POINT-BY-POINT RESPONSE TO COASTLAND’S LETTER – “THE OTHER SIDE OF THE STORY”

GOVERNANCE COMMITTEE’S POINT-BY-POINT RESPONSE TO COASTLAND LETTER

We apologize for the length of our rebuttal to Coastland’s recent mailing, but there is no other way to demonstrate that what they said is false.  The bullet points from Coastland’s letter are in black italics.  Our responses are in blue. 

• Coastland Corporation has developed over 1,000 home lots in Ocean Sands over the last 40 years and still has substantial acres of oceanfront property and other parcels remaining to develop.  We have substantial ongoing commitment to this community.

Coastland owns less than 2% of the platted lots in Ocean Sands proper and the undeveloped Section G.  As we shared previously, Coastland owns just 8.5% of the property value in Ocean Sands.  This does not warrant total, absolute control over every single issue and decision.  Any commitment demonstrated by Coastland has been towards selling lots and controlling Coastland’s expenses.

• Coastland cares about the long-term conditions and property values in Ocean Sands.  We are proud of what has been created here.

Coastland had a wonderful concept originally – that’s why many of us bought here.  Over the last 20 years Coastland has become consumed with fighting with the county and opposing any community ideas not coming from Coastland (see Bike Path, Stormwater District).  Their focus has been to minimize spending on infrastructure, which has resulted in the community having limited maintenance, a poor, tired appearance, less landscaping and deteriorating roads. We believe that their primary motivation for minimal maintenance and not building a reserve fund is to keep dues low as a selling feature for their remaining lots. This highlights Coastland’s unfixable conflict of interest between caring for existing owners versus making new sales. 

• Coastland has handled the Property Owners Association (POA) for the last forty years, mostly because when we started developing sites there were no good options.  Because of Coastland’s involvement, Ocean Sands has had the lowest relative Owners dues in the entire area for years.  Coastland’s efforts have saved long-term owners a substantial amount of money over the years, at the same time striving to provide the best services possible with the funds that are available.

We acknowledge that 40 years ago POAs were relatively new, there were no community management firms in the Outer Banks, no electronic solutions for “back-office” operations, and not enough homeowners to provide POA management.  However, for the last 20+ years that hasn’t been the case!   Low dues are meaningless if the results are a tired, worn appearance, deteriorating infrastructure and minimal amenities!  

Coastland has left the POA exposed on reserves for long-term capital repairs such as roads.  The only reserve study in 40+ years happened because owner members of the board spent years pushing for it and Seaside Management finally made it happen. Coastland Vice President and lawyer Braxton Hill reportedly said “it was a mistake to let Seaside get a reserve study because now we have to do something about it”.   An owner-member board would ensure more “bang for the buck” and reasonable, efficient spending focused on owner-directed objectives. 

• The size of the Association has slowly outgrown Coastland’s time and resources to keep up with the management efforts and Coastland has lost money for years handling the POA.  Coastland is going to get out of the Association management business and is in the process of researching professional management companies that can transition Coastland out of this responsibility yet continue to provide you and us, as property owners, the best services available at the most reasonable cost.

There is no evidence that Coastland has lost money on the POA.  If that was the case, Coastland had control of the board to increase dues – further proof of their inherent conflict of interest.  Coastland never bothered to join the Community Associations Institute (CAI) or take CAI courses even though former owner board members suggested it 10 years ago!  Ed Gaskins, who Coastland hired as POA Counsel, told Coastland that the complete lack of processes and internal controls was problematic and that the financial information provided to the POA board members was incomplete and unacceptable.  

The services we pay for have been spotty and/or poorly executed.  Surveys we did last year on Trash Rollback and Security Services showed that the overwhelming majority of owners were unhappy with service levels and quality.  Slight recent improvements are due to pressure applied by the Governance Committee.  

• For years we relied on our onsite manager, Bob, to communicate with the members on an informal basis and this had worked.  Last year, since Bob was sick, we tried to formalize the process with an outside firm and unfortunately this didn’t work as well as we had hoped.  We hope the transition to new management will resolve a lot of these issues.

