A gate fee lawsuit filed against the Sea Pines Resort Homeowners Association has prompted concerns about the lack of financial transparency.
Gate Fee Lawsuit Goes to SC Supreme Court
As visitors enter the gated Sea Pines Resort, many wonder about the purpose of the $9 entrance fee. Resident Dana Advocaat shared this curiosity. Her quest for financial transparency has become a prolonged legal battle, now reaching the South Carolina Supreme Court.
Despite two court rulings in her favor over the past four years, Advocaat has yet to gain access to documents detailing how her community uses this significant revenue source.
In March 2020, Advocaat, a seasoned Realtor in the Hilton Head area, filed a lawsuit against Sea Pines Community Services Associates, Inc. (CSA) after they denied her request to review the gate fee agreement. This agreement outlines the visitor fee structure and how the funds are spent.
In 2023, the CSA collected $4.3 million from these daily fees, which comprised about 20% of its annual revenue.
Controversial Amendments and Lack of Transparency
Historically, Sea Pines homeowners could request access to the gate fee agreement. However 2018, the CSA quietly amended the agreement, raising the daily gate fee from $6 to $8 and denying members’ requests to review the document. The amendment, leaked in mid-2018, led to accusations of secrecy and a petition against its adoption.
By 2020, the gate fee had increased to $9. The current bylaws allow the CSA board to raise these fees further with Sea Pines Resort’s approval. Advocaat is seeking access to the gate fee agreement and other financial records to ensure accountability and prevent potential misappropriation of funds.
Advocaat emphasized that while property ownership in Sea Pines is individual, the community is intertwined with commercial interests. She pointed out that these commercial owners have significantly influenced the CSA, leading to decisions that favor the commercial sector over the residential community.
Court Rulings and Ongoing Appeals
In court, the CSA argued that the 2018 amendment was not a bylaw and, therefore, not subject to the state’s open records law for nonprofits. South Carolina courts have largely disagreed with this stance.
Ian Ford, the Charleston-based trial lawyer representing Advocaat, highlighted that the case revolves around ensuring transparency for the members and holding the board accountable. These are fundamental principles of nonprofit organizations.
In September 2020, a circuit court judge ruled in Advocaat’s favor. The judge affirmed her right to inspect the gate fee agreement under the state’s Nonprofit Corporation Act. The CSA was ordered to cover Advocaat’s attorney fees if she prevailed.
After losing in Beaufort County circuit court, the CSA appealed to the South Carolina Court of Appeals, which again ruled in Advocaat’s favor in February. The CSA has petitioned the South Carolina Supreme Court to review the case.
Ford explained that the South Carolina Supreme Court will have options. The court could choose not to hear the case, allowing the Court of Appeals ruling to stand or decide to take on the case if the justices have further questions.
Broader Implications and Future Steps
Advocaat views this gate fee lawsuit as just the beginning. She believes that gaining access to the gate fee agreement could lead to full transparency regarding the CSA’s financial decisions.
Advocaat expressed that she and others want to investigate several issues further. However, she believes that obtaining a ruling on the gate agreement is crucial, as it could uncover details about other agreements within the community.
The outcome of this case could have significant implications for Hilton Head, where 70% of the land is controlled by privately owned neighborhoods like homeowners associations (HOAs). Residents frequently clash with these organizations regarding overspending and transparency. In June, for example, Hilton Head Plantation residents protested a decision limiting access to key committee meetings.
According to Ford, residents of these private communities are often denied access to financial records despite likely having a legal right to them. The power imbalance between real estate corporations and individual residents makes it difficult to challenge these decisions.
Ford noted that it’s uncommon for members to invest the time, money, and effort needed to enforce their rights in court. Few cases like this exist because it’s challenging for an individual to take on a powerful, multi-million dollar organization over a matter of principle. He commended Advocaat for doing just that and believed her fellow citizens should recognize her efforts.
A Prolonged Fight for Transparency
As the gate fee lawsuit extends into its fifth year, Advocaat remains hopeful, confident that the law is on her side.
Advocaat expressed surprise that, despite filing the lawsuit in 2020, the issue remains unresolved four years later. She emphasized that the lawsuit is straightforward, with no accusations against anyone, simply asserting the legal right to access the gate fee agreement.
