Dear PBNA member:

Mandatory Membership Waiver.  As you may recall, in May 2023 South Street Partners (SSP) unilaterally “waived” the requirement that Palmetto Bluff property owners be members of the PB Club.   This was done without a member vote as required by section 4.2 of one of our keystone documents, the Recreational Covenant.  Five residents (Plaintiffs) challenged this change and SSP (the defendant) agreed to an expedited legal process using a referee.  The referee issued a ruling on Friday, March 14^th.  The referee decided in favor the plaintiffs, agreeing that SSP did not have the legal right to make this change without a member vote.  The ruling stated:

“I find that the provisions of the Charter and the Recreation Covenant we intended for the mutual benefit of the Developer and the Owners and thus, the mandatory membership requirement could not be unilaterally waived by the Developer.”

This ruling is important as it underscores the need for our developer to act in accordance with the documents, which we all agreed to when we bought our properties here in Palmetto Bluff.

What’s next?  In short, we don’t know.  SSP has the right to challenge the decision and potentially appeal the decision to the South Carolina Appeals Court.  They could also choose to rescind the waiver.  A third option is they could put this matter to a member vote which requires a majority to property owners to agree in writing to the change.  Other options may exist.

The ruling is a public document; let us know if you want a copy. 

Annual Meeting Notice.  We are excited to let you know that the Palmetto Bluff Neighborhood Association, Inc. (“PBNA”) will hold our Annual Meeting of Members on April 15, 2025, at 5:00 p.m. local time, at Wilson Lawn and Racquet, 30 Leila Bell St., Bluffton, SC 29910.

The purpose of the meeting is to elect members of our Board of Directors, following which we look forward to an opportunity for members to discuss our community, the many wonderful things that deserve our support, and opportunities for improvement.   

PBNA directors serve three-year, overlapping terms.  The nominees are:

Term expiring December 31, 2028:  Cathy MacKinnon and Jay Parker

Over the past year, the Board has worked to keep members informed of developments, advocate for member interests with management, and revitalize the PBNA. The Board has waived member dues for 2025, and the balance sheet of the PBNA is essentially a small amount of cash used primarily for maintenance of the website.

We have heard from many members that they would like to participate in an open discussion regarding our community but will be away.  We are looking into online participation and will report back.

Again, we are pleased to bring members together for a broad, constructive discussion, and we look forward to seeing you.

Sincerely,

Palmetto Bluff Neighborhood Association, Inc. 

Current Board Members:

Cathy MacKinnon, John Meltaus, Bob Morette, Jay Parker, Frank Riddick and Allen Roth

If you have friends and neighbors who are interested in joining, please tell them to go to our website, www.pbnabluffton.com, and click “join”.

Note to readers:  While we applaud South Street Partners enhanced transparency provided in their Saturday night email to the PB community on the Village Green controversy, please know that there is much more to this topic of which all PB property owners should be aware.  We address these below.  Also, please know that in our effort to provide you with accurate information, on Friday we reviewed –consistent with prior practice—a draft of this email with PB’s Chief Operating Officer.  

Dear PBNA Members,

This newsletter touches on two topics: the Village Green in Wilson Village and the 2025 PBNA board.

Wilson’s Village Green

The use of the Village Green for weddings continues to be a source of irritation for many PB property owners for at least two reasons: 

• First, while the number of weddings has decreased slightly, the scale and duration of the events has grown dramatically, causing a myriad of lifestyle, access, and safety concerns.  This is the subject of much chatter, both within our Palmetto Bluff community and on social media.  In addition to the nuisance and safety concerns, many believe that property owners are not appropriately compensated for our inability to use and enjoy our “downtown” and marque park in a peaceful and orderly manner for significant amounts of time.  A further concern is that such events (and construction/tear down) are not sufficiently monitored, resulting in damage to our iconic live oaks and the Wilson Mansion ruins.

• Second, the Village Green is effectively “owned” by us, the property owners.  The Green is part of our common area property (including roads, bridges, etc.) that is directly owned by the PB Preservation Trust, LLC (our POA), and as such, we (via the POA) are reimbursed when the Green is used for non-POA events.  The primary outside events are weddings managed by Montage Palmetto Bluff (MPB).  For years, the developer has argued that our “quid pro quo” is the rental fees offset money that property owners would otherwise have to pay in POA fees. 

Our objective is to shed more light on the second matter.  Three topics are addressed below—history, current economic arrangements, and potential conflicts/self-dealing by our developer, South Street Partners.  

History.  For many years, our POA charged $1,000 per event for use of the Village Green, regardless of whether the Green was used for one or many days (for set up and tear down).  While the POA does not break out rental revenue for the Green in the annual audited financials, the 2024 POA budget estimated fees at $105,500.  This amounts to less than 1% of our POAs overall revenues (or about $65 to $75 per PB property owner).   In recent years the Village Green repair costs have averaged $35-40,000, so the net economic benefit of the rental fee income is approximately $40 per property owner.    

