September 13, 2025

Subject: Community Update

Dear PBNA Members:

We hope you have had a great summer, and we wanted to report on various topics.  There is much good, many areas of significant concern, and seemingly an absence of communication between the developer and members towards a common good (resulting in litigation).  Also, earlier this summer, several of your volunteer board members met with our Mayor along with the town manager and staff.  So, we want to share what we learned as well as to highlight some other areas deserving attention.

This newsletter addresses:

1. Lawsuit Status
2. Areas of Community Concern
3. General State of Developer-Member Relations and Paths Forward

Executive Summary

Litigation.  Two lawsuits by homeowners against the developer remain active.  Lawsuit # 2 was decided in favor of the homeowner plaintiffs requiring mandatory membership in the club and prohibiting SSP from changing the Recreational Covenants without following the amendment process.   The lawsuits have arisen in part due to an absence of a dialogue and working relationship between SSP and the members. 

Big issues face the community, many of which are seeing little to no action, or slow progress.

• Traffic entering PB from May River Road
• South Wilson erosion
• Golf Club pricing, division and uncertainty
• Noise, weddings, corporate events and the Village Green
• Club rule changes (in favor of SSP) without notice or discussion
• Gag order on members and “suspension” threats
• EMT and Town Police resources
• Club and Trust financials and possible trust-but-verify audit

Henderson Park – SSP – Member Relations.  There is room for improvement.  Curious if Henderson Park or SSP have any interest, or what might encourage a bit more mutual respect.  It would be a suboptimal but necessary result if the only path toward a dialogue was filing more litigation in the face of unilateral action.

A Deeper Read:

Lawsuit Status.

Lawsuit #1 (Broader Club Governance Issues and Short-Term Rentals):  As we previously reported, SSP continues to pursue legal efforts to force arbitration of this lawsuit.  SSP appealed to the South Carolina Supreme Court the previous decisions in the South Carolina trial court and the SC appeals court which denied SSP’s claims that the case should be arbitrated, among other related issues.  The South Carolina Supreme Court has agreed to hear SSP’s appeal, and currently there is no hearing date set.  Therefore, the important issues raised by this lawsuit with respect to the governance and management of Palmetto Bluff and related entities remain outstanding and unresolved.

(For those of you unfamiliar with the case, the lawsuit had its origination in the developer, SSP, curtailing the rights of those members who had purchased short-term rental properties.  It then developed into a larger dispute over community governance.     The lawsuit was filed in 2022, and it appears the developer may have been charging the PB Base Club and the PB Preservation Trust with large portions of the defense costs (which are effectively paid by members through our dues).   After three years and much money arguing about where to resolve claims as opposed to resolving the claims themselves, there remains no resolution of these important issues.  Given the time and money spent, and in the interest of a more harmonious community, the PBNA would encourage SSP/Henderson Park to come to the table and negotiate a resolution to this lawsuit.) 

A few takeaways.

• Two courts have stated that just because something is written into club documents, that does not necessarily mean those provisions are enforceable.  The law trumps the club documents.  On this particular matter, the South Carolina Supreme Court will decide on South Carolina legal and policy grounds whether these specific community matters go to court or confidential arbitration.

• The short-term rental issues have in practice been mitigated for now by putting private renters on parity with renters in the Montage/SSP program.  That status is undocumented and can be unilaterally changed by the developer at any time.

• We understand that parties were close to but did not achieve a settlement.

• Good faith negotiations might resolve this lawsuit, but for reasons we can’t fathom a settlement has not occurred. 

Lawsuit #2 (Illegal Waiver of Mandatory Membership):  Updating our July 3 report, this lawsuit is now closed.  On the final open item, the Special Referee ruled in favor of SSP’s request that the recission of mandatory membership not apply from the date of the waiver to the date of his decision (roughly March 2024-March 2025).  Therefore, any Palmetto Bluff homeowners who opted out of mandatory membership during those dates apparently do not have to be members of the Palmetto Bluff Base Club.  We believe this has the effect of creating and maintaining two classes of Palmetto Bluff homeowners and the loss of dues. The plaintiffs in this case strongly disagree with this aspect of the ruling, which creates negative financial and other consequences for Palmetto Bluff including the potential for additional future litigation on these issues.  The appeal window for this lawsuit has passed so the decisions stand.  The potential member vote on mandatory membership, and other unrelated issues proposed by SSP, has not moved ahead.  There has been no communication to Palmetto Bluff homeowners on the next steps on the proposed vote.

(For those of you unfamiliar with the case, SSP/the developer attempted to unilaterally waive mandatory membership in the PB Base Club for all property owners.  For the many reasons discussed in the developer-member forums, this was generally not seen as good for the community or property owners.   A group of property owners challenged the waiver, undertaken without a member vote to change the Recreational Covenants, arguing that that change was unauthorized and unenforceable under those Covenants.  The Special Referee assigned to the case ruled in favor of the plaintiff homeowners and determined that SSP’s unilateral waiver of mandatory membership, which is included in the PB Recreational Covenant for the mutual benefit of the developer and the members, was illegal and unenforceable.)

