Kiawah Island Property Owners Group

1. KICA ISSUES

KRA – THE DEVELOPER

PROPERTY OWNERS

DISCUSSION

Retains control over KICA Covenants (p23 and Exh. 18.1)

KRA contributes approximately 5% of KICA assessments and has only a single KRA Director on the Board, yet KRA retains final say whether Covenant changes can be proposed to the membership.  See example of critical Covenant in Discussion immediately below.

Easier for KRA to bring new properties under KICA Covenants.  ’94 DA requires 6 of 7 KICA Directors to vote to accept contiguous or near contiguous properties west of Main Gate for inclusion under KICA Covenants; ’05 DA reduces this to simple majority of Board (’05, p24; Cov, Art 11, Sect 2)

When ‘94 DA was signed, there were 3 Property Owner Directors and 4 Developer Directors.  Therefore 2 of 3 Property Owner Directors (2/3) had to vote with Developer.  ’05 DA requires only simple majority of Board (1 Developer Director and 3 Property Owner Directors), rather than a majority of Property Owner Directors (4 of 6).  Once under the KICA umbrella, Covenants stipulate those properties can be called “Kiawah Island.”  When ‘05 DA first posted on Town website (8/23/05), no KICA Board of Directors’ approval was required to bring properties into KICA.  This issue was addressed only when a non-resident property owner brought it to Council’s attention at a public meeting.  When ’05 DA expires, Covenants will again prevail and KRA will be able to bring properties into KICA “without further consent of the Association.”

KRA waives right to appoint majority of KICA Board (p23 and Exh. 18.1)

Waiver posted to Town website as of 9/27/05 still does not contain language making this waiver permanent, as it would be under the terms of the ’94 DA, and as the Town has publicly agreed it should be.  ‘94 DA precluded KRA’s exercising this right during the life of the ‘94 DA and on 1/1/08, the day after that agreement expires, KRA would have been required to sign permanent waiver.  ‘05 DA requires waiver be signed within 30 days of execution of ‘05 DA and doesn’t say “permanently.”

KRA’s Delaware partnership filing lists D&W Investment, Inc. and TWD, LLC as the general partners of KRA ,with Buddy Darby as President of D&W and Manager of the LLC.  These same two entities are the signatories to Exh. 18.1 of the ’05 DA (KRA’s waiver of its right to appoint majority of KICA Board), but neither is mentioned in ’05 DA as an entity related to KRA.  It also has not been explained why these two entities should not be included in ’05 DA.  It is unclear what legal impact such an omission may have on the waiver Darby will be executing on their behalf.

KICA annual assessment reduced from 150% to 100% on marsh island properties, such as Terrapin Island, Summer Islands, etc. (’94, p11)

Elimination of this provision of ‘94 DA means additional costs of upkeep on deteriorating bridges to these islands, some of which have facilities available only to neighborhood residents.  These costs will be borne by all property owners.  Even if no other marsh islands are developed, KICA  would only be able to assess a higher fee for properties on already developed islands if KRA approved submission of a referendum to all property owners. 

Dual majority no longer required to appoint KICA General Manager and Director of Security

Dual Majority means there must be a majority of Developer Directors and a majority of Property Owner Directors for approval.  This was important in ‘94 to protect specific individuals who held these positions at that time.  Both incumbents in ‘94 are no longer employed by KICA.

 

No dual majority required to approve expenditure of  MR/R funds

MR/R stands for KICA Major Repair and Replacement  funds, which are used for maintenance and repair of KICA infrastructure (roads, culverts, etc.). This has never been an item of contention.

KICA Board gains right to relocate KICA offices without KRA approval

The significance of this item is unclear because KICA does not currently own any property to which its offices could be relocated.

KICA Board gains right to control its own operations

Standards Manual included in ‘94 DA controlled KICA operations.  ‘05 DA eliminates Standards Manual.  At 9/9/05 public hearing, Leonard Long, a KRA principal, stated publicly that Standards Manual had been “largely ignored and on the shelf gathering dust all these years.”

Sora Rail maintenance tract donated to KICA (p18)

KRA to convey .15 acres for maintenance tract to KICA by quitclaim deed.  Quitclaim deeds are used without warranty of title. 

No land for Security Pass Admin.

KICA Board specifically requested property for this purpose.

KICA can appoint 1 member of ARB if it so desires (p10)

This right already exists under KICA Covenants (Art VII, Sect 1) which stipulate (1) all members of the ARB “be appointed by the Board of Directors of the Association” and (2) at least one member of the Association, other than the Developer’s representatives, shall be a member of the ARB.  KICA has not exercised its right to appoint members of the ARB.