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March 16, 2019

Dear Sea Pines Property Owner:

Unfortunately, I find it necessary to be writing this letter to my fellow residential property owners. Over the past few weeks, several residential property owners have used emails, videos and Facebook postings to distribute false and misleading information about actions taken by your CSA Board of Directors. Not only is there false and inaccurate information in their messages, but this group continues to make personal false accusations against members of both the CSA and ASPPPO Boards, as well as non-residents and businesses in the Hilton Head Island Community.

This correspondence is intended to correct misrepresentations made about two recent actions the CSA Board has taken to help residential owners enjoy their personal investment in the Sea Pines Community. Those two actions were: (1) The Gate Fee Agreement and (2) the purchase of 14 Greenwood Drive, known as the Gallery of Shops property.

The Gate Agreement

The current Gate Fee Agreement was approved by the CSA Board, The Sea Pines Resort and the majority ownership of the Sea Pines Center in July of 2018. The new fee structure became effective August 1, 2018, and the terms of the agreement were provided to all owners. The allegations that the Gate Agreement is “secret” is not true. 

All financial terms of the agreement have been disclosed to the property owners by CSA President Bret Martin on numerous occasions. It has long been the policy of the CSA Board not to disclose actual contract/agreement terms as these agreements are between CSA and third parties and may be attorney-client privileged or contain others proprietary information. This is consistent with the practices of other similarly situated owners associations and state law.

Certain residential owners claim CSA is violating the 1974 Covenants by allowing a portion of gate fees collected to be used for marketing purposes by Sea Pines commercial businesses. That claim is simply not true. The 1974 Covenants provide that gate fees be used for community services. Business lands are part of the community. The Marketing “Fund” provides resources to promote marketing of commercial businesses operating within the Sea Pines community as well as for other related purposes. Just as CSA provides services to residential property owners including the restoration and rebuilding of Tower Beach, the purchase of equipment to pick up landscape debris throughout residential neighborhoods, the construction of roadways in residential neighborhoods, the marketing fund simply provides services to business land owners. The Gate Agreement also generates significant revenues to provide additional service to all property owners both residential and commercial.

The 2018 Gate Fee Agreement incorporates the terms of previous agreements which allowed the gate fee to be raised from $3.00 to $5.00 as well as from $5.00 to $6.00. Money for Trolley operations, a $65,000 contribution to a marketing fund and a $.20 contribution each for marketing and dredging related purposes. These terms have been part of the prior gate agreements and have been in place for years. Feel free to refer back to our previously provided communications from July 2018 for historical perspective:

The History of the Sea Pines Gate Fee and Summary of New Gate Fee Agreement ( Click here  to view the PDF)
Frequently Asked Questions Regarding New Sea Pines Gate Fee Agreement ( Click here  to view the PDF)

A new item in the 2018 Gate Fee Agreement was an annual $75,000 contribution to the Marketing Fund when the gate fee was raised from $6.00 to $8.00. This contribution will increase to $150,000 if/when the new gate fee rate increases to $9.00 (a total increase of $3.00) and it will increase to $225,000 if/when the gate fee increases to $10.00 (a total increase of $4.00).

Additionally, the agreement provided commercial tenants free access for 250 of their best customers. If commercial owners utilized 100% of this right, some 17,500 vehicles would be provided free access into Sea Pines each year. Through the first seven months of the program, only 75 passes have been requested.

A review of the performance to date is helpful. CSA has lost $600 in gate fees (75 x $8.00 = $600) but have added $219,210 in new revenue from the $2.00 gate fee increase.

Further, it should be noted that the Gate Agreement in 2019 will generate over $560,000 in new revenue while providing a $75,000 contribution to the Marketing Fund from that revenue. Is there a business out there that wouldn’t benefit from this arrangement? The Board believes this as a good investment for all property owners.

