2014 ANNUAL REPORT - Hilton Head Plantation HHP Annual Report WEB.pdf · 2014 POA Operations - Administration The General Manager’s office is responsible for providing staff support

Hilton Head PlantationProperty Owners’ Association, Inc.

P.O. Box 21940, Hilton Head Island, SC 29925Tel. 843/681-8800 • Fax: 843/681-8801

www.hiltonheadplantation.com

Spring Lake Pavilion, built in 2012

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Hilton Head Plantation Property Owners’ Association, Inc.

2014 BOARD OF DIRECTORS

Terry Conway, President Members:Harold Meyers, Vice President Jerry Cutrer Tom Hoppin, Treasurer Pat Harlacher Ben LetiziaDoug Skelly, Secretary Michael Keskin Lois Wilkinson

STAFF:

General ManagerT. Peter KristianCMCA, LSM, PCAM®

Executive SecretarySharon P. White

Front Desk/ReceptionistTosha Suggs

Assistant General Manager/Director of AdministrationTodd LindstromPCAM®

Staff AccountantNatalie Keene

Records ClerkAngela Graves

Director of MaintenanceDavid Mills

Maintenance StaffErin Billingslea-P/TJames Mills-P/TLarry Turner-P/T

ARB ConsultantDick Wirth-P/T

ARB Administrator/Community RelationsBetsy Weppner

Community RelationsSpecialistMichele Chisolm

Director of ActivitiesChrissy Kristian

Assistant Directorof ActivitiesKeriann Ginter

CommunicationsCoordinatorDenise McAllister

Tennis ProKeith Ferda

Tennis ClerksBob Bruce-P/TGeraldine Fink-P/TDennis Malick-P/TRobert Wallace-P/T

Director of SecurityArt Benoit

Deputy Directorof SecurityCapt. Warren Gaither

LieutenantsJoseph FarmerVanessa GreenEdward Sutton

SergeantsTimothy HarrellWilliette LeeDonald Martin

OfficersCpl. Terrence BoydCpl. William BruceCpl. Tomika BusbyOff. Shawn FoxOff. Tiffany GadsonCpl. Randy GambleCpl. Raymond GibboCpl. Malcolm HorneOff. Chemaine JenkinsPfc. Grant MarcurellaCpl. Carl OlsonOff. Lashay ParkerOff. Charles PizarroPfc. Jerri SpragginsPfc. Seth StephensOff. Jessie Tyson, IIICpl. Luda John Wahlfeldt

P/T OfficersPfc. Matthew KleehammerCpl. Anthony Major

DispatchersCpl. Suzanne BennettCpl. Vera Ford

GOVERNANCE:Under By-Laws adopted in 1977, the HHPPOA is governed by an elected nine-member policy-making Board of Directors serving overlapping three-year terms, and an appointed General Manager.

PROPERTY STATUS (12/31/14):HILTON HEAD PLANTATION: 3,711 ACRES 72 MILES OF ROAD 88 LAGOONSFAMILY DWELLING UNITS: 4,120 UNDEVELOPED LOTS: 158 TOTAL: 4,278

SERVICES:Covenants Enforcements: POA Staff Electric: Palmetto ElectricRoad Maintenance: POA Staff Fire: Town of Hilton Head Island Fire Dept.Recreation: POA Staff Police: Beaufort County Sheriff’s Dept.Security: POA Staff Postal: US Postal Service Rural DeliveryLandscape Debris: Self-Service Debris Pile Telephone: Hargray Telephone CompanyBuilding Permits & Inspections: Water & Sewer: PSDHHP Architectural Review Board and Household Trash Collection: N/ATown of Hilton Head Island

For the past three years, I have been honored to serve the residents of Hilton Head Plantation as a member of the Board of Directors. Your Board is comprised of nine very bright, very dedicated property owners who give of their time to guide the HHPPOA through interesting times. And they have been interesting.

By the time you read this, hopefully, HHPPOA will be benefiting from the best cell phone infrastructure on Hilton Head Island. This project has been long, and at times torturous ― beginning in 2002 with the appointment of a Cell Tower Task Force, followed by the installation of the Distributed Antenna System (DAS), and culminating in 2015 with the enhancement of the DAS and the activation of a “monopine”. There has been a dramatic change in attitude over that span of time so that the great majority of our property owners enthusiastically supported the final phases of this project.