Current Economic Arrangements.  After years of pressure from property owners, the rental fee paid to the POA was raised in 2024 from $1,000 per event to $3,000 per day.  For example, this means that for a wedding that uses the Green for five days total, the POA would receive $15,000 in revenue, which is a major improvement over the prior pricing arrangement.  With this, we can expect total annual site rental fees to increase to the range of $200k to $300k, which will represent approximately 1.4% of POA revenues, or roughly $125 per PB property owner per year.  Remember that the POA pays for all repair and resodding costs, so it is still unclear if the property owners receive any meaningful economic benefit under the new pricing arrangements.

Montage Palmetto Bluff’s (MPB) list price for the Wilson Green rental is currently $8,000 per day, which provides a $5,000 margin over the “cost” of $3,000 per day paid to the POA.  This arrangement is a potential conflict of interest as SSP owns the hotel and directly benefits from the hotel’s profits while 92% of the POA’s assessment fees are paid by PB property owners.

Potential Conflict of Interest/Self-Dealing.    As owners of the hotel, SSP receives all profits (or losses) from the operation of MPB.   While details of the contract between Montage and SSP are not known, typical hotel management contracts call for the manager (Montage) to receive 3% of revenue plus certain incentives.  For simplicity’s sake, let’s assume Montage receives 5% of revenue.  This means that SSP would receive $4,750 per day in profit as there are no incremental costs to them.   Many believe, including the PBNA volunteers, that this arrangement is wrong, and conflicts with the POA’s fiduciary duties to PB property owners.   The conflict is that SSP management controls the POA board but also runs PB overall in a way that maximizes SSP’s profits. 

Under the terms of the PB governing documents, currently the POA is controlled and managed by SSP.  PB property owners have no input on POA policies regarding wedding locations and pricing.  PB management has defended these arrangements, arguing that there are other potential benefits to PB property owners from the weddings including the marketing of PB and the sale of additional real estate.  Clearly, these potential benefits are far greater for SSP compared to PB property owners.  Moreover, these potential benefits could be obtained by having weddings at other Palmetto Bluff venues including at Montage. 

Most property owners with whom we have discussed this matter believe that the full economic benefit for rental of POA property should accrue to the POA.   Additionally, many believe the potential benefits of Village Green weddings to PB property owners are far outweighed by the associated costs, disruption, inconvenience, as well as security and safety concerns. 

Further, this possible breach of fiduciary duty by the POA is part of the current litigation (initiated in 2022) against SSP and various PB entities.

Closing Questions and Thoughts:   Our questions:  Why doesn’t the full $8,000 per day fee go to the POA?  Is the $8,000 per day fee still below “market,” given the higher pricing doesn’t seem to discourage frequent rental?  Since the Village Green is such a visible source of angst for property owners, why doesn’t POA break out the revenues and repair costs in their published audited financials?  Is our security team (which costs approximately $1,750 year per PB property owner) prioritizing Montage and wedding guests over residents’ safety, freedom of movement and quality of life?

Lastly, most Palmetto Bluff property owners believe that the last thing we need is more litigation.  So, we urge SSP to change their pricing policies and put their fiduciary obligations to the POA and PB property owners first.

2025 Year PBNA Board

We are near the end of our third year since the PBNA “reboot” and it is a natural time for the volunteer board to be refreshed.  While we have some great new candidates, we need more volunteers. 

If you want to be an active part in informing, shaping, and protecting our amazing community's future please consider joining our board as a volunteer.   Please e-mail our Nominations Committee chair, Alan Roth, directly at ar08053@comcast.com

Closing

If you have any questions, please feel free to reach out to any of the PBNA volunteers:  Bob Morette, Arian Ellis, Alan Roth, Helen Ryan, Ford Bartholow, Eric Sutherland, and Frank Riddick.

If you have friends and neighbors who are interested in joining, please tell them to go to our website, www.pbnabluffton.com, and click “join”.

Dear PBNA Members,

This newsletter is an update to our February 2024 email regarding on-going disputes, which have now broadened out to include community-wide emails and a recent petition effort by several property owners. 

The three separate dispute streams are:

• ST Rental/PBCA Litigation.  As you may recall, litigation was initiated in 2022 between the group known as PB Community Advocates (comprised partly of, but not exclusively of, owners of properties in the short-term rental areas).   This litigation continues, and given the nature of the litigation, little new information is publicly available.  Two key pillars of this lawsuit may already be moot (e.g., amenity access by short term renters, and mandatory membership in a for profit club) but a third key pillar involves the governance and structure of what is now referred to as the “base” Palmetto Bluff Club.  The PBCA has circulated community wide emails articulating their arguments and points.

