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December 6, 2020

—– Forwarded Message —–
From: tomleonti <[email protected]>
To: [email protected] <[email protected]>
Cc: [email protected] <[email protected]>; Stephanie Baron <[email protected]>; Chris Millar <[email protected]>
Sent: Sunday, December 6, 2020, 06:41:19 PM EST
Subject: SH Concerns

Don,

I am addressing this email to you as the current South Hampton BOD President.

As you know my email dated September 15, 2020 to Chris Millar and copy to Doug Millar, Yourself, Stephanie Baron and Sue Leinenweber asking for clarification regarding the Structural Waterproofing update has gone unanswered.  This continued lack of communication from You and our Management Company is very troubling and concerning.  You know the biggest concern expressed at each of the Annual Homeowner’s meetings in the past few years has been the lack of communication from the board.  The lack of communication continues and is inexcusable.  Dave Puckett tried to help improve communication by creating a quarterly newsletter.  This communication tool seems to have abruptly stopped when you took over the president’s position.  The discontinuation of this newsletter seems awfully coincidental that it aligns with our building projects problems.

When I sent my first email concerning the summons letter, I believed we were dealing with an issue regarding a $101,975.62 payment to Structural Waterproofing.  Then the Mechanics’ Lien was placed on all homeowner’s properties.  This gave me pause as it did not make sense why Oak City Law would have to take this action over such a small amount as compared to the over-all project costs.  After talking to attorneys involved, and learning how many attorneys are involved, and getting paid, it was obvious something much bigger is at the core of all this.  And I was miffed at learning you hired an attorney to represent the homeowners without informing the homeowners of such.  Since each homeowner is named individually, each owner must agree to having this attorney represent them.

We continued to do our own investigating and just recently found a document sent from Lynn Edmonds of  Litus* To Let to a realtor/closing law office that has some very disturbing information regarding a special assessment on the units of South Hampton that will begin in January 2021.  This document is titled “South Hampton Property Owners Association, Inc. Certificate of Assessment.  It states the regular assessment of $717.00 will be raised to $721.00.  This is not concerning to me.  What is concerning is what comes next:

Special Assessment – 2 options, beginning 2021
Payment in full due $11,543.38
Monthly payments (60) due $192.39

This is obviously for a 2-bedroom unit in the closing process and I’m sure the 3-bedroom units will have a proportional increase.  It goes on to say; “Special assessment approved by BOD in late November to replenish funds for piping project and waterproofing.  Assessment due beginning in January 2021”.

I am making the assumption that 3-bedroom units will be assessed at ~20% higher than the 2-bedroom units (based on our regular assessments are 19.9% higher for the 3 bedroom units)

Here are the costs of this assessment based on my calculations:

$11,543 for 72 2-bedroom units = $831,096
$13,851 for 72 3-bedroom units = $997,272
Total assessment = $1,828,368

At the May 2019 Annual Homeowners Meeting you stated we had enough money to pay for the piping project and the building project with a modest ($500k – $600k) shortfall that would be covered with a short-term bridge loan.  You also said the bridge loan would be paid out of our regular assessment funds in less than a year.  The document I am referencing clearly states something very different from what you told the homeowners.  This document states the assessment is to replenish the piping project and waterproofing.

It’s not too hard to determine there is something seriously wrong when you are imposing a special assessment in an amount that is very close to the original budget of the 2 projects, especially when you are on record of stating in the annual meeting that there would be no need for an assessment to pay for the projects.  This tells me that the $101,975 due to Structural Waterproofing and the liens on our property pales in comparison to something much bigger.  It is becoming clearer to me that we owe much more money.  I am guessing it is to Tribune for over runs, our contracted engineer, and now increasing attorney fees, not to mention the mess we have regarding the units with storm shutters.  I am concerned that the bridge loan is not being paid per your plan communicated to us at the annual meeting and if true, are we at risk of defaulting?  I am asking for a detailed explanation as to what is really going on.

As for the special assessment, there are very clear requirements set forth in our Master Deed.  I have attached below 4.7 and 4.8 for your review and comment, although I am sure you are already aware of what it says.  The Board can only approve a special assessment not to exceed 10% of the prior year budget.  In this case the board can only approve ~$140,000.  The document I am referencing above states; “Special assessment approved by BOD in late November”.  To place a special assessment in the amount of ~$1.8M, there must be a vote by the homeowners and it needs 51% homeowner’s approval.  This document seems to be in violation of our Master Deed, not to mention ethicality of how this is all being handled.

4.7 Special Assessments. In addition to the HOA regular assessments authorized by this Article, the HOA may levy, at any time and from time to time, upon affirmative vote of a majority of the Board of Directors of the HOA, a special assessment in an amount up to ten (10) percent of the prior years budget, payable over such period as the HOA may determine, for the purpose of defraying, in whole or in part, the costs of any construction or reconstruction, unexpected repair or replacement of the Project or any part thereof, or for any other expenses incurred or to be incurred as provided in this Master Deed (including without limitation HOA expenses). Such special assessments, if any, shall be included within any and all references to HOA Assessments. This Section shall not be construed as an independent source of authority for the HOA to incur expenses but shall be construed to prescribe the manner of assessing for expenses authorized by other sections or Articles hereof. Any amounts assessed pursuant hereto shall be assessed to Co-Owners in proportion to their respective Percentage Interests. Notice in writing of the amount of such special assessments and the time for payment thereof shall be given promptly to the Co-Owners; no payment shall be due less than fifteen (15) days after such notice shall have been given. All unpaid portions of any special assessment shall incur a late charge of $25.00 per month or any portion of any month (or at such lesser rate equal to the maximum interest rate allowed by the applicable law) from the date such portions become due until paid. All funds received from assessments under this Section shall be part of HOA funds.

4.8 Additional Special Assessments. In addition to the HOA regular assessments authorized by this Article, the HOA may levy, at any time and from time to time, upon affirmative vote of at least fifty-one (51%) of the total votes of the HOA, special assessments, payable over such period as the HOA may determine, for the purpose of defraying, in whole or in part, the costs of any construction or reconstruction, unexpected repair or replacement of the Project or any part thereof, or for any other expenses incurred or to be incurred as provided in this Master Deed (including without limitation HOA expenses). Such special assessments, if any, shall be included within any and all references to HOA Assessments. This Section shall not be construed as an independent source of authority for the HOA to incur expenses but shall be construed to prescribe the manner of assessing for expenses authorized by other sections or Articles hereof. Any amounts assessed pursuant hereto shall be assessed to Co-Owners in proportion to their respective Percentage Interests. Notice in writing of the amount of such special assessments and the time for payment thereof shall be given promptly to the Co-Owners; no payment shall be due less than fifteen (15) days after such notice shall have been given. All unpaid portions of any special assessment shall incur a late charge of $25.00 per month or* any portion of any month (or at such lesser rate equal to the maximum interest rate allowed by the applicable law) from the date such portions become due until paid. All funds received from assessments under this Section shall be part of HOA funds.

All this tells me why there has been very little and inaccurate information shared with the homeowners.  Your decision to go underground does not go unnoticed by many homeowners and this puts you and our management company in a precarious situation where you have lost respect, trust, and confidence from homeowners.

Many homeowners are ready to take actions towards your removal from the board and possibly the removal of the entire board if that is what is needed.

I am expecting a timely response to this email as there is a time sensitive matter concerning the January 2021 special assessment that I believe exceeds the Board’s approval limits for such an assessment.

Best Regards,
Tom Leonti

No Response to This Email from Don Matheson

December 10, 2020

Don Matheson’s Assessment Page 1   Page 2