For almost as long, we have been discussing the future of the real estate just outside the Cypress Gate known as Salty Fare. After financial difficulties affected the real estate market on Daufuskie Island, that property stopped operating as an embarkation point to that island. Your Board of Directors and many residents were actively involved in shaping the final result which is now moving closer to a reality. The Town has agreed to the required rezoning to allow a sale of that property to a well credentialed developer of a retirement living complex. This will augment the facilities next door at The Cypress. Thanks to all who helped that project along.

I have to say a word about the Capital Transfer Fee, which a previous Board presented to the community and you overwhelmingly voted to implement some years ago. This fee is assessed on the purchaser of any real estate within our boundaries amounting to one-quarter (¼) of one (1%) percent of the purchase price. This accumulation has allowed the construction of a beautiful new Spring Lake Pavilion just three years ago. This facility is now fully paid for. Next on the horizon is a new swimming pool complex to replace the “aging beauty” (thanks to past president Dick Waltz for coining that phrase). Permitting has been completed and construction is slated to begin this coming fall with completion scheduled for next spring. Our neighboring communities are experiencing the same process of addressing an aging infrastructure, but do not have a funding tool to address necessary redevelopment.

President’s Letter to Property Owners

With all of these major initiatives underway, I am happy to report that our financial condition is stronger than ever. Our reserves and other mechanisms to respond to emergencies and other unexpected events ensure our continued viability which makes HHP the envy of our neighboring associations. Our auditors continue to validate these results with clean annual audits and no Management Letters, which are used to suggest improvements in our processes and controls.

Which brings me to my final point. We are blessed with the finest staff on the Island. From our General Manager to the Administrative staff to the Security force to the Maintenance staff to our hundreds of dedicated volunteers, I extend my sincere appreciation and thanks for jobs well done. Our General Manager, with his involvement in Town, State, and National governing bodies and associations, keeps us well informed on issues that could affect us all in a way that lets us help quash the objectionable or at least shape the final outcome. The Activities staff is constantly looking for ways to keep us entertained through diverse activities and programs for children and adults alike. Covenants and ARB diligently protect the ambiance of our neighborhoods through attention to the condition of our properties and the consistent application of the requirements in our governing documents. Security continues to perform their duties professionally and effectively. This year alone, there have been at least two resident lives saved through the quick action of our Security Officers. This has resulted in local and statewide recognition of their actions.

Again, thank you so much for allowing me to serve for the past three years, and huge thanks to all of the Board members who have served with me. It has been a pleasure, and I know the success will continue to be achieved.

Respectfully submitted,

Terry Conway, President

2014 POA Operations - Administration

The General Manager’s office is responsible for providing staff support to the Plantation’s Board of Directors and its committees. The Service Center maintains the records of the Board, its committees, and all of the Association’s legal documents. The General Manager’s office also provides oversight for all of the POA’s departments and affords guidance as needed. Overall coordination for your monthly newsletter (Plantation Living), the POA Website (www.hiltonheadplantation. com), and the Homeowner’s Welcome Packets come under the jurisdiction of the General Manager’s office.

During 2014, the Board continued its due diligence to ascertain if the next phase of the Spring Lake Master Plan could be moved forward. A concept plan for the Spring Lake Pool and surrounding area was adopted by the Board based on input from residents and the Recreation Committee. As a result of the Board’s work, a multi-generational renovation to the Spring Lake Pool will be bid, which will also include improved parking, pedestrian walkways, and a new entrance feature to the Spring Lake Recreation Area. This design concept, if approved for construction, will transform and enhance several recreational amenities within Hilton Head Plantation. All of the permits for the dock features associated with this project have been obtained from both DHEC and the Army Corps of Engineers. These types of projects were made possible because of the community’s vote to adopt a Capital Transfer Fee back in 2007. Without your support, this pending project, the new Spring Lake Pavilion, and many others would not be the realities we all have a shared pride in today.

