The following is an e-mail that was sent by Irwin Seitelman to Bernie Amero in response to the previous point/counterpoint exchange regarding the News Bulletin published on BaywindsLife©.

Bernie,

As indicated by our previous exchange of viewpoints, I assumed that were we to move forward with the purchase of the clubhouse, that the increase in our payments to the Master Association and the Clubhouse, would amount to 14%.  In that prior round of viewpoints, the 14% seemed to be a given. 

When we attended the Baywinds community informational meeting held at the Clubhouse, various numbers were bandied about, and the 14% increase you and I wrote about, though large, would fall within the extremes mentioned at that meeting.  Though no hard and fast numbers were stated, residents of Baywinds who try to be “in the know”, use 14% as if it were cast in stone.

On Monday, June 13, I returned to my home in mid-afternoon to find a message on my telephone answering machine from John Mikus, Board President of The Estates and a member of the Board of Presidents currently negotiating the purchase of the Clubhouse.  He requested that I return his call.

As he did not request that I keep the nature of the conversation confidential, I am providing the information below to allay the fears of homeowners fearful of a huge increase in our dues, as a result of the purchase of the Clubhouse.

John stated that the 14% increase spoken of was a mathematical error.  In reality it will be a 7% increase.  What was the error that brought it to 14%?  As any increase will affect the Master Association dues as well as the Clubhouse dues, and each is to rise 7%, someone who has forgotten their early schooling in arithmetic ADDED the 7% plus 7% to get to the 14% we have all been speaking of.  Obviously an increase of 7% in each of those two dues is a total increase of 7%.  That error, 14%, is what we’ve been hearing and repeating, instead of the correct figure of 7%.  John hoped the above would put to rest the fears of the homeowners.

Irwin Seitelman

The following is the e-mail reply from Bernie Amero to the above e-mail from Irwin Seitelman.

Irwin,

Contrary to what John Mikus told you that the 14% increase was an error and that the increase will be 7%, Lennar has confirmed the calculation for me. I will attempt to demonstrate to you why the 14% is correct and John Mikus' 7% is incorrect.

We all currently pay $66.67/month in master association dues. Given that this number is based on the monthly budget being divided by 1168 homes, one can easily calculate the monthly budget for the community by multiplying the $66.67 by 1168 homes. The number comes out to be $77,870.56/month.

Now we have to recalculate the monthly fee that each of us pay by dividing this number by the number of homes. Because POD I will have only 58 homes rather than the originally planned 144 condominiums, the divisor should be 1082 (i.e., 1168-144+58) which will be the final number of homes once Lennar finishes POD I and builds the additional 2 homes in Regatta Cove where the sales office parking lot now exists.

If you divide $77,870.56 by 1082 you come out with $71.97/month per home not the $76.19 reported in the Harbour Cove minutes. This would represent a 7.9% increase which is what John Mikus is trying to get you to believe. What he is not telling you is that, because Lennar won't pay the monthly fees for the 58 homes on POD I nor for the 2 homes yet to be built in Regatta Cove or a total of 60 homes, the divisor can't be 1082 but must be 1022 (1082-60) as correctly reported in the Harbour Cove minutes.

If you divide $77,870.56 by 1022, again as correctly reported in the Harbour Cove minutes, you come out with the reported $76.19 or a 14.3% increase. voila

John is either providing misinformation to you or doesn't know what he is talking about. Either way, it does not bode well for our community to have people like John in the position he is in. Also, if the number was an error why didn't Karen Israel and Joe Cabano respond to the e-mails sent to them requesting clarification before the news bulletin was published on the website? Also, why hasn't any President seen fit to correct the record after the 14% increase was published on the website? I'll tell you why. The increase is real.

How do I know this? I spoke to Sharon Caputo and she told me that Lennar will not be paying any monthly fees for the 60 undeveloped properties after transition nor will it fund any deficit resulting from any shortfall caused by this. How else could the Presidents balance the budget than by using the 1022 rather than the 1082?

The real interesting thing is that I cannot find in our documents any basis to support Lennar's position that they don't have to pay for the 60 undeveloped properties. Let's say 5 years from now one of the 1082 homes is destroyed by fire or a hurricane and it takes a year to rebuild. Should the board recalculate the budget by dividing by 1081 homes until the destroyed home is rebuilt? Although it would be a nice thing to do, I think not. So why are these Presidents so willing to accept Lennar's position that it will not pay for these undeveloped properties. Again, I can find no support for this position in the documents.

I'm sure if confronted by this, John will say that the increase in the fees due to these 60 homes is temporary and therefore should be factored out of the discussion as to how much our fees will be increased.

Well had Lennar been permitted to proceed with the 5-story condominiums, we would not have hit the trigger point of 90% of the homes being sold until the construction of the condos was nearly completed. This would mean that 1052 homes of 1168 would have to have been closed on before a 90 day clock to transition would start. How many condos of the remaining 116 condos do you think could be sold in those 90 days? Quite a few. By the time of transition, there would only be a handful of homes left to sell and there would be no material need to redo the budget based on the fact that a few homes were not yet sold (i.e., we probably would never have to have paid for the unsold properties and could have avoided this additional >7% increase).

So when you add in lawyer and engineering fees, insurance, closing costs, reserves, etc. it is more than likely that the increase will be in excess of 20%. Now our Presidents are smart enough not to do this increase all in our fees. They will distribute this between fees and one or more assessments. If they are smart, they will make sure that the fees only increase nominally (i.e., well under 10%) and bill the excess in one or more assessments. This way they will be able to claim that BaywindsLife© acted irresponsibly in reporting the 14% figure.

It is also conceivable that Lennar might yield to pressure and pay some or all of the fees due on the 60 undeveloped lots. All this only relates to the Master Association fees. How will the clubhouse fees be affected by these 60 undeveloped lots. Well Lennar told me back in April that, if we went forward with the purchase of the clubhouse, it would be willing to pay some or all of the cost of the purchase of the clubhouse that those 60 undeveloped lots would represent. Lennar was careful to exclude its responsibility to pay any portion of the remaining clubhouse fees for those 60 undeveloped lots (i.e., in effect, the homeowners would be paying the fees for those undeveloped lots until the homes were build and sold).

Bernie