HI 2012 Year in Review: HISID faced a tough year of changes and their aftermath
HOLIDAY ISLAND -- Holiday Island went through more major changes in 2012, perhaps, than in any year in the last 10 years, and those changes will no doubt affect the future of the 42-year-old planned community.
A shakeup of personnel and board members in the last year has had an as-yet untold impact.
The Holiday Island Suburban Improvement District started the year without a district manager, following the firing of Kevin Crosson at the end of November 2011. After an attempt by commissioners to take turns running the district, the board appointed former commissioner Boyce Williams to handle the day-to-day affairs.
In March, the board hired John D. Kennedy, a parks and recreation director, who lasted only four months before accepting a job in Topeka, Kan. Again rudderless, the board appointed community leader Donna Putnam to oversee the district while it again began a search for a new district manager.
That new manager, Gerald Hartley, was hired in August.
Now one year into their three-year service, the board's three new commissioners were joined in December by another new commissioner, Greg Davis, who won his seat, replacing outgoing Chairman Linda Griswold, by four votes over his opponent, Ron, Griswold's husband.
These four new commissioners and a new district manager will continue to be challenged by major decisions made in the prior year that were not of their making.
Following is a recap of the major issues the district faced during 2012, many of which they will continue to grapple with in 2013.
Two major lawsuits against the district, one filed in late 2011 and the other filed in 2012, center on the new Assessment of Benefits, which established a tiered assessment rate for improved and unimproved lots. These suits challenge both the legality of the AOB process and the assessment amounts. One of the suits, Table Rock Landing Time Shares Association v. HISID and HIDC, asks for $1.9 million in reimbursements over allegedly illegal assessment billing over a 10-year period.
After two failed mediation attempts, the district will likely end up in court in 2013 and may end up in appeals court as well. The district has no funds set aside in the budget for legal fees for these suits and no funds set aside should it lose the TRL case, other than its reserves, which will be wiped out should the judge grant TRL's reimbursement request.
For more information on these lawsuits, read our story here.
A third lawsuit, this time with the district as the plaintiff, will be filed against the county in 2013. Attempts by the district to have delinquent property taxes due on quit-claimed and foreclosed lots exempted failed with the county tax assessor. The district also does not have funds budgeted for this suit.
For more information on this story, click here.
Other legal issues:
Because Holiday Island is a suburban improvement district, many questions came up in 2012 about what it can legally do, especially in the areas of raising outside revenue. Challenges from commissioners and property owners alike were presented to the board when it began to develop a marketing plan for quit-claimed and foreclosed lots in its possession. The statute establishing a SID does not give the district the authority to market or get into the real estate sales business.
If the district cannot itself market these lots, it will have to come up with a plan, as a dispute with Holiday Island Development Corporation arose in 2012. Developer Tom Dees severed his contract with the district in February over the district informing him he would have to start paying assessments on lots in his possession for sale under the contract, which had exempted him from doing so. He quit-claimed 250 lots to the district, and attempts to negotiate a new contract failed.
Whether anyone else could market such lots remains to be seen. At a state auction of tax-delinquent lots in September, only two lots sold, bought by the same party.
The district was also challenged in December on whether it can legally make the amenities open to the public, with special membership fees for non-property owners, as a form of bringing in more revenue, The code states the district's amenities are for the use of property owners. Its 4-1 vote in August to make the campground open to the public may have to be rescinded if, after it obtains a legal opinion, it must restrict amenities only to property owners.
For more on this, click here.
The district was also faced in 2012 with a replat request by a property owner looking to develop a business plan under Resolution 184, passed in 2005. The question arose as to whether the district can replat lots as a SID, and it voted to deny the request. A related question arose as to whether the district could expand its boundaries when a nearby property owner requested annexation. That request was also denied.
Loss of assessments:
Although the district will end the year in the black, according to the budget, in 2012 the district filed more than $300,000 in foreclosure notices for delinquent assessments, which the district manager said will not be expensed. The projection to collect on assessments for 2013 is down by around 1,000 lots, which has raised questions about whether the district can collect enough in assessment to meet its obligation for debt service on the new wastewater treatment plant.
The auditing firm doing the 2011 audit told the district its accounting system is "difficult to navigate, pull information from and receive reports from," so the district went out for bids for new accounting software. Bids returned were much higher than budgeted for, and the district is continuing to look for a software package that will meet its needs.
More on the budget can be found here.
As of the end of 2011, the district had a 75-percent water loss between pumped and billed water. This loss is presumedly caused by undetected leaks from aging waterlines and service lines. Not only is the loss significant because of the electricity cost of pumping unbillable water, but because of the potential of having to replace pumps and electrical components due to more accelerated wear and tear, Hartley told the board. The district will try to develop an in-house leak detection and repair program, based on advice from a nearby regional water system.
The district's analysis of its water loss problem and the scope of leak detection needs can be found here.
How the district will handle these challenges in 2013 remains to be seen. So many of them depend on answers to questions about the legal limits of what the district is allowed to do. Some answers may cost nothing, if they are sought from the Attorney General. Others may strap the district financially if they end up being answered in court.