The department also continued to work with the Trustees of the Hilton Head Plantation Conservancy Foundation to raise funds to benefit the Whooping Crane Conservancy. Over $14,309 was raised in 2014 with the present HHPPOA personnel continuing to absorb the cost of administering the work of the Conservancy Foundation. New signs depicting the indigenous fauna and flora were installed in the Whooping Crane Conservancy.

Also, via a joint venture with the Hilton Head Land Trust, a series of new educational signs designed by Naturalist Todd Ballantine were purchased and installed in the Whooping Crane Conservancy.

The POA’s Road Toll program, which was adopted by the Board in 2013 to aggressively pursue the collection of past due assessments from property owners that were more than two years behind in paying dues owed to the POA, continued to prove to be an exceptional tool. Each property owner bears the expense of carrying these delinquent accounts. The Board, in an effort to forgo the time and expense of foreclosing on these properties, chose to charge a toll for the vehicles used by these severely delinquent owners in order to motivate them to arrange for payment plans or deal with the inconvenience of paying a daily toll for their vehicles to use the Plantation’s roads and other services. In 2014, we continued to chip away at these long-term delinquencies and booked one of the best years for collections. This measure has been successful beyond expectations.

The Board proactively pursued the enhancement of cell phone and other wireless services on the Plantation by working with Crown Castle International to install a monopine that will profoundly improve these services. The Board also approved an upgrade to the Plantation’s Distributed Antenna System (DAS) which was driven by AT&T. This upgrade consisted of replacing five of the existing antenna poles with concrete poles and

2014 POA Operations - Administration (cont’d.)

installing two additional poles, one in the Dolphin Head Recreation Area and another on High Bluff Road between Oyster Shell and Jingle Shell Lanes. These upgrades aim to drastically amend wireless services from both a coverage and a capacity

perspective. Both of these projects are scheduled for completion during the first quarter of 2015.

We endeavor to keep Plantation Living crisp, topical, and pleasing to residents. In 2014, we once again published three color editions. Our advertising revenue was up significantly over 2013 surpassing the budgeted target.

A strong Accounting Department, bolstered by the oversight of the Board and the Finance Committee, continued to maintain HHPPOA’s excellent financial position as evidenced by the excess in revenue over expenses and the care in the management of the POA’s financial and other tangible assets.

A program to require guests to provide identification in the form of a driver’s license or other acceptable form of photo ID was continued. This procedure also insures that the person requesting the pass is the person whose name is on the pass. Keeping you safe is a primary goal, and although we can never guarantee that the Plantation will be totally crime-free, we do strive to take reasonable precautions to identify who is picking up a pass to enter the property and that they are legally driving on our roadways.

The Board worked diligently with representatives of The Cypress, the Town of Hilton Head Island, and the Bayshore Group to find a compatible use for the Salty Fare property outside our Cypress Gate. This long-term pursuit came to fruition in January

2015 when the Town of Hilton Head Island rezoned the Salty Fare property to allow for the construction of an upscale assisted living facility on the property.

In September 2014, Hilton Head Plantation was the lead host for the Community Associations Institute’s 2014 Large-Scale Managers’ Workshop, which attracted Community Managers from as far away as Dubai to tour Hilton Head Plantation’s facilities along with several other local communities. The workshop was a sellout hosting 120 participants. The entire POA staff worked diligently on the preparations and execution of this event. Staff members Todd Lindstrom, Denise McAllister, and Chrissy Kristian deserve special recognition for their work on the special event.

Our bi-monthly Coffees continue to be well attended and serve as an opportunity for the greater community, the Board, and residents to exchange information in an informal atmosphere. This format continues to be widely praised.

Providing you with quality and efficient services will continue to be the goal of the entire Hilton Head Plantation POA staff.

2014 POA Operations - Security

The Hilton Head Plantation Security Department cannot operate at its maximum potential without the support of the homeowners that we serve. Promoting and maintaining a safe community environment takes more than your Security Officers. No amount of law enforcement training can match the value of the eyes and ears of concerned community members who report suspicious behavior, safety hazards, and violations of law. This allows HHP’s Security Department to take a proactive, instead of reactive, approach to the safety and well-being of the community it serves. It is our department’s goal to be community-based problem-solvers. We have challenged our Officers to adhere to and maintain the highest ethical standards in administering services with your safety as their prime mission. We will continue to meet this commitment daily with courtesy, sensitivity, and constant vigilance.

