Kiawah Island Property Owners Group

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KPOG History

A History of the Kiawah Property Owners Group from 1981-1995
written by Thomas U. Greer

At the May 28, 1992, town council meeting a new controversy erupted on Kiawah. The town council had been working with KRA to provide additional beach parking, which was especially needed behind the second security gate. KRA agreed to make a plot of land near the intersection of Glen Abbey and Flyway Drive available for parking. Before any of the details, such as who would pay for the bridge over Canvasback Pond, were worked out, a group of property owners whose properties were located close to the chosen site objected strenuously and initiated legal action to prevent having the parking lot in their neighborhood. Concurrently, there was an even greater outcry from other property owners who cited the urgent need for more beach parking. The crux of the problem lay in the fact that land destined to be used for beach parking should have been so designated before lots in adjacent areas were sold. The developer (primarily the Kiawah Island Company) had not made adequate provisions for beach parking in his planning.

In the June ’92 issue of Talk, KRG made its position known in an editorial which cited the need for adequate beach parking on Kiawah and asserted that the problem needed to be addressed then, not later. The editorial opined that the primary responsibility lay with KRA, which owned the undeveloped land and had the greatest stake in insuring both that potential property owners would have the means to gain access to the beach and that current property owners would remain content. Talk’s editorial went on to say that the Town of Kiawah Island, as the zoning authority, also had a responsibility to insure that adequate plans for beach parking were included in their zoning actions. It was pointed out that KICA would be the ultimate owner of any parking areas, so they too must play a role. The message in the editorial was that KRA, the town and KICA should start right away to work together to find adequate interim and permanent beach parking.

KRG kept the heat turned up on the problem. KICA property owner director Tug Greer proposed forming a beach parking committee with membership to include KRA, the town, Landmark and KICA. This committee was formed, was chaired by Greer at the request of the KICA board, and labored long and hard to develop a solution to the beach parking problem. When locations for small parking lots were found, property owners living in the vicinity of the proposed locations put up a howl. No one thought it was fair to permit on-street parking on roads close to the ocean. Landmark provided a number of additional spaces in Night Heron Park. KRA opened 9 spaces near the Beach Club, provided space for added parking at the property owners’ pool as part of the new Beach and Recreation Center complex, and promised a parking lot opposite the Ocean Course club house in the future. Legal blocks to using the Glen Abbey/Flyway site were overcome.

Eventually, in the development agreement between the town and KRA, more spaces were provided through a compromise which substituted the 50 space parking lot now existing at the intersection of Governor’s Drive and the eastern end of Flyway for the 20 space Glen Abbey/Flyway site. It is questionable whether the total number of beach parking spaces planned for will be adequate to meet long-term needs, but only time will determine this now.

At the June 1, 1992, KRG quarterly meeting, property owner director Dick Sayers reported on KICA affairs, concentrating on two problem areas. The first was the community association’s need for a much greater reserve fund to cover major repairs to, and replacement of, the island infrastructure. Dick reminded us that with Kiawah development having begun in 1975, some parts of this infrastructure were already 17 years old. He noted the KICA board hoped to have approximately $370,000 in the reserve fund by the time 1992 ended, an amount which was definitely inadequate considering the potential major repair requirements. He told the meeting that a new Reserve Fund Study Committee had been formed, chaired by KRA director Frank Brumley, to investigate the problem and look at potential sources of revenue. KICA administrator Bob Cowan had done yeoman service in gathering basic information on the size and details of our infrastructure and its cost, which would go into a study designed to predict our future repair and replacement needs.

Dick’s second subject was "transition" - that is, when would control of KICA pass from the developer, KRA, to property owners? This transition issue has been the single greatest point of controversy between property owners and the developer in the history of Kiawah. To understand the issue it is necessary to go back a few years. Early in his regime as KPOG president, Jack Pulleyn asked then former KICA property owner director Tug Greer to look into the transition issue and report back to KRG.

Greer reported in September, 1989, that his reading of the covenants indicated when 80% of the authorized number of lots and dwellings on Kiawah had been sold to individuals, transition would occur. The Planned Unit Development District document for Kiawah, the initial zoning document approved by Charleston County, indicated 7000 "dwelling unit equivalents" (a term too complex to try to explain in this paper) were authorized for Kiawah. Greer’s rough interpretation was that when 80% of 7000, or 5600 units (lots and condos) were sold, transition would occur. He questioned Frank Brumley on this; Brumley concurred that that was what the covenants stated.