There has been long-standing frustration and disappointment with the performance of the Site Manager, a Coastland employee.  Bob DeFazio has never proactively sought to communicate. When owners call him they often get confrontation, rather than resolution.  From a best practices standpoint, how can Coastland think that any one individual could adequately communicate with 1,000 owners?  Coastland has never attempted communication via email, used the official POA website, or even developed a newsletter.

Seaside Management is a competent association management firm.  We objected to the POA paying Seaside’s bill because they were hired to act as a public relations firm for Coastland – another instance of Coastland using POA money to fund Coastland expenses.   Seaside Management was unable to communicate with homeowners because Coastland would NOT provide Seaside with a list of owners.  Seaside was handcuffed and set up for failure.  Because of this experience, it is unlikely that any other property management firm can be successful while ultimate control of OSPOA remains with Coastland.

• In contrast to what has been said by others, Coastland does not object to the stormwater district and is agreeable to allowing test wells to be drilled on our property.  The issue could have been resolved months ago had the County provided a satisfactory access agreement instead of a poorly written, backwards hold harmless waiver.  Coastland offered to have an agreement prepared and the County didn’t want to pay the $720.00 legal expense, so it was never completed.  The OSWSD board has since chosen to go through private property owners to accomplish their needs.

Coastland fought the Stormwater Committee every step of the way with its typical approach of delay, obfuscation and refusal to reply to questions. Braxton Hill appeared at the Public Hearing on District formation to oppose its creation and, at a minimum, ask for a delay.  The Commissioners essentially told Mr. Hill:  “Why should we give you a delay? Coastland’s had 40 years to fix the flooding problem and has done nothing.”  Mr. Hill’s testimony at the Public Hearing can be seen by clicking on the following link: Stormwater Public Hearing  and the link is  posted on the Home Owners of Ocean Sands website, www.oshoa.org.  Recently, Coastland filed a lawsuit against the County to have Coastland properties removed from the Stormwater District.  Clear evidence that they don’t support the District.

The issue over access was another “red-herring”– this involved a 1-1/2 inch PVC pipe going down 8 feet! With respect to the $720, a little context is appropriate.  First, the County can’t pay directly because it would be an expense of the Stormwater District.  More importantly, the $720 was to pay Braxton Hill personally for legal work.  Mr. Hill is also on the Stormwater Advisory Board.  The other members of the Advisory Board thought this was a clear conflict of interest.  All of the other advisory board members bring their varied professional expertise at NO CHARGE.  

• We currently have a group of disgruntled owners that have set up their own “Home Owners” Association and reached out to the rest of the property owners in an effort to remove Coastland, as the developer, from having board control.  This effort has created a lot of confusion and misinformation among property owners and some [sic] those actively involved are on the current board of directors.  This groups [sic] wants to take over and run the POA.  They want to be in charge.

The charter of the Governance Committee, which was formally established at the 2015 Annual Meeting, is to create the best framework for long-term prudent management of Ocean Sands POA.  The owner board members are on the Governance Committee because it was established as an official committee of the POA Board.   In fact, Braxton Hill stated at the 2015 meeting that a group should be formed to plan for a post-Coastland environment as the key Coastland players were getting up in years.  Once Coastland blocked every request to improve OSPOA operations at the 2016 Annual Meeting, the Governance Committee concluded that accelerating the transition of control to all owners was in the best interest of the community. We also decided that the communication void left by Coastland needed to be fixed.  We have spent over 24 months, as volunteers and using no OSPOA money, soliciting e-mail addresses of the vast majority of owners, developing  a website, sharing information via e-mails and the soon to be opened Facebook page. Coastland only recently sent two letters, using far more costly USPS mail.

Coastland tries to paint us as a small, local group of “disgruntled” owners. Over 230 owners have contributed to the legal fund and 321 owners have already executed Written Consent forms to remove Coastland. Those are not small numbers! Since there are only 60 resident owners in Ocean Sands this is clearly not a locals-only movement.  Coastland continues to hope you don’t pay attention or don’t care about your property. 

• Because this rogue group is attempting to interfere with Coastland’s rights and property, Coastland is prepared to make a substantial investment in effort, time and money to protect their property rights.  This could ultimately cost the Association a considerable amount of money in legal fees as well.  We want to make sure all parties fully understand the implications and costs of these efforts, and its potential impact on property values. 