The Security Department is responsible for providing many services to residents of the Plantation. The most visible is access control to the Plantation at three gates where approximately 12,000 vehicles are processed daily by our Officers. That totals over four million vehicles annually!

Protecting life and property, traffic control, keeping the peace, and the enforcement of State Laws, and the Plantation’s Rules and Regulations are some of the department’s other basic missions.

In December 2014, the Town of Hilton Head’s Fire and Rescue Chief Brad Tadlock presented two Officers of the Hilton Head Plantation Security Department with letters of Commendation for their heroic actions in saving the life of one of our homeowners. This event again has highlighted the fact that our Officers are well-trained and are here to make a difference.

Security Personnel patrol 72 miles of roads and amenity areas; additionally, they respond to and complete reports on lost, missing, and stolen property; respond to medical emergencies; inspect homes of residents who are away; provide animal control; respond to fire and burglar alarms; jump-start vehicles; assist residents who are locked out of homes or autos; provide gas for stranded vehicles; provide security checks of commercial areas after closing; and conduct health and comfort checks for the elderly.

Once again, during 2014, crime on Hilton Head Plantation was very low. This was due in part to the homeowners’ vigilance and the Board’s decision to add a third Patrol Officer to the night shift.

(above L-R) Lieutenant Vanessa Green and Sergeant Williette Lee in front of the new Dodge Charger patrol vehicles.

(above) Corporal Raymond Gibbo checks vehicles as they enter Hilton Head Plantation.

In 2014, our Officers logged a total of 152,955 miles patrolling the Plantation’s residential areas. Security Officers responded to 424 alarms from residential homes and businesses and, additionally, Officers responded to 3,769 calls for service from our residences and businesses. Included in these calls for service were 3 burglaries cases, 26 breaking into motor vehicles cases, 471 medical assists, 1,214 resident assists, 57 traffic collisions (3 were deer-related), 10 incidents of trespassing, 1 domestic disturbance, 7 cases of disturbing the peace, 19 cases of vandalism, and thousands of calls regarding animal complaints, improper parking, lost and found items, prowlers, and Covenant/Rules and Regulations violations.

Additionally, Security Officers completed over 31,954 security checks for our away-from-home residents and commercial properties. Over the last 12 months, 86 State and 221 Warning tickets were written for speeding to drivers on Hilton Head Plantation roadways for a total of 307 traffic stops. Security Officers issued 564 non-moving violations for such things as pets running at-large, RV’s/boats in driveways overnight, and illegal parking.

The Security Department reduced the deer herd by 50 again this year, and continued its very successful participation in the Deer Management Program, thus helping in the preservation of the natural habitat on the Plantation.

Reducing acts of vandalism and educating our residents about locking their doors when away from their homes and autos continue to be the priorities of the department.

2014 POA Operations - Security (cont’d.)

Awards were presented to the Security Officers above for saving the life of a resident who was suffering a heart attack. (L-R) Harry Meyers, Security Committee Chairman and POA Board Vice President, Sergeant Williette Lee, POA Board President Terry Conway, Private First Class Jerri Spraggins, and Security Chief Art Benoit.

Officer Shawn Fox (center) was credited with finding and saving the life of a resident who had become disoriented and lost. Lieutenant Edward Sutton (left) and General Manager Peter Kristian (right) recognized Officer Fox for his service. At the awards ceremony, Fox was promoted to Private First Class.

2014 POA Operations - Maintenance

The HHPPOA Maintenance Department regularly undertakes daily and weekly tasks such as grooming, lining, and minor resurfacing of our tennis and bocce courts, club and event set-ups, mulch deliveries, light audits, repairs and installations, including the low voltage uplighting at the main entrance. The building and assembling of complete mailboxes and repairing components of the same is an ongoing task. The Maintenance Department also assembles and installs all benches and bike racks with memorial plaques, all waste receptacles and doggie bag dispensers, and all traffic signs. Our staff has honed their wooden sign building skills utilizing our Terrco carving machine to make new street name signs when needed. Some of the signs built in our maintenance shop that you will see throughout the Plantation are directional such as Boardwalk signs at the Whooping Crane Conservancy, Use Turn Signals at the traffic circle, and Photo ID Required at each security guardhouse. Others include: No Parking, Handicapped Only, Don’t Feed the Alligators, just to name a few.

