No. 5 News Story of the Year: HISID spends the year in lawsuits, opts for another one

Tuesday, January 1, 2013

HOLIDAY ISLAND -- The Holiday Island Suburban Improvement District had its share of problems in 2012, but the most vexing, perhaps, were that the district was contending with two lawsuits against it for most of the year and then agreed at the end of the year to enter into a third suit, this time as the plaintiff.

The first suit, actually filed in late 2011 by the Table Rock Landing Time Shares Association, was also filed against Holiday Island Development Corporation.

The suit contends that HISID charged excessive assessments, charging 10 times the amount of an R-1 assessment for each of TRL's 28 units, over a 12-year period. In actuality, the 10x formula was in place a lot longer. In August 2010, developer Tom Dees told the board that after the time shares were built in 1984, "under a gentleman's agreement," they agreed to pay the 10x assessment formula. In exchange, time share owners and their extended families were able to use Recreation Center amenities for free during their weeks. That was done for 14 years, and then in 1998 was formalized in a five-year contract, which was not renewed, although its terms continued to be observed. In 2010 it changed when HISID instituted swimming fees for all, and TRL questioned why they should pay the 10x assessment formula if all property owners were treated the same.

TRL's lawsuit complains that time share owners are being unfairly assessed when the legal status of their ownership is the same as an R-1 dwelling for taxation/assessment purposes, as the tax on an R-1 dwelling is the same regardless of whether there is one owner on the deed or a hundred owners. Thus, the suit accuses HISID of illegal zoning by setting a different classification for time share owners.

Also at issue is charging time share owners amenity fees not as property owners but as guests and not allowing time share owners to use amenities because the TRL board did not pay the full assessment in 2011 and 2012. The portion of the complaint was settled when the judge ruled that until the full matter is decided, time share owners are to be treated as property owners, allowed to use amenities and charged property owner rates.

The TRL lawsuit is asking for $1.9 million in reimbursements and legal fees.

Two mediation attempts to settle this matter, along with a lawsuit brought by David Bischoff, have so far failed, and it looks as though the suit may go to court.

However, Dees, who also sits on the TRL board, said recently he believes the TRL lawsuit will be resolved soon.

In August, property owner David Bischoff sued HISID over the new Assessment of Benefits, completed in 2011, which set a new assessment rate for 2012. The suit contends the process and method were illegal.

The method does not allow assessment based on property owner usage of improvements or value of parcel, but only on accrued benefit to each lot. The filing process was also illegal, the suit states, because it was not filed in the time prescribed nor in the correct courthouse.

The suit asks for a judgment that HISID violated state law and for HISID to recalculate the assessed benefits for each lot.

A third lawsuit, which was approved to be filed by the HISID board in December, will be against Carroll County over billing the district for taxes on quit-claimed and foreclosed lots in the district's possession. Attempts with the county assessor to have such taxes exempted have failed.

The district does not have funds budgeted in 2012 or 2013 for these lawsuits.

Beyond these lawsuits, the HISID board is likely to continue discussing and seeking legal opinion as it enters the new year on several questions that arose in 2012. Because Holiday Island is a suburban improvement district, there are legal limits on what it can do. Several unresolved issues that resurfaced in 2012 were whether the district can get into marketing and real estate sales, replatting and zoning of lots and parcels, annexation of property and whether it can offer memberships and fees for regular use of its amenities to non-property owners.

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