Last Updated April 18, 2022
A: The purpose of PB Community Advocates is to promote transparency, responsible governance, and a great experience for all homeowners in Palmetto Bluff. Like so many other Palmetto Bluff homeowners, the PB Community Advocates have become increasingly concerned about the future direction of this special place, and they gathered to support this common purpose.
A: More than two years ago, a concerned group of Palmetto Bluff homeowners began meeting to digest unusual and unexpected changes that the Developer was contemplating. The group’s strong opinion was that many of these changes were unreasonable, conflicted with the Governing Documents, and could be illegal.
As these homeowners delved further, the initial concerns ballooned into many potential problems that could affect every resident of Palmetto Bluff – both as homeowners and as “members” of the Palmetto Bluff Club.
The acquisition of Palmetto Bluff by private equity investors in June 2021 compounded the previously identified issues. Unfortunately, it seems the current Developer, South Street Partners (SSP), views Palmetto Bluff mainly as a short-term transaction. With potential plans to sell the hotel in as little time as three years and a vision to exit from Palmetto Bluff by selling to another investor within eight years, unsettling questions regarding the management and vision of this pristine community are at an all-time high.
Many homeowners appear to be increasingly concerned that the Developer is trying to extract as much money from property owners as quickly as possible. Perhaps this is part of a near-term strategy to maximize its eventual profit from the sale of some, or all, of the Palmetto Bluff assets – regardless of what will be left for the homeowners. The community may not survive the spreadsheet gymnastics expected of SSP by Henderson Park, the United Kingdom-based firm that holds 90% of the investment in Palmetto Bluff. Therefore, the PB Community Advocates believe there is an urgent need for this group and others to seek resolutions for these issues.
A: The initial concerns centered on possible changes to policies that would affect homeowners in the Charter-defined designated rental areas (DRAs). As the group of neighbors quickly grew through word-of-mouth, homeowners undertook many efforts to engage with the Developer and the management team of Palmetto Bluff to discuss these issues. Group members committed to each other and the Developer to explore a mutually-beneficial solution that was in the best interest of the community. Some efforts were formal (from structured meetings all the way to two mediations with a professional mediator) and others were informal and personal (from coffee chats at RT’s Market to one-to-one calls with the Developer’s senior-most executives). In the end, these good faith overtures yielded little substantive response – and no real action – from the Developer.
The Developer’s rationale for the contemplated changes created significant questions. The search for answers uncovered issues much broader than the initial rental-oriented ones. For example, the Palmetto Bluff Club “Joining Fee” might be an illegal transfer fee; the Governing Documents appear to create an unlawful community structure; and the Club and Preservation Trust resources may have been misused.
These issues and others are the subject of a lawsuit, which alleges significant improper governance, financial and trade practices that harm all homeowners, and violations of several South Carolina laws. The issues, if left unchallenged, could have implications for property values, all members’ experience, and could put the long-term financial viability of the community at risk.
Last Updated April 21, 2022
A: The Developer should answer this question. Solving for these types of problems requires a long-term commitment and stewardship to Palmetto Bluff’s land, community, and promoted lifestyle. One would assume that any developer at any luxury property, and the financiers backing the investment venture, would carefully weigh how much new capital they’re willing to inject when a near-term exit may be on their horizon.
A: This is a fair question. We share your desire to get an answer. SSP held a town meeting on February 17, 2022, but, as an example, did not notify homeowners of the upcoming houseguest policy, including expensive fees for unaccompanied guests. They also did not surface the prohibited use of Club facilities during peak holiday times for these guests (even though this use happens in lieu of owners being at the residence), nor the rules that would seem to effectively eliminate VRBO and third-party managed short-term rentals.
A: These changes may be news to you because the Developer apparently did not provide notice to all property owners. A key issue is the potential immediate decline of your property’s value compared to where it would have otherwise been. Properties in DRAs sell for premium price because they can be rented. The area’s sales data shows this.
DRA homes that are not Montage-managed have now been deliberately cut off from almost all key amenities. Unlike other large communities in the region, such as Kiawah Island, Palmetto Bluff does not have a public beach or public golf courses for guests to use. Thus, rentals here have relied on reasonable access to restaurants, a pool, and basic amenities – especially given that the typical profile of DRA renters is a young family with small children. At stake is both the expected loss of rental income and the possible sudden loss in property value.
A: All of us are curious as to why the Developer would not be interested in DRA rentals continuing. DRA rentals are a vital pipeline of prospects for the Developer’s goal of selling as much real estate as the Developer can before it sells all or parts of Palmetto Bluff.
Most current homeowners rented at some point before buying. This is how most of us fell in love with Palmetto Bluff. These changes are perplexing. According to the area’s real estate sales metrics, properties in communities with transient guests transact at a premium compared to other truly private club communities. Minimizing transient guest visits seems counterproductive to monetizing the value of the remaining undeveloped real estate and to supporting premium property values.
A: The group has been in touch with elected officials and civic leaders about all these troubling issues that are changing Palmetto Bluff. We are also very concerned about how the Developer’s sudden, unilateral decisions for the DRAs will affect the small business ecosystem of Bluffton. The DRA rentals drive significant and meaningful revenue to the local businesses – and this revenue might soon evaporate.
The DRA homes support numerous property managers, housekeepers, maintenance operators, transport services, and other residential service providers. In turn, the DRA rental guests buttress many other businesses in the local community and throughout Beaufort County. These small businesses could face deep financial harm and, in many cases, closure with the possibility that many employed citizens will lose jobs that they love and rely on.
The opportunity for gainful employment for local citizens was always part of the arrangement between Palmetto Bluff and the Town of Bluffton. Yet, these new DRA policies may have the adverse effect.
A: The Palmetto Bluff Neighborhood Association (PBNA) is a neighborhood association that also looks out for the best interest of our community. The mission of the PBNA is to “work together to ensure that Palmetto Bluff remains the very special place that we call ‘home’ for generations to come by promoting transparency, communication, and education.” Our group strongly supports this cause, and we encourage all homeowners to join in their important mission.
PB Community Advocates is separate from the PBNA. Yet, we greatly appreciate our healthy and open relationship with PBNA’s leadership.
A: The Member Advisory Committee provides input to the Developer but has no authority or vote in the direction of the Club or Community. We encourage all homeowners to reach out to the Member Advisory Committee with their concerns now and in the future. (updated 4/21/2022)