Tug reminded property owners, however, that when KRA purchased Kiawah, they announced their intention to reduce the density to a number of units slightly over 5000. If this were the case, Tug felt, the 5600 figure would never be reached and KRA would control the community association right up until the last lot was sold. Tug indicated he had written to Frank Brumley on this matter and was told it was too early to discuss the problem, which should wait until KRA got closer to final build-out. Greer told the meeting that property owners at least needed to reach a philosophical agreement now with KRA as to how and when control would pass, with specifics to be worked out later. He concluded by stating that with KRA’s track record of fair treatment up until that time, he was optimistic an equitable solution could be reached.

Greer continued a dialogue with Brumley on this issue at KRG’s request, and reported again at the December 11, 1989, quarterly meeting. Greer had set out to try and get a written commitment from KRA. Instead, he reported he had received a firm verbal commitment from Frank Brumley that KRA’s policy would be to pass control of KICA to property owners when KRA had sold between 80% and 90% of their estimated final build-out, with two provisos—that we had demonstrated the capability to run KICA, and that the town government remained in good, capable hands. Those subjective evaluations were to be made by KRA. That’s all the progress that had been made until late 1991, when property owner director Dick Sayers got involved.

Back to the June 1, 1992, KPOG quarterly meeting. Dick Sayers’ second subject was this transition issue. He reported that a careful reading of the transition paragraph (III, 4b), led him to believe it didn’t say what we and KRA thought it said. Dick’s interpretation was agreed to by both of the other current property owner directors (Gloria White and Tom Winkleman) and a series of letters on the matter began with Frank Brumley, taking place over a nine month period.

The property owner directors’ position was a that new, unambiguous transition paragraph was required; they offered to work with KRA in developing the new paragraph. KRA’s response was that if paragraph III, 4b was to be addressed, then KRA had other future policies and covenant amendments which they wanted to address concurrently. Property owner directors believed this was unsatisfactory, as the transition paragraph was a significant problem which warranted individual treatment, and not a means for bargaining on other matters.

Starting early in 1992 and concurrent with the work done by Dick Sayers, the KRG Research Committee, headed by Charlie Moore, was looking into the same transition issue. They had solicited help from Greenville property owner/attorney Larry Estridge. The KRG board finally decided they needed formal legal assistance and approved hiring Estridge to read and comment on Dick Sayers’ theory and to recommend an approach to solving the dilemma.

A new "transition committee" composed of the 3 property owner directors (Dick Sayers, Tom Winkleman and Tug Greer, who had replaced Gloria White), two representatives from the KRG Research Committee (Charlie Moore and Ralph Magnotti), and property owners Bob Degenhart, Wally DuBois, Al Sill and Mayor Tom Nelson, was established to coordinate these activities and determine how best to proceed. They met on June 26, 1992, and were briefed by attorney Estridge following his study of Dick’s theory and the now famous paragraph III, 4b. Estridge not only concurred in Dick Sayers’ interpretation but indicated that he independently had come up with a very similar interpretation.

The interpretation is quite complex and would take far too much space to explain in detail. Simplistically, however, we believed the paragraph makes it clear that the number of units authorized on Kiawah was not a fixed number as KRA said it was. The paragraph said transition occurred when. . . "80% of the cumulative maximum number. . ." had been sold. Use of the "cumulative" indicated an ever-increasing number. The paragraph also said ". . .the number of lots and dwelling units authorized shall be determined annually" . . .and that transition will occur. . ."at such times as in excess of 80% . . ." of the cumulative number is reached. If it had to be determined annually, it is expected to be changing.

The plural "times" clearly showed that you could reach a transition number more than once. For these and other reasons the property owner interpretation was that as lots and dwelling units are platted and offered for sale, any time 80% or more of the cumulative number offered to date had been sold at the single time of the year when the count is made, control would pass to property owners. This would mean that if control passed this year to property owners, the developer, by offering more lots for sale, could regain control the following year. A developer desiring to maintain control would only have to time his offerings of new lots to occur before the annual count. However, as build-out was approached it would be harder and harder for the developer to have enough lots to equal more than 20% of the total. Research determined this is precisely the way control of property owner associations does pass in some sections of the country.

The committee’s intention was to try and continue to negotiate with KRA on a plan for transition without getting into a major revision of other portions of the covenants. The committee was unanimous in agreeing they wanted to avoid a court action. It was pointed out by Estridge that if one subscribed to the property owner directors’ theory, then the last annual KICA election of a director was improperly conducted, as transition would have already occurred. Accordingly, the property owner directors felt obliged to bring this to the attention of the board. This was done by a June 30, 1992, memo. Meanwhile, KRG’s Research Committee directed Estridge to write up his theory in a memorandum for KRG and to send a copy to KRA. Larry did this on July 14, 1992, and asked for discussion with KRA.

Right in the middle of all of this, a very significant event occurred. Frank Brumley resigned from the KICA board. The resignation was effective July 1, 1992, when his direct association with Kiawah ended. Frank was no longer chief executive officer of KRA, and now his verbal commitment in lieu of a written one regarding transition was of questionable value.

At the July 16 board meeting, KRA director Buddy Darby announced the transaction which made Morgan Stanley a partner of KRA. He stated that Leonard Long would replace Frank Brumley on the KICA board. KRA’s Townsend Clarkson chaired all board meeting from that time on. [ note: It is the opinion of the author that Frank Brumley’s departure and replacement by Leonard Long signaled a significant change in KRA’s method of operating on Kiawah. With this change began a steady deterioration in KRA/property owner relations. Brumley’s departure was a blow to property owners. Just one man’s opinion.]

KRA called a special meeting, an executive session of the KICA board, on July 22, refusing to tell the property owner directors the agenda. When Dick Sayers and Tug Greer walked into the meeting, they were told an executive session was not necessary and then were hit with a summons—KRA was suing the property owner directors. The suit asked the courts to make a declaratory judgment to decide on the meaning of the transition paragraph in the covenants.

The property owner directors requested a jury trial. The law says if there is ambiguity in the document in question (in this case the KICA covenants), the trial has to go to a jury. Thus began a legal action which took until August of 1993 to be decided in favor of KRA. The Charleston judge declared there was no ambiguity, hence he tried the case and issued the judgment. An appeal to the State Appellate Court was made, which took another 14 months to reach a decision in October of 1994. By a 2 to 1 decision the appeal also went in favor of KRA. In a strong minority opinion, the dissenting judge stated there was clearly an ambiguity and the case should not have been decided by the local judge.

The instigation of the lawsuit was a miscalculation by KRA. When they received Larry Estridge’s memo, KRA assumed the property owner directors had hired Larry as a prelude to initiating legal action themselves. KRA decided it was in their best interest to preempt the property owner directors and initiate the legal action.

The role of KRG in this legal action was significant. KRG was willing to pay for the legal fees of the property owner board members, provided they agreed to use Larry Estridge. It was finally agreed that Dick Sayers and Tom Winkleman would be represented by Bob Clement’s Charleston law firm, to be paid for by KICA, which gave the property owner directors the advantage of having local lawyers to deal with a local judge. (At the first board meeting subsequent to the lawsuit being filed, the KICA board voted to pay for the cost of one lawyer for the property owner directors.) Tug Greer would be represented by Larry Estridge, thus building on KRG’s initiatives in the transition issue and giving the property owner directors the added advantage of Estridge’s knowledge of the subject matter and property owner zeal.

Ironically, late in the process it was discovered that KICA directors’ and officers’ insurance would cover the defendant property owner directors, while KRA had to pay their own legal costs. Thus, KICA through its insurance paid Bob Clement’s firm and KRG paid Larry Estridge’s fees through the trial. Estridge handled the appeal alone; those fees were also paid by KICA insurance.

Talk covered all aspects of the actions leading up to the lawsuit and provided property owners periodic progress reports. When it was essential for the property owner directors to send a letter to all property owners responding to a letter sent them by KRA, KRG paid for the mailing. The KRG position on transition was made clear in the August ’92 issue of Talk: "The KRG Board endorses the position of the property owner directors on the transition issue. . . As in previous controversial matters, we believe it is more important that you have sufficient factual information to form your own opinion. That will continue to be our primary objective."

Interestingly, the judge’s decision and interpretation of the covenants modified the calculation procedures and in so doing made the complex paragraph 4b even more complex. By simple planning KRA could still maintain control of KICA right up until all but a few acres of land were left to be sold. KRA had not accomplished much with their successful legal action as they were still left with disgruntled property owners who, although providing close to 90% of the KICA revenues to KRA’s approximately 6-7% in 1992, had no idea when they would gain a majority vote on the KICA board. Certainly property owners had lost their interpretation of paragraph 4b as a bargaining chip in future negotiations. They then looked for another way to skin this particular cat. Fortunately, the town council had already decided to make transition a part of its development agreement with KRA.