The Maintenance Department is responsible for day-to-day house-keeping and janitorial services at our facilities. Our full crew participates in our annual cleaning event in August when we powerwash all exterior surfaces high and low. Surfaces include roofs and gutters (if possible), fascia and siding, windows and doors, decks and handrails, and most hard surfaces including the pool deck. All wooden decks are resealed after cleaning with a water repellant.

Our talented staff provides us with the capability of performing many skilled tasks that would otherwise have to be outsourced to a contractor. This approach allows our staff to complete a wide variety of minor in-house services and repairs in carpentry, plumbing, electrical, and HVAC in a cost-effective manner. Some of our 2014 in-house achievements include replacing damaged wood siding at the POA Service Center, replacing the Plantation House steps, the wooden perimeter fence at The Cypress, and reinforcing the loose timbers at the Dolphin Head Recreation building and all boardwalks. Staff repaired water leaks in the ceiling at the Plantation House and repaired

the drywall ceiling. Our crews installed new water heaters at the Dolphin Head Recreation building and the Plantation House. Five irrigation backflow preventers were installed to our systems in order to stay in compliance with DHEC. Sub-surface drainage was added at the Spring Lake Tennis

facility. Our staff has successfully addressed all toilet and lavatory issues without the need for a commercial plumber, and we changed out numerous electrical outlets, light switches, and fixtures. Our HVAC equipment is cleaned and filters are changed regularly and we handle minor aerator electric control repairs.

Contracted maintenance projects in 2014 included 4,000 square yards of root intrusion road repair, milling, repaving, and restriping all of Santa Maria Drive, milling, repaving, restriping 1,525 linear feet

of Seabrook Drive starting at the Cypress Gate, and the restriping of numerous crosswalks, stop bars, directional arrows, and curb lines. The pavers at the Pearl Reef Lane cul de sac were removed and reused at the POA Service Center. The road bed was reestablished and resurfaced with asphalt.

2014 POA Operations - Maintenance (cont’d.)

Two Pine Island Beach mini-renourishment projects were needed and the Bluff revetment included grooming and reshaping the protective rip rap stone to maintain a tapered slope for functionality.

In addition to tree removal, our tree care provider trimmed low hanging limbs along Whooping Crane Way, Seabrook Drive, and Dolphin Head Drive including the Bradford Pear trees along the roadside and leisure path. During the fall of this year, we had them remove all of the encroaching limbs at the POA Boat/RV storage yard. They remove dead wood and any hanging limbs that are deemed hazardous on an annual basis at all of our amenity areas. Our grounds maintenance crew handle limb encroachment trimming along most of our secondary roads and intersections as well as our lake edges and common areas as needed.

Palmetto Coastal Landscape continues to be our grounds maintenance provider under the watchful eye of Rick Smith and his on-site manager Robert Hughes. In addition to his vigorous routine maintenance schedule, Robert’s responsibilities include scheduling and overseeing all annual flower changes, planting, pruning, and amending all plant materials including winter ryegrass, all irrigation troubleshooting and repairs, root pruning and roadside edging, bushhogging, drainage inspections/ditch cleaning, and repairs and maintenance of all POA vehicles. Mosquito fogger applications take place on the last Friday of each month from May through September between the hours of 11:00 PM and 7:00 AM.

The Town of Hilton Head Island’s stormwater management team has bolstered or replaced many of our drainage pipes and catch basins this year eliminating some of the flooding problem that we have had in the past. Areas include Sawtooth Court, Golden Hind, Lenora, Birdsong, Edgewood, and two areas on Oyster Reef Drive.

Sweetwater Lane drainage pipes were cleaned with a jet stream of water under high pressure to flush away sediment and debris in preparation for upgrades in 2015.

Other achievements include painting the POA Service Center and Security office, new curbing at various intersections, renourishing the sand at our playgrounds, replacing basketball hoops and backboards, and the installation of new gas and diesel dispensers at the POA maintenance fueling station.

Special acknowledgement and appreciation goes to The Avid Gardeners (TAG) Club for their beautification efforts at our garden areas and throughout the Plantation. We thank them for their expertise, skilled eye for detail, and the many plant and flower donations, which include fertilizers and soil amendments.