This is a blatant attempt to intimidate.  They are admitting that Coastland is going to spend your POA dues fighting for Coastland interests! During this year’s annual meeting, Ed Gaskins, the lawyer Coastland hired for the POA, was pointedly asked the question as to whether this would be a Coastland expense or a POA expense, and he confirmed that it would be a Coastland expense.  Now they are either trying to scare you or they lied the first time.

• This rogue group’s website and unsolicited contact has created confusion which may have caused a large number of property owners to fail to pay their dues and this impacts the bottom line of the Property Owners Association.  To date the communications from the HOA group have all been one-sided, inaccurate and misleading.

We have provided the facts and the truth.  We have bent over backwards to let people know that the website is not the official OSPOA website.  We all firmly believe that the time for self-rule has come.  The Governance Committee gets nothing from this effort but the opportunity to make the community better for all owners and to protect our property rights and values.  

We only communicate with those who have voluntarily provided their e-mail addresses and asked to receive our communications.  We make it easy for owners who no longer wish to receive these e-mails to unsubscribe.  Our website clearly states that this is not the official OSPOA website.

What has impacted the bottom line is Coastland’s total neglect in  pursuing delinquent owners for unpaid dues and failing to assess late charges.  The Site Manager & Developer board members have repeatedly told owner board members that delinquent accounts were tracked and liens placed when appropriate.  We, and Crown Point, have found out that this is untrue.  Coastland has been informed for the past three years by the  CPA who audits the books that it needs to actively pursue delinquent dues, as this is one of the key functions of an association manager.  Despite repeated requests, Coastland also refuses to provide the owner board members with a delinquency report, claiming privacy issues.

• The “governance committee” is an ad hoc group that has never formally been approved by the Ocean Sands Board of Directors and has focused their efforts to try to take over control of the POA.  The committee has never reported to the board, the management company or formally to the Association membership.  They have set up their own website, created confusion in the community and have consistently posted inaccurate and negative comments about Coastland.

NOT TRUE, See the “The Charter of the Governance Committee” response three bullet points above. 

• Mr. Al Marzetti went so far as to sue the POA to retrieve financial and other information, much of which was already publicly available.  Hiring legal counsel to work through this ongoing suit and subsequent Board issues has cost the Association over $18,000 last year that could have been spent on boardwalk maintenance, landscaping and other improvements for the POA.  The majority of the 2017 budget line item for legal is in response to this suit and other Board issues created by this rogue group.

This lawsuit was a Governance Committee initiative.  We were seeking more information as to whether/how Coastland was misapplying OSPOA funds. However, in order to sue, an individual who was a board member had to be the plaintiff, so Al volunteered.

Originally, a simple letter was sent to Coastland by our attorney requesting this information.  All of the information requested was within what North Carolina law says must be provided to board members.  Most of the information, such as POA contracts and general ledgers, had never been available.  Information that was available, such as prior year financials, was requested because we discovered that Coastland had, on occasion, changed numbers after-the-fact and we wanted them to put a stake in the ground as to which version was correct.  After much delay, Coastland said they would provide the information, but only if Al sent Coastland a check for thousands of dollars.  So, there was no choice but to bring suit. Coastland could have avoided the legal fees by simply providing the information that is clearly mandated under the law when it was requested.  There was NO legal issue here. 

POA Counsel admitted that they spent many hours chasing Coastland because they couldn’t get Coastland employees to respond to them, i.e. Coastland mismanaged litigation costs because the attorney was trying to herd cats.  By contrast, our legal fees in this suit were about $4,000.

• Misinformation on their website includes stating that Coastland dragged the Water and Sewer District (OSWSD) into a lawsuit between the County and Coastland.  This is inaccurate as the County is the party that motioned the course (sic) to have OSWSD brought into the litigation.  Coastland tried to keep OSWSD out of the case and the property owner members of the Board refused to vote on this issue. Coastland board representatives had abstained from voting to due to potential conflict.  With the OSWSD in the lawsuit the district could end up liable for damages and the property owners ultimately pay the price.