In that agreement, the number of lots and dwelling units authorized for Kiawah was reduced from 7000 to approximately 5567. The 80% figures from the covenants still applies, so the number which triggers transition is now approximately 4454. With the decision to put a golf course in the Bass Pond area, it is very doubtful KRA will now sell 4454 lots and condos. (As of last December 3510 had been sold.) Thus it is likely the 80% figure will never trigger transition. The town showed great foresight in including in its development agreement an alternate road to transition—the gradual transition from "initial" (March 1, 1996) to "interim" (December 31, 2000) to "final" (January 1, 2004), to a complete ending of KRA’s involvement in 2016. It now appears this is the arrangement which will ultimately give control of the community association to property owners.

KRG’s role in the transition issue was critical. By having the resources and demonstrating the will to use them, KRG neutralized the intimidation factor that hitting volunteer property owners with an expensive law suit would have had. Even though KICA directors and officers insurance eventually covered the property owner directors legal fees, KRG’s provision of Larry Estridge strengthened the property owner team. KRG kept property owners continually informed through Talk and paid for mailings when the property owner directors needed to counter KRA mailings.

In 1992 Talk seemed to get better and better. One month there was a Dining Guide which listed by type all local restaurants located short of downtown Charleston. Bob Cowgill wrote a number of interesting "Nature Trails" articles on such things as the loggerhead turtle program, the Portuguese man of war, and the lifestyle of our island alligators. Carter Maguire began writing his interviews with interesting island employees. Jim Dore started a new feature called "It’s a Small World," in which he identified newcomers to the island and told readers a little about each of them. Reviews of local restaurants written by "Escoffier, Jr." began to appear also.

The next town election was due to take place on December 1^st, 1992. On Kiawah, the mayor and the entire council come up for election every two years. The KRG board was concerned that there was little interest being shown in the election and set out to change that. The September issue of Talk carried an editorial entitled "A Most Important Election" which addressed the importance of the town to all property owners, resident and non-residents, and why readers should take an interest. A series of articles on the town appeared in that issues including: "What Do I See in the Future for the Town Government?" by Mayor Tom Nelson, "Why Incorporation?" by Incorporation Commissioner Wally Dornseif, "Trials and Tribulations of a Council Person" by Lib Melvin, a member of the council, and "Is the Town of Kiawah Island Important to You?" by Tug Greer.

Talk’s efforts were successful in getting six residents to run for the four council positions, while Lib Melvin ran unopposed for mayor. Talk then asked each of the 7 candidates to answer the question, "What do you hope to accomplish as a member of the next town administration?" The responses, along with a picture of each candidate, were printed in the October, 1992, issue of Talk.

KRG then co-sponsored, along with the town, a "Meet the Candidates Night" on November 10, where candidates were asked a series of questions submitted by voters. Jimmy Smith orchestrated the evening. Questions were also asked by a panel composed of Dot Dornseif, Elmer Shumaker and former mayor Bo Turner. Attendees came away with an excellent understanding of where each candidate stood on the issues.

The election for council was very closely contested. When the dust settled, Lib Melvin became our mayor, as expected, and Ralph Magnotti, Roger McLaughlin, Charlie Moore and outgoing mayor Tom Nelson were elected to town council. They were sworn in by Charleston’s mayor, Joe Riley. KRG played a major role in focusing on the issues and in providing voters the opportunity to know the candidates.

Even as KRG gave an assist to the town, it continued to fulfill its watchdog role. The town had announced its intent to establish a planning board and a zoning board of adjustment composed of Kiawah voters. Up until this time these functions had been performed by similar Charleston County board. The members of these boards would be appointed by the town council.

At the September 17 town council meeting, citizen comments were made expressing alarm that it appeared as if the town council were expediting the ordinance to establish these committees in order to be able to name the committee members just before going out of office. Talk’s editorial board picked up on this, applauded the initiative of the council in the formation of the committees, but urged the council to wait and let the incoming administration name the committee members, since the new council would be working closely with the newly formed committees.

This turned out to be a non-problem, as the Nelson administration desired to complete establishment of the committees before leaving office but was quite willing to wait and let the incoming administration name the committee members.

In the middle of the previously-discussed transition lawsuit, KRA initiated another utility rate increase, its second in two years, and KRG found it necessary to intervene. The next installment will provide the details.

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