The goal of the Community Relations Department is to focus on maintaining residential properties and preserving the aesthetics of the surrounding natural habitat of Hilton Head Plantation. Our main objective is to protect the quality of life for residents and guests by assuring that the overall ambiance and natural environment of Hilton Head Plantation is maintained by the evenhanded enforcement of Hilton Head Plantation POA’s Covenants and Rules and Regulations.

Covenants

Covenant violations are reported by the Security Department, the members of the Covenants Committee, and property owners. The Covenants staff works with our homeowners in a cooperative manner to maintain their property and to encourage them to take personal responsibility for the upkeep of their property, which influences the Plantation community as a whole. Monitoring of our protective covenants involves many different facets, which fall into four basics categories: People, Pets, Parking, and Property.

During 2014, the Community Relations Department investigated and processed over 2,024 non-moving covenant violations. Of the violations reported, only 55 fine letters were forwarded to those residents who were non-compliant. The majority of violations were resolved through education and voluntary compliance. The department has placed emphasis on education to reach out to new owners and longtime residents in our community. As a result, non-moving violations have decreased throughout the years. The Covenants staff communicated with residents by forwarding letters and/or emails, phone calls, and, in some cases, personal site visits were made to address concerns. Our efforts to be more amicable and understanding resulted in a greater appreciation of our mission to sustain the quality of life for residents and their guests.

A lighter approach to Covenants compliance is featured in a monthly article in Plantation Living starring “Harry Heron” who is the Covenants Bird, “the voice of reason and compliance.” He often focuses on current trends and problems we have in our neighborhoods. Harry comments on day-to-day compliance issues and may offer solutions to our homeowners’ concerns. Harry will continue to comment on harmonious living by focusing on compliance with the leash laws, and residents and their guests being more responsible pet owners. Our commercial vendors periodically need to be reminded that all service providers need to purchase the required day passes, monthly, or yearly decal, even if it is just for an estimate. Compliance with this

requirement will eliminate the number of guest passes being used for commercial vendors and alert residents of how misuse of the Guest Pass policy can cause yearly assessments to increase. Harry also mentions the convenient amenities that are provided by the Plantation such as the landscape drop off area. This outstanding benefit provides a pleasant and easy way for residents to dump their landscape debris. This helps

to eliminate the illegal dumping on common property and open space areas. We hope you enjoy reading Harry’s column for updates and his monthly analysis and insights.

The Holiday Lighting Contest/Driving Tour features a wonderful display of homes decorated for the Christmas and Hanukkah seasons. The holiday spirit was alive and well again in 2014. It was a popular experience for our residents to share with their families and guests.

Our discounted yearly Realtor Decal ($25) is a success. Realtors are provided with an information packet that highlights the many different amenities to assist them when showing property within the Plantation. Also included is a welcome brochure for the Realtor’s prospective homebuyers.

The Covenants staff assists the Security Department with daily entries made into the Incident Report Log, gathers data for monthly reports, graphs, tracking trends, juvenile activity, researches, and gathers reports for pending cases, manages the Emergency Card Information database, and posts weekly Realtor Open Houses for compliance.

The Community Relations Department continues to communicate, educate, and work with homeowners. The task of demonstrating the value of sustaining our community, both aesthetically and functionally, is our ongoing mission. These practices and programs are focused on sustaining harmonious living and protecting and enhancing every member’s property values. The reasonable enforcement of our governing documents and arming and advising residents with equitable solutions to issues is designed to assure residents that their investment will continue to grow and be protected throughout the years.

2014 POA Operations - Community Relations

“Harry Heron” - the Covenants Bird

2014 POA Operations - Community Relations (cont’d.)

Architectural Review Board (ARB)

From the very beginning, the “natural environment” was the main attraction for homebuyers to purchase and call Hilton Head Plantation their home. The developer determined the overall land plan and infrastructure and then documented the regulations and covenants needed to guide development to meet this goal. One of the guiding regulations used to protect this primary asset are the Architectural Review Board’s Guidelines, which were established to ensure that development would proceed in an orderly, well-planned manner and in harmony with the natural environment. Every two years the Guidelines are reviewed and updated. The Guidelines protect the community from unattractive and irresponsible construction, thus enhancing the overall beauty and cohesiveness of the development, maintaining property values, and protecting the environment.

