’s debt capacity is limited by its cash flow, which is limited by its ability to raise annual fees more than about $300 more per year without a member vote. Because Kiawah is a barrier island with the constant risk of uninsured storm damage, we remain at risk of an unexpected funding need that exceeds our ability to fund via a one-time assessment of members. It is important to limit borrowings to provide sufficient unused borrowing capacity for storm damage. This will allow us to borrow to fund the uninsured repair and replacement costs and allow us to collect from homeowners over several years to minimize the burden to our members.
Loggerhead sea turtle nesting season is in full swing. Nesting activity typically begins in mid-May, and female turtles will continue coming ashore to nest until August. Nests will begin hatching in July and finish by October.
During nesting season, it’s important that we do all we can to protect this threatened species from any further perils. To avoid unintentional harm to these beautiful creatures, follow these tips during nesting season:
-If your property is visible from the beach, turn out all exterior lights (flood and deck) from dusk to dawn.
-If any interior lights are visible from the beach or cast light on the beach, close blinds or drapes at 9 p.m. or turn them off.
-Flashlights should not be used on the beach at night during nesting season. Do not carry flashlights or play flashlight tag on the beach.
-Fill in large holes dug on the beach at the end of the day, as adults and hatchling sea turtles can become trapped in them.
-Observe sea turtles quietly from a distance – never disturb a nesting sea turtle or hatchlings.
-Do not shine lights on a sea turtle, including cell phones and flash photography.
Help keep Kiawah special and our turtles safe by following these guidelines or sharing them with family, friends and vacation rental guests. Learn more about Kiawah’s Loggerhead population.
At the May 1 KICA Board of Directors meeting, the community was invited to view a presentation from the Sandcastle planning team on options to renovate and improve this important community asset. View a PDF of this presentation.
For questions or comments, email firstname.lastname@example.org.
RB Survey results are in! View the results at kica.us/rhetts-bluff-survey-
In addition to the results, many property owner comments were made. These are being reviewed. Thank you for your participation. The information gathered will be very helpful in planning the reconstruction of this amenity.
Last month, KICA announced its commitment to providing an unfiltered member forum for information sharing, discussion and general announcements. Two options (described briefly below) are being reviewed as potential solutions, and KICA would like your input. The options being considered are:
– A listserv, like the iKiawah list or an unfiltered version of the KICAlist
– A third-party product, such as Nextdoor or Front Porch Forum
The KICA Board of Directors recently asked staff to begin work on plans to upgrade the Sandcastle. The Sandcastle facility is the primary amenity available to all KICA members. The 21-year-old community center has received only minor investments over that period, while the number of KICA properties has grown by about 10% and usage data shows an increase in the number of members using the facilities at Sandcastle.
In 2015, members voted down a $245 increase in annual KICA fees, which was needed to support the financing for a proposed $8.6 Million upgrade to the Sandcastle. Although the vote to borrow significantly and invest in a very major upgrade at Sandcastle did not pass, it is clear that this facility requires attention beyond minor investments. KICA’s acquisition of the Town Municipal Center building in October 2016 will provide additional meeting space and further flexibility to how the space at the Sandcastle can be used. Therefore, the board has authorized an investment to reinvigorate and improve the Sandcastle.
There will be a community presentation no later than June with the details to date. The level of investment will be less than half of what was previously proposed, and the board believes KICA can fund this through a combination of reducing current operating reserves and a minor financing. Since there will be no increase in annual dues, a member vote is not required. The goal is to have the project completed and in service by summer 2018.
The key components of this investment include:
– bringing the look and feel more in line with Kiawah standards
– operating within the current footprint of the building
– taking better advantage of the ocean views
– maintaining or increasing the space allocation for fitness
– constructing an adult pool (which may be done now or in the future, depending on whether it can be accomplished within the budgetary framework outlined).
We look forward to sharing the plans when they are available, and are open to input and suggestions from the community.
A new fractional ownership development on Kiawah by Timbers Resorts was recently announced. This development is the result of a sale from Kiawah Partners to Timbers Resorts.
The site is located near the entrance to Beachwalker County Park, outside the Kiawah Island Main Gate but still a part of the community association. The plan is to build three 4-story buildings, each with seven units, as well as a separate clubhouse (with an 800-square-foot fitness center and a concierge) and a swimming pool. There will be two 3-bedroom units on each of the three lower stories and one 4-bedroom penthouse on the top floor.
This development will share one characteristic with timeshares, which is that they have fractional ownership (Town of Kiawah Island ordinances do not permit timeshares but do allow fractional ownership). Unlike a timeshare, ownership in each unit is not spread across 52 owners, rather the 4-bedroom penthouse units will each have six owners and the 3-bedroom units will each have nine owners. As a result, there would be a total of 180 owners versus over 1,000 in a typical timeshare of this size. Also, unlike many timeshares, these are very high-end properties with a target price of $500,000 per owner for the 3-bedroom units and $1.2 million per owner for the penthouse.
In terms of the legal relationship between these properties and KICA, The Timbers group will pay the prevailing annual assessment to KICA for each of the 21 units (21 full fees). Like other multiple ownership properties on Kiawah, one owner (“the primary owner”) from each unit will have full access to KICA amenities, voting rights for the unit, etc. Also like any other multiple owner properties, secondary owners have the option of paying an additional amenity assessment for a Sandcastle membership. The Timbers group has indicated that they plan to provide these Sandcastle memberships for each of the secondary owners and incorporate the added cost in the annual ownership costs passed along to all 180 owners. This means KICA will receive 159 additional amenity assessments. The association, however, feels that Sandcastle usage by Timbers owners is likely to be low based on the fact that they will have their own fitness center and oceanfront pool.
From a Kiawah Island Club perspective, the development has been given the rights to 21 memberships. The current plan will be to offer these first to each of the 18 penthouse buyers. The remaining three memberships, plus any available if a penthouse buyer elects not to join the club, would be offered to the 3-bedroom unit buyers. KICA understands that the 21 owners electing to take one of these memberships will have identical rights and privileges as any other Kiawah Island Club member.
For more information on Timbers Resorts, visit timbersresorts.com.