A few takeaways:

• Very importantly, the Special Referee ruled that the developer cannot unilaterally change this fundamental Palmetto Bluff document without following the amendment process.  That process includes a member vote in certain circumstances.

• Instead of making the Club whole on lost dues, the developer asked the special referee to not only forgive back dues, but to allow the approximately 71 memberships that opted out to stay out – costing the Club an estimated $667,400 a year in dues. When considering whether the PB Base Club does not make a profit as well as the appropriate level of member PB Base Club dues, this lost revenue and the allocation of the aforementioned legal costs are significant factors.  

• South Carolina law likely does not allow mandatory membership in a for-profit club to be bound to homeowners’ property.

• We have been advised that South Carolina also likely does not allow mandatory member joining fees that must be paid to a third party, a separate for-profit club owned by the developer.  

• SSP attempted to make the club structure legal, by first trying to unilaterally waive mandatory membership and then proposing a member vote on an amendment to the PB Recreational Charter to allow non-mandatory membership (among other changes).

• As recently displayed, the collective wisdom of most PB homeowners is that mandatory membership is a good thing.

• Some members have suggested that a reasonable alternative might be to convert the Club to a not-for-profit entity, like the Trust.

• Joining fees need to go to and stay in the Club.  The money is needed for operating expenses, repairs, improved member offerings, and a capital reserve.  

• • The Golf Club, Shooting Club, Boat Club and Equestrian Venue are separate for-profit private businesses owned by the developer.  Members have a choice of whether to join. 

Lawsuit #3 (breach of fiduciary duties by Trust stewards appointed solely by SSP):  It is our understanding that this lawsuit against the Palmetto Bluff Preservation Trust (Trust) and its Board of Stewards is proceeding to discovery.  We will provide additional updates as they become available.

(For those of you unfamiliar with the case, the suit alleges breach of fiduciary duties by the Board of Stewards of the Trust, in part by allegedly paying one-third of the legal fees in lawsuit #1 and by allegedly diverting funds from the Trust to Montage and the developer in connection with wedding and corporate events on the Village Green. 

The developer controls the Trust and appoints its board, consisting of SSP personnel and club management employed by SSP entities.  The developer owns the hotel facilities, which is a for-profit business and not part of the PB Base Club or Trust.  SSP has directed the Trust to rent the Village Green for $1,000 to $3,000 per day for hotel events and related set-up and breakdown.  The Trust pays for maintenance, upkeep and resodding of the Village Green.  The Trust financial statements do not show whether this results in a gain or loss for the Trust.    All other revenue from these events (upcharge for Village Green, catering, hotel rooms, private sales, etc.) apparently go to Montage and SSP.

The Trust is a non-profit corporation and subject to South Carolina non-profit corporation law which is clear that, among other things, the developer-appointed Stewards owe a fiduciary duty to PB homeowners.  We have been advised that Stewards on the Trust board that are not independent may be subject to a higher standard of care.  

Certain members have complained of late-night noise, unruly hotel guests, impolite conduct by hotel staff, and damage to the Village Green and trees.)

Areas of Community Concern.

PB entrance and Route 46 Intersection.  No news of progress here.  In addition to the SSP intersection studies, Beaufort County commissioned a 2023 traffic safety study of the Route 46 Corridor from the Rt 170 circle to Old Miller Road.  The Report highlighted that our intersection is an issue but there are two worse ones.  The study presented numerous options for these State controlled roads, which have since been taken up by the three-county Local Area Transportation Study, which makes recommendations to the SC Dept of Transportation.  In any event, apparently no state or local funds are available for the projects, pending another State Transportation Bond issue (funds from prior bonds have been exhausted). 

A town resource has indicated that an open issue is who pays for any construction – the developer as a condition to future permitting, or state funds?  Further, the study leans towards a traffic circle versus a stop light, which further complicates a resolution of this issue.  As noted in the July 2025 MAC meeting notes, “Gray Ferguson stated that Club management was reaching out to Town of Bluffton and County officials to see if they would support SSP on the installation of a stoplight, at least as a temporary solution, or otherwise accelerate the project.”  Our best guess: resolution is years away unless PB management and/or our POA, the PB Preservation Trust, puts significant energy behind this.  We will continue to monitor any developments.

Town of Bluffton Noise Ordinance.  As you may recall, there has been on-going concern over weddings and other events on the Village Green, and one unresolved issue is whether the Town of Bluffton’s noise ordinance applies to Palmetto Bluff.  The Town’s rule states live and amplified outdoor entertainment is allowed from 12:00 p.m. (noon) to 10:00 p.m.  During our Mayoral meeting, we learned that 92 percent of the homes in Bluffton are “behind the gates” and certain town resources take the position that the Town’s Noise Ordinance, as written now, does not apply to these communities and accordingly the local HOA (or POA in our case) is to control and monitor the noise ordinances within each individual community.  The Bluffton police will not typically respond to noise complaints.  We have to rely on our Security Team to enforce the POA/Montage noise limits in place that we believe creates an imbalance and needs resolution.

Club Rule Changes and “Gag provision”.  Several residents brought to our attention that the PB Club Rules and Regulations have been extensively revised and contain a provision in the Discipline section stating that members may be disciplined for “making disparaging, derogatory or defamatory remarks about the Club, Club associates or Club ownership, including by email or in social media…(emphasis added).”  This ban on social media posts appears to be contrary to the US Consumer Review Fairness Act of 2016 that prohibits companies from contractually banning truthful, if negative, social media posts about company goods and services.  While we understand other communities may have enacted such bans, the legality of these gag orders has not been tested in court.  We encourage our membership to become familiar with this legislation and its intent.  We will issue a separate more detailed letter on this topic shortly.

Several residents have also brought to our attention that the Club, Trust and/or Montage have purported to suspend members or have threatened to suspend members because of public commentary.  We are aware that certain members have insisted on hearings where they have been represented by legal counsel and have contested the alleged facts and asserted infractions.   Any practice of threatening suspensions to squelch good faith discussion or debate would be Unamerican as well as likely illegal and would need to change.

EMT Coverage.  As long-time residents will remember, our local fire station used to have Emergency Medical staff stationed here 24/7.  With the completion of the New Riverside Station, this EMT resource was moved there.  Many residents have expressed a strong desire to have EMT capability inside PB.  We believe this is a priority as our population grows and our new neighbors are increasingly farther and farther away from the New Riverside station.  We are working on a task force to define and address the needs.  Stay tuned.

Police.   Confusion exists regarding what is a police matter, a Club security matter, when the hotel “security” team can act, etc.  Further confusion exists as to what the standing instructions are to the on-campus security staff in terms of deference to developer, hotel, and hotel guests, particularly in cases where member interests diverge.  Further confusion exists as to the level of training, authority and weapon-carrying authority of the on-campus security staff.  We will investigate and report back.

Audit of PB Base Club and Trust Financial Statements – Trust by Verify?

Management has pointed out that, under the Club documents and SC law, members have a right to audit the PB Base Club and Trust financial statements although the Trust already completes an annual audit by a third-party audit firm.  The PBNA is considering undertaking an audit of the PB Base Club and requests feedback on whether PBNA members would like an audit completed and whether they would help fund the cost.

Golf Membership Pricing and Division – Next on the Tee is Tier II

Ownership announced its new golf membership plan, categories and pricing on August 6.  While folks are curious to see and evaluate the new Anson course, and understand that the developer’s intent is to reserve some memberships for future lot buyers, the general reaction heard from Golf Club members is that the current Tier II members have not been treated well or provided with reasonable options. 

We understand that some golfers are now looking at non-PB options.  That is unfortunate for many reasons. 

We would have expected that ownership, having cashed the previous joining fee check, would have provided Tier II with the option of going May River/Crossroads only Tier I for a reasonable additional joining fee, or keeping what they have including unlimited additional rounds at the accompanied guest fee.  

We have heard from some golfers that they are hesitant to sign on given the economics, general principles of fairness and equity, absence of “true” private club amenities, uncertainty on clubhouse, a 4-5 mile dirt approach road, and potential for SSP to increase golf member dues in the future.  The decision may be forced before anyone has the chance to play  and evaluate the new course.

Given their support of the club, and our desire to see neighbors play golf together, we would like to see current Tier II members given options to upgrade to May River Tier I for the recent joining fee net of their prior fee or keep the current Tier II including unlimited additional rounds for the accompanied guest fee.  The golf course utilization chart on the member website shows the current year-to-date course usage at 25% of capacity.  There are 312 Tier II members.  Club management reports that 55 have elected to move to Tier I thus far.

Yet to be seen what the Tier II golfers do.  The sense of belonging and inclusiveness contemplated by PB charter documents is being severely strained by the SSP golf proposal.

Member-Developer Relations.

Impact on Property Values and Developer and Member Sales

Litigation, governance concerns, reputational issues around developer-member relations, pricing, offerings, lack of new amenities, and value proposition of the PB Base Club and the boating, golf, and shooting clubs may have a negative effect on property values and demand.  We are all for positioning PB as a high-end community, however, one would have to imagine that real estate offices at other communities are quick to comment on some of the goings on.  We would also like to see an inclusive community with something for everyone here.   At any point in time, half the homes will be below the median value; we would discourage the developer from pricing half the community out of PB offerings.

A Path Forward?

The answer will not be for one side or the other to simply capitulate, but rather for the sides to find a working relationship no matter how difficult.  We doubt that a “thank you sir may I have another” approach will be a widely adopted among the members. We intend to contact Henderson Park and report back. 

Given the significant issues facing our community and the potential impact on the value of homeowners’ properties, we would encourage all homeowners to join the PBNA and communicate your concerns directly to management and SSP.

Upcoming Preservation Trust (POA) meeting on September 22.  Prior to this meeting, we will email PBNA members a list of questions that property owners may want to ask, including remedial plans for the South Wilson erosion. 

As always, feel free to reach out to any of the PBNA volunteers.

Regards,

PBNA Volunteers

Cathy MacKinnon, John Meltaus, Frank Riddick and Allen Roth