The responsibility of the ARB is to review, approve and/or disapprove all plans for improvements, accept property owners’ compliance deposits, establish and collect fees, and assess fines for non-compliance. The ARB consists of four volunteer members, an Architect and a Landscape Architect (both paid consultants), the Chairperson (a member of the POA Board of Directors), and Staff Administrator. The ARB meets on the fourth Thursday of each month. Submissions to the ARB are due on the fourth Monday of each month.

The ARB has seen an increase in home improvement requests to include permits for painting, window and door installments, garage doors, driveway repairs, tree removal, and installing new landscape material. Copies of these permits are filed away in the property’s house file.

During 2014, seven (7) new homes were started, of which five (5) were completed, and 436 major alterations were approved and have since been given a final inspection. The department issued 486 Building Permits, and 493 Tree Permits. The office responded to and acted upon over 5,000 requests for service and/or assistance.

The department continues to convert new house plans and renovation plans to CD-ROM. This is an effort to insure that in the event of a disaster, original house plans will be available for rebuilding. This program cuts down on usage of paper, is cost-efficient, and makes it easier for the homeowner to access their house plans via CD-ROM.

The ARB department manages the Right-of-Entry Program. Interested homeowners can participate by giving a deposit of $2,000, and filling out two forms for the bank to establish an escrow account. This account will be used to provide quick relief and prevent further damage to your home by placing a tarp over your roof, boarding up broken windows, and removing trees from the roof.

In addition, the ARB was involved in several large projects that will improve and provide the Plantation with better telecommunication and cellular service capacity and adapt new technologies for our residents which will entice others to move to our Plantation. These projects include:

• Monopine: A Crown Castle project located on Dolphin Head Drive was presented and given a final approval by the ARB in August 2013. The purpose of this project was to provide a stronger communication and telecommunication service for the Plantation. In the latter part of 2014, the required permits were acquired, the engineering details were finalized, and the project was able to get underway.

• DAS System Project: Sponsored by AT&T, consisting of updating five (5) of the original Crown Castle poles and adding two (2) more monopoles to provide better cellular service for the Plantation’s residents.

• Salty Fare Project: A project of Bayshore Retirement Partners is actively working with the Town to develop an assisted living facility right outside the Cypress Gate. After the rezoning is approved, plans will be submitted to the ARB for consideration and approval.

In all, the ARB department plays a proactive role in some of the decisions that are changing the direction of our community. Planning for the future is needed for survival in today’s competitive real estate market.

In 2014, the Activities Department introduced a plethora of new and exciting programs including a Mardi Gras Bingo Night in conjunction with Dolphin Head Golf Club, a Ladies Painting Party,

the Cheeseburger in HHP Paradise event with Rob Ingman at Bear Creek Golf Club, the “Honor Flight” Movie Night on Veterans Day, and a series of Calligraphy classes. We also partnered with the Port Royal Sound Vocals and offered three dinner show events – the “Doo-Wop Diner” at the Country Club of Hilton Head, “Food & Folk Night,” and “Showtime: Music from Stage & Screen.” Other annual events that continue to grow in popularity include the Cooking Live Series, the Caribbean Pool Party, the spring and fall Trash & Treasure Sales, as well as the spring and summer Concert Series with Rob Ingman, Deas-Guyz, and The Headliners.

During the year, we continued the tradition of our various holiday programs such as the Shamrock Shuck & Shag, the Easter Sunrise Service, the Easter Egg Hunt & Brunch in joint effort with The Country Club of Hilton Head, the HHP Day 4th of July Celebration, the Halloween Pet Parade, and the Children’s Halloween Party.

This year we also partnered with the Hilton Head Island High School NJROTC Unit to host the 9th Annual Veterans Day Observance Ceremony.

The year ended with the Children’s Holiday Party and the Holiday Hayride.

The lineup of new seminar topics for 2014 included social media, arthritis, investment mistakes, elder law, Alzheimer’s, and golf and its effects on your lower back. Also, back by popular demand, was a spring and fall Home Sense Series with The Home Depot. Other popular activities included a community blood drive with The Blood Alliance, the Kids’ Night Out, and the Teen/Tween Party with the GameTruck®.

