Jun 11 2010

Op-ED: Seabrook survey dodges key issues

By Glenda Miller

With just days remaining for Seabrook Island property owners to return their proxies in response to four referendum questions, residents also are being asked to complete the annual survey.

Conducted jointly by the Seabrook Island Property Owners Association (SIPOA) and the Seabrook Island Club (SIC), the questionnaire is divided into eleven sections, including sections on individual and household demographics. SIC members are requested to complete all sections of the survey while property owners who choose not to belong to the SIC may complete only the first three sections and the two demographic sections of the questionnaire.

Designed and analyzed in-house at a cost of approximately $3,000 to the SIPOA and probably another $3,000 contributed by the SIC, the sponsors urge every member of a household to participate, stating, “Your opinion is important to us!”

Although I completed the property owners’ portion of the survey, I was dismayed by what I consider to be a lack of substance and attention to key issues. If the feedback and opinions of property owners are honestly being solicited, perhaps some more appropriate questions may include the following:

1. Do you support spending $1.5 million to re-cut Cap’n Sam’s Inlet every 10 to 15 years?

1a. Do you support researching alternatives to re-cutting Cap’n Sam’s Inlet?

1b. Do you think funds should be used to limit natural changes caused by Mother Nature?

2. Do you support secret meetings for topics other than personnel or sensitive legal matters?

3. Do you support allowing a Board-appointed committee that meets secretly having the authority to spend $25,000 without publishing minutes or reports?

4. Do you think the times and dates for all committee meetings should be posted on the SIPOA website and interested property owners should be welcome to attend?

5. Do you think the minutes of all committee meetings should be posted on the website?

6. Do you support the Town of Seabrook Island, on behalf of the SIPOA, spending $6,000 for a consultant/lobbyist to advocate new road construction and/or improvements to existing roads when there is no federal, state, or local funding for these projects?

7. Do you support spending $6,900 to study the feasibility of additional bicycle paths?

8. Do you support spending $3,500 on additional signs warning people about alligators because the current signs fail to force compliance?

9. Do you support reducing the hours of operation for the Lake House? If so, please indicate the hours you recommend (this would be followed by proposed hours).

10. Do you think paying $25,000 is too much to spend to cull the deer herd?

11. Do you support disclosure of personal and professional affiliations of SIPOA Board members, including membership in the SIC, to avoid conflict of interest questions that may arise as a result of contracts and agreements?

12. Do you support the reduction or freezing of salaries of SIPOA employees to manage the budget during difficult economic times?

13. Do you support opening Seabrook Island and its amenities to property owners and rental guests from Kiawah Island or any other entity to market real estate?

14. How do you wish to use the Oyster Catcher property? (Choices could include closing the community center and the pool; closing one, but not the other; allowing the pool to remain open, but unheated; heating the pool for a specified period of time.)

15. Do you support having an impartial, professional firm validate ballots and count votes submitted during elections and referendums?

Prior survey questionnaires should have included the following questions:

1. Do you favor outsourcing security services? This question could have included information about an initial expenditure of $37,302 with projected cost savings over a specified period of time.

2. Do you support the SIPOA using a derivative swap to lock in an interest rate of 7 per cent on half of the amount being financed for the Horizon Plan if it results in paying more in interest because the loan cannot be refinanced at a lower interest rate during the 10-year period of the loan?

3. Do you favor allowing the SIPOA to use interest rate swaps to fix a portion (in this case 50 per cent) of the Horizon Plan financing? (This occurred about three years ago, and resulted in an interest rate of a little less than seven per cent and a “paper loss” of $599,000 in 2008, which was reduced to $367,000 in 2009. The paper loss should not be realized as long as the swap agreements are maintained and the SIPOA does not pay off or refinance for a lower interest rate the hedged portion of its loan for the term of the loan repayment schedule, in this case 10 years.)

4. Do you think the SIPOA should spend a maximum of $46,000 for playground equipment? If so, should this be funded over a period of several years?

A survey can be a most useful tool in obtaining opinions and feedback, however, it loses its value if the difficult questions are not asked, or if those questioned are not asked to comment on issues of importance and substance.

Consideration should be given to discontinuing the time and expense of the current survey unless it is redesigned with a focus on obtaining thoughtful responses to concerns that impact the community and its resources.

Yes it is a derivative swap that allowed us to fix 50% of the Horizon Plan financing at a little less than 7% 3-years ago. A good rate at that time! The other half is at a variable rate at 1.5 points over the 30-day libor. So presently with the combination of the two loan portions we are paying about 5% on the outstanding balance.

This figure represents a contingent liability that was set at $599,000 in 2008 and was reduced to $367,000 in 2009. It would only become an actual liability in the unlikely event that that the SIPOA prepays the hedged portion of the Horizon Plan loan.

Yes it is a derivative swap that allowed us to fix 50% of the Horizon Plan financing at a little less than 7% 3-years ago. A good rate at that time! The other half is at a variable rate at 1.5 points over the 30-day libor. So presently with the combination of the two loan portions we are paying about 5% on the outstanding balance.

There is no “policy” that addresses derivative contracts exactly, but if you are familiar with such financing animals you understand that the loss is a paper loss that is not realized so long as the swap agreements are kept in place for the term of the loan repayment schedule, in this case 10-years. Through the years the swap valuation could go up or down, but in the end it will be zero, so long as we don’t try to unwind the agreement early.

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