• Mandatory Membership Waiver.  Last July, a group of property owners submitted a formal complaint regarding SSP’s unilateral announcement last May to make PB Club membership optional.  Per our governing documents, this was the first step in a formal dispute.  The heart of this complaint is that SSP, in making such a fundamental change to PB Club membership, was required to use the amendment process, outlined in section 4.2 of the Recreational Covenant, and obtain a majority vote by the property owners.  This was not done.

• Petition effort.  As many of you may know, a third group of PB homeowners is circulating a petition and holding meetings amongst PB property owners who have expressed an interest in learning more about the first lawsuit and its potential consequences.  The leaders of this effort (Jim Grant and Julia Butler) plan to send a community wide communication to share with the balance of the community what was discussed in the neighborhood meetings.  They are advocating for settlement or withdrawal of the PBCA-backed litigation.   Further, their petition is intended to thwart the plaintiffs’ attempt, down the road, to have its lawsuit certified as a class action.  More on this below.

Lots of points and counterpoints are being asserted and we will not attempt to address each one.  Please remember that many points and arguments are being expressed by the interested parties in a manner which best supports their goals.  Consequently, there is a risk of more heat and smoke but not a lot of light and clarity.  In our earnest effort to shed some light, here are some points which may be helpful:

• Despite all the handwringing about how the disputes are hurting property values, there are no data to confirm this assertion.   All of us receive real estate transaction updates from PB Real Estate as well as from independent brokers which continue to show record prices on virtually all metrics.  Of course, if conflicts continue and/or amplify, and with increasing publicity in the newspapers about the lawsuits, this risk no doubt exists.  It is worth noting that lawsuits in planned communities are not uncommon, here in SC and across the US, so Palmetto Bluff is not notable in this regard.
•  
• The market, and not the absence of litigation, will likely be the biggest driver of new amenity construction.   SSP has approximately 2,300 lots yet to be developed, platted, and sold.  The only way they will continue to transform raw forest land into million dollar lots is through easy to access top tier amenities.  This is evidenced by the construction of the second 18-hole golf course and the Anson Marina.  Regardless of the litigation, SSP may choose to make any new amenities separate from the base PB Club, much like they did with Crossroads.  SSP has a fiduciary responsibility to their investors to make the decision they believe to be in their best economic interest.

• The second legal action involving the waiver of mandatory membership will likely be resolved by the end of summer or early Fall.  As the property owners and SSP have agreed to a streamlined legal process whereby a special referee (already chosen by both SSP and the property owners) will rule on this question.  If the special referee rules in favor of the property owners, SSP’s waiver will be reversed.  SSP will then have the option to either 1) restore the mandatory membership requirement; and/or, 2) seek the written consent of a majority of PB property owners.  SSP also could appeal, as they have done in the other lawsuit, which would prolong the matter. 

• The lawsuit brought by PBCA seeks to be a class action but is NOT a class action yet.  The plaintiffs’ complaint alleges that they are “representatives” of the “Property Owners Class,” defined as “all owners, including former Owners, of residential property units…within the past twenty years…”  There may come a time—unclear when but could be two to three years hence—when a judge (not yet appointed…) could be asked to certify the lawsuit as a class action.  If the judge certifies the case as a class action, then at that time, each property owner would have a choice to remain in the class or to opt out. 
• Remember, this lawsuit is still in a procedural stage (court vs. arbitration) and nothing has been argued or discussed in court yet on the merits of the plaintiffs’ arguments. The potentiality of the current lawsuit turning into a class action is a significant (and uncertain) financial cloud over SSP.  This cloud, we would imagine, would be an incentive for SSP to settle.    
•  

Where will this end?  We don’t know but some current thoughts:

• While they disagree, arguably PBCA has already “won” two key points in their dispute—short term renter access and the allegedly “illegal” structure of a for profit club being mandatory (which may be reversed).  Their key remaining arguments revolve around PB Base Club structure (for profit vs. nonprofit), governance, and such.  The “bid-ask” spread between the plaintiffs and SSP is immense, and we don’t see any easy solution short of constructive compromise.  Apparently, this has been tried several times and has failed.  While we are not sanguine that this will change easily or quickly, we hope we are wrong.

• Nonetheless, we firmly believe that settling the PBCA backed lawsuit is in the best interests of the Palmetto Bluff community and hope that the defendants and plaintiffs can find a way to do so.
• As with the other recent “grassroots” efforts (e.g., Grace Club, Moreland cell tower) to keep Palmetto Bluff a special place, we are grateful that our neighbors continue to step up to work together as a community.