This year we promoted our certified fitness instructors through a series of “Fitness Instructor Spotlights” in the Plantation Living newsletter to showcase the many different fitness classes we offer. The most popular classes continue to be Low-Impact Aerobics, Total Body Conditioning, Gentle Yoga, Total Fitness, Intermediate and Beginner Pilates, and Water Aerobics. We also continued to offer sessions of Chair Yoga and Qigong, as well as the 6-Week Fitness Challenge.

Numerous HHP families continued to support our “Kids Kamp” summer program; however, we experienced a decrease of 12% in total enrollment from 2013 to 2014. With the total enrollment dropping from 285 in 2013 to 251 in 2014, the weekly average enrollment also decreased from 141 in 2013 to 131 in 2014. The daily average enrollment also fell 12 spots from 100 in 2013 to 88 in 2014. We still offered Kids Kamp for eight

2014 POA Operations - Activities

2014 POA Operations - Activities (cont’d.)

Our next major project on the horizon is the new Spring Lake Pool and Boardwalk project. The permit for the dock and boardwalk was secured from the OCRM/DHEC in the fall, and we are hopeful that the project will continue to move forward into the bidding and construction phase in 2015 depending on Board approval.

Additionally, the POA continues to implement a Memorial Brick Program whereby residents can purchase a brick in memory or honor of a loved one who served in the military and have it placed in a special area in front of the flagpole. Residents may also choose to make a donation of various items such as a picnic table, park bench, or even plants/shrubs through our Memorial and Honorarium Program (MHP) in recognition of a friend or loved one.

Overall, the year was marked with an incredible amount of activities, memorable events, and rewarding accomplishments. Our volunteers and the POA-sponsored clubs continue to offer valuable contributions to this wonderful community with their donations and support of the POA, facilities, activities, special events, and landscape. We are very grateful for the generosity of these special people, and the department thanks the community for its continued support and assistance.

weeks, and the new weekly themes for 2014 included “Greek Week,” “Mission Impossible,” “Sweet Land of Liberty,” “Ship’s Ahoy,” “Movin’ & Groovin’ Week,” “Around the World in 80 Days,” “Game Show Mania,” and “Showbiz Week.” Special events this year included Greek Color Wars, a scavenger hunt, a pool party, a train show, a game show event, puppets by Millie, an ice cream social, a visit from the Hilton Head Island Fire and Rescue Department and their big red fire truck, an international potluck luncheon, and the End-of-Kamp Show.

The Spring Lake Pool was the place to be this summer as the approximate attendance during the pool season (April through October) was 22,684 – a 3% increase from last year, with the peak of 150 people at any one time. The more popular pool activities included Morning Water Aerobics and Evening Deep-End Water Aerobics.

In 2014, all three clubhouses – the Plantation House, the Spring Lake Pavilion, and the Dolphin Head Recreation Building received a portion of new furniture including new tables and padded folding chairs. The front and back steps to the Plantation House were also replaced. While both the Spring Lake and the Dolphin Head playgrounds received additional sand, the Dolphin Head playground also had new basketball goals installed.

rendering from Wood+Partners

In the POA’s continuing effort to provide residents with accurate, timely, and useful information, the Communications Department utilizes a variety of informational tools, including the following.

PUBLICATIONS

Plantation Living

Current news and historical information are provided to residents, the general public, and off-site property owners via the monthly newsletter. In addition to news, paid advertising is accepted. Advertising revenue for

2014 exceeded the annual target. We continue to receive positive feedback from advertisers and residents.

Multiple printing bids are periodically obtained in order to maintain the best cost for value to the POA. In December 2012, the department presented the first ever full color issue to HHP residents. In 2013 and 2014,

the department was pleased to produce three color issues each year (March, August, and December).

A substantial savings in postage costs was noted due to signing up new, out-of-town property owners to receive Plantation Living via email rather than automatically mailing the newsletter to them. The department continues to promote the viewing of the color newsletter online.

Annual Report

The Communications Department designs and coordinates the printing and distribution of the Annual Report and the Annual Meeