Sand Dollar Village POA says developers cut off services, amenities to homeowners following a 2014 restructuring of the Master Community Association
By Deborah Goonan, Independent American Communities
In some parts of the U.S., local governments are fond of approving developement plans for large scale common interest communities with thousands of homes and an elaborate array of amenities.
Millville by the Sea, Sussex County, Delaware is one example. Conceived in 2005, Millville by the Sea had grand plans to build 3,000 beach homes, divided into several phases or Villages.
The concept was to create one grand, but unified, master-planned resort community, just four miles from Bethany Beach.
To date, according to the Millville by the Sea website, about 400 homes have been built at Millville by the Sea, in four phases. The current assessment for the Master Community Association (MCA) is $104 per month, in addition to separate monthly fees payable to each Village in the community. MCA dues cover costs to operate the Lifestyle & Activity Center, which consists of a pool, playground, lake, and community gathering places.
However, according to a lawsuit filed in Chancery Court in July (2018), Millville by the Sea is a community divided.
Village 1 Millville by the Sea Property Owners’ Association (POA) — consisting of homeowners of the Sand Dollar Village — is suing the Millville by the Sea Master Community Association and other developer-controlled enterprises, as well as three former board members. The POA claims that their members are being overcharged for access to the amenity center, in violation of governing documents. The POA also alleges that the developer is no longer funding maintenance of Sand Dollar Village roads, also a breach of contract.
What happened? Homeowners aren’t quite sure.
Construction of the first phase of Millville by the Sea, the 250-dwelling Sand Dollar Village, began in 2008. At that time, early buyers say they agreed to community governing documents that entitled them access to all amenities, in exchange for specified monthly assessments. The agreement also stated that the developer would maintain the roads — including snow removal — up until the time when the roads would be inspected by the City, approved to meet building codes, and then transferred to the homeowners’ association.
However, over the course of a decade, the community has seen several changes in the development team, affiliated home builders, and management. In 2014, the MCA was reportedly ‘reogranized’ and ‘severed’ from the POA. POA members were presented with a new contract that required a 10% increase in fees to the MCA. Members who refused to pay higher assessments would no longer be permitted to use the Lifestyle & Activity Center.
When members of the POA board objected to the sudden fee increases and began asking to review financial records following developer turnover, the lawsuit reportedly states that members of Sand Dollar Village were provided with different color wrist bands when entering the pool.
POA members also allege that hundreds of thousands of dollars of its money is unaccounted for. The POA accuses the developer of funneling Village 1 dollars to services for other Villages, and to cover costs of common amenities that benefit the entire community.
Additional details are reported from two sources below.
Millville By The Sea residents sue developers for management, amenity issues
Sara Swann, Salisbury Daily Times Published 9:00 a.m. ET Sept. 11, 2018
The Millville By The Sea Property Owners Association, Inc. has filed a lawsuit with Delaware’s Court of Chancery against the developers for issues involving access to amenities and property management.
The five board members of the POA filed the lawsuit on July 23 as a last resort, after about 18 months of attempts to settle the issues were unsuccessful, said Wally Bartus, president of the POA.
“First and foremost, the board and residents’ desire is to have one Millville By The Sea community, rather than this polarized structure that has evolved,” Bartus said.
Sue Laur, community manager of Millville By The Sea, said she could not comment on lawsuit since it is ongoing.
Millville By the Sea property owners file suit against developers
Thursday, August 30, 2018 – 6:27pm
By Kerin Magill
Staff Reporter, Coastal Point
Editor’s note: This article has been updated with a response from W. Craig Havenner, president of The Christopher Companies. Havenner is one of the parties named in the lawsuit.
A homeowners’ group in the Millville By the Sea development is suing the community’s developers over numerous issues involving use of community property, financial issues regarding use of the funds belonging to the group and other matters.
The suit, filed in Delaware Chancery Court on July 23, lists the Millville By the Sea Property Owners Association Inc. as the plaintiff; and Millville Town Center LLC, Millville Seaside Properties LLC and Millville By the Sea Master Community Association Inc. as defendants.
Also named as defendants are three individuals — Charles D. Ellison, Pamela Wiles and Craig Havenner — directors of the Millville By the Sea Property Owners Association from 2010 to 2016. Havenner was also president of the Christopher Companies, one of three home builders who have been associated with the project.
The 40-page court filing was obtained by the Coastal Point this week. The document lists 14 counts in which the Millville By the Sea Property Owners Association is seeking redress.
Problems with large scale community associations
Having once lived in a large scale association-governed community, and having learned about dozens of others in the U.S., it’s obvious that dividing communities into several separate neighborhoods or villages creates unhealthy rivalries and internal political battles.
Think of master planned community infighting as sibling rivalry.
It’s not uncommon for several children compete for the attention of their parents, especially when a parent treats a favored child better than the others. Or course, favoritism doesn’t sit well with the non-favored sisters and brothers, so the children begin to question the authority of the parent and often end up fighting amongst themselves.
Developers tend to favor Villages in new phases of construction. After all, that’s where they still have lots to sell and homes to build. Once a phase is completed, once control and accumulated financial liabilities are handed over to the homeowners’ association, the developer and affiliates naturally turn their attention to the next phase or phases under construction.
And when developers decide to change the basic rules of the common interest community game, favoring new residents over existing ones, homeowners are often shocked and angry at the unfairness of it all.
When a ‘child’ or Village Association objects to new rules or charges, dares to question the authority of, or talk back to the ‘parent’ or Master Community Association (MCA), like a bad parent, the MCA might inflict pain with inappropriate discipline, in an attempt to encourage compliance.
The results can range from arbitrary enforcement of petty rules to downright nasty legal battles over The Money.
In Millville by the Sea, homeowners in Sand Dollar Village say they want to be treated just as well as homeowners in three newer phases still under construction.
The developer denies the POA’s allegations.
Long term developer control of private governments
The truth is, the Covenants, Conditions, and Restrictions (CC&Rs), which homeowners “agree” to, upon taking title to their homes, often contain provisions that give the Declarant (developer) legal rights and powers to amend governing documents, including the right to raise assessments without consent or vote of homeowners.
Usually, a developer controls the Master Community Association for many, many years — at least as long as it takes to complete multiple phases of development.
Consider this: It has taken ten years to build 400 homes in Millville by the Sea — average of 40 homes per year. At this rate, the remaining 2,600 homes might be completed in 65 years.
And that assumes that a developer will actually complete Millville by the Sea as planned. Chances are, that will never happen.
So we can expect the development plan to change several more times in the future. And with each change, there’s bound to be some friction.