Dear PBNA Members,

This newsletter addresses questions we have received regarding the annual dues from The Palmetto Bluff Preservation Trust (PBPT), which is effectively our POA (short for Property Owners Association).  The POA is governed by a Board of Stewards, which is controlled by our developer, South Street Partners (SSP).  A full description of this entity is contained in the “entities” FAQ on the PBNA website.  Given the confusion around the PBPT name, we will simply refer to it as our POA.

The PBPT owns, operates, and maintains the Common Areas (other than Club properties) and operates under our governing documents.  It is funded largely though mandatory annual assessments on property owners (amounting to $4,515 per property in 2022, $4,876 in 2023, and $5,315 for 2024), and commercial operations (e.g., Buffalo’s, RT’s, etc.), and if elected by the PBPT’s board of stewards, unsold platted lots.  Gate pass revenue and Design Review Board (DRB) fees are also significant revenue sources.  The most recent statements, for 2022, were finally released in February 2024.  You can access these 2022 audited financials on the PB Member website under the” POA-Preservation Trust” tab.

Observations on the 2024 budget includes:

• Assessments continue to rise despite having accumulated a surplus of $ 6.3 million from 2019 to 2022 (2023 was essentially a breakeven year for the POA).
• Given these hefty surpluses, SSP elected to change polices (effective 2022) so that it no longer pays assessments on their platted but unsold lots.  Under the prior accounting election, the developer contributed an average of $476k annually (2018-2022).  Under the new accounting election, SSP is responsible for any POA deficits, which are unlikely given high reserves and continued growth in sold lots and annual POA fee increases.  In effect, SSP has shifted nearly one half a million dollars annually on to current property owners.
• Implicit in this budget is an expectation of only 24 additional assessment-paying properties in 2024 vs. 2023, which would be the second lowest number of new lot sales since 2012.  Either the Board of Stewards are being conservative or SSP is pessimistic about 2024 new dirt sales.
• 2024 will be the first, recent year, in which reserve funds will be used to pay for repairs and maintenance.  Previously, repairs and maintenance were paid out of the annual PBPT revenues.  While there is much debate amongst property owners around the right level of reserves, we should all be aware that the POA plans to spend a portion of the reserve funds for the repair or replacement of our common assets in 2024.
• Our POA has budgeted to spend $ 383k for legal fees this year, most of which will likely be used to defend against the two legal actions currently underway.  Note that the PB Club has budgeted an additional $400,000 in legal expenses.  SSP is responsible for the remaining third of the estimated $1.2 million legal fees.  In sum, we estimate that property owners are shouldering approximately 65 percent of ongoing ligation defense costs.
• Of course, the POA’s costs grow as Palmetto Bluff becomes more developed and there are more roads, bridges, and lagoons to maintain.  In 2024, the only significant changes in the POA’s scope of duties are the addition of the new neighborhoods and the added inland waterway acreage which were formally “turned over” in March.

Going forward, what should property owners be concerned about, given where we are and SSP’s stated intentions?

• We can expect our assessments to continue to increase.   Given the POAs current financial cushion, we should expect that SSP will maintain their current election to cover any deficits vs. the alternative of paying assessments on their unsold but platted homesites.
• Further, many of our roads are nearing the point when they will need to be milled and repaved.  This will likely be a significant cost, which must be funded either through annual POA assessments or by spending down reserves (or both).  Either way, property owners will pay.
• While financial transparency has improved under SSP’s ownership, many questions remain regarding cost efficiency and allocations.  While we are comfortable about allocation methodology vis a vis the POA, allocations are a more significant component of the PB Club’s budget.  We will address this next.

We will continue to post observations of the financial information we receive from SSP and our POA.  If interested, we encourage you to read the prior analysis of 2016-2021 which is also on the PBNA website.  This report goes into more granular detail on the mechanics of how the PB Preservation Trust operates financially.