We have answered this multiple times and you can find the true story on our website http://oshoa.org/stormwater-in-ocean-sands-and-crown-point/ . In short, the owner board members believed this to be a futile effort as the legal conclusion was clear and, thus, hiring counsel for the POA would be a waste of OSPOA funds.  Coastland has a long history of spending POA funds on Coastland lawsuits. 

You may recall that Coastland sent you a letter disparaging the owner board members and pledging to oppose the County’s motion “at its own expense.”  However, at the first opportunity in court, Coastland’s attorneys agreed that OSWSD was a “necessary party.”  Coastland thus reneged on its pledge to oppose the motion at its own expense.

• Historically, Coastland provided the due diligence to keep Aqua and Tidewater Utilities from taking over the water and sewer services, respectively and ended up saving the property owners huge headaches and huge increases in their service fees that other groups have been subject to in North Carolina.

It is public knowledge that it was never realistic that Aqua or Tidewater would be given this utility.

• After Hurricane Jacqueline it was Coastland that called State officials and got the state to force the County to provide flood relief pumping after they refused to do so.  The cost was capped at $10,000.  After hurricane Mathew [sic] the County charged $80,000 for flood relief pumping.

Over a week after Hurricane Jacqueline,  Mr. Johnson used some connections to get NC DEQ to allow ocean pumping after the County tried to obtain permission but was unsuccessful.   Most of the stormwater committee members sent Mr. Johnson messages of thanks.    Later, we realized that the reason he likely agreed to do this was that this was Parade of Homes weekend and there were houses in Section O entered in the Parade of Homes, but the Parade signs were almost totally underwater!

You should note that the “Coastland pumping” was just a couple of pumps at the HIJO “lake”. By contrast, the Service District had multiple storms in succession to deal with, responded immediately to get pumps in place, made the right decision to keep pumps in place for a week between storms (even though this incurred additional costs), and pumped out flood water in every section of Ocean Sands and Crown Point.  Ocean Sands was the envy of every other POA in Corolla for the quick and effective response.  Subsequently, about half of the pumping costs were reimbursed by FEMA, so the net cost of pumping out the entire development after two major back-to-back storms was around $40,000 to the Stormwater District.

• We would encourage any persons interested in working to bring Ocean Sands Property Owners Association back to a civil Association to contact us at Coastland and we will support an effort to elect new members [sic] directors to the board.

We fully support any individual who wants to work for the betterment of the community to run for the board.  The current owner members of the board have repeatedly been unanimously re-elected, to standing ovations, at Annual Meetings.  Coastland’s demand for civility in light of its continued neglect, threats, mismanagement of the community, and its historically shoddy treatment of homeowner board members is remarkable.

• We want to make sure that you as the Property Owners get to hear all side [sic] of all of the issues so you can make intelligence [sic] decisions about your Association and your investment in Ocean Sands.

We’re speechless.  Coastland just sent out what may be the biggest set of lies of the year.  We hope you recognize it for what it is. How do they figure it is “your Association” when Coastland has absolute control?

• We look forward to continuing our efforts to make Ocean Sands a better community.

What actual improvement, addition or expansion has Coastland performed?  Please note that Coastland has never identified an actual improvement they have provided to the Ocean Sands community?

We would note that EVERY single action mentioned in Jeanne Marcinko’s cover letter was initiated and pushed by either a homeowner board member or by a member of the Governance Committee. Left to their own devices Coastland is clueless as to what should be done next.
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WE LOOK FORWARD TO RESUMING OUR REGULAR, USEFUL COMMUNICATIONS WITH OWNERS. PLEASE STAY TUNED FOR FUTURE EMAILS. AND, AS ALWAYS, VISIT OUR WEBSITE AT www.oshoa.org.

IF YOU HAVE NOT RETURNED YOUR WRITTEN CONSENT TO AMEND THE DECLARATION, PLEASE DO SO. IF YOU NEED THE FORM, PLEASE EMAIL http://www.admin@oshoa.org

JOIN US TODAY ON FACEBOOK: Home Owners of Ocean Sands

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The Governance Committee

Al, Rick, Jeanne, Jim, Chris, Robert, Greg, and Dennis