Also please note that without this new agreement, gate fees could not be increased. Residents benefit significantly from gate fee revenue. The proof is in the fact that residential assessments, as a percentage of our total CSA revenues, have steadily declined over the years. Current residential property owner’s assessments are approximately 50% of total revenues.

Gallery of Shops Purchase

Despite what some residential property owners want you to believe, CSA’s purchase of the Gallery of Shops property in May of 2018 was not accomplished secretly, was not without proper due diligence, nor was it executed by a Board with conflicting interests.

For many years before I was elected to the CSA Board in November of 2013, residential property owners complained about traffic issues surrounding the Greenwood Gate. In recent surveys, residential owners identified this as the #1 issue to be resolved. 

Our Gate Configuration Task Force (made up of CSA Board, Commercial, Resort members and residential property owner representatives) reviewed proposals from previous engineering studies, but found no viable solution to this age-old problem.

When the Gallery of Shops building came back on the market in late 2017, the task force recommended the purchase of this building as a new pass office option. An option that had never previously been considered.

Oppositionists claim CSA paid too much for the property and that it was purchased without a professional appraisal. Further, that CSA failed to undertake due diligence.

Let’s set the record straight:
  1. The property was put under contract at a price below the asking price.
  2. The property was appraised and purchased under the appraised value. An appraisal was provided to CSA by a professional appraiser.
  3. The contract was extended several times so CSA could complete their thorough due diligence on the property.
  4. When the CSA Board announced the purchase of the building, at the request of the seller, the purchase price was not to be announced until the transaction closed. (The seller was protecting its interest should the sale not be finalized.)
  5. Upon closing, the purchase price was disclosed to the property owners, as well as a detailed site plan that indicated the intended utilization of the property. The property was conveyed with clear title, and CSA has a title policy insuring the purchase.

The final false allegation against the CSA Board deals with the accusation that there was a conflict of interest involving several CSA Board Members. The alleged conflict involves 3 CSA Residential Board Members and CSA Board Member Steve Birdwell whose wife works at Coastal States Bank. It also includes a false allegation against BNC Holdings, LLC, the Seller and Mr. Craig Bright.

Let’s set that record straight as well:
  1. It is suggested that a $940,000 mortgage existed in favor of Coastal States Bank and we 4 CSA Directors had a conflict. A review of the closing statement reveals that the loan to Coastal States Bank was $212,580.03 and not $940,000 purchase price.
  2. Because this loan was not of a size that would have risen to the Bank Board level, the Directors had no knowledge of the loan. Nor was it in default.
  3. The CSA Board resolution to purchase the property passed unanimously.
  4. The CSA Board does, in fact, have a Conflict of Interest Policy and Board members are bound by the SC non-profit law which also addresses circumstances which constitute Conflict of Interest for Non-Profit Board Members and a process in the event such a conflict arises. Here there was no conflict of interest.
  5. For a South Carolina non-profit corporation, a director conflict of interest is defined in South Carolina law as a transaction where a director has a financial or personal interest in the outcome. Banks like Coastal States Bank are in the business of making loans. The satisfaction and payoff of a mortgage secured loan is not necessarily beneficial to a bank and provides no benefit to stockholders or directors.

As I stated in my opening, the accusations and misrepresentation by a few property owners are disturbing and not healthy for our community. They also serve to create liability for defamation. The authors of these accusations supported candidates who were soundly defeated in last year’s Board elections. Despite these election results, they continue their efforts to derail future referendums with false allegations such as the ones I’ve addressed in today’s letter.

It’s unfortunate we have a few residential property owners who want to rewrite history. While our covenants aren’t perfect, they’ve still allowed us to become a successful 60-year-old community. Your CSA Board is working diligently within the laws governing Sea Pines to improve your Sea Pines experience. 

I want you to know your CSA Board understands and takes seriously our responsibilities to you and to the entire Sea Pines Community.

Thanks again,
Mark A. Griffith
CSA Board Chairman
Sea Pines Community Services Associates 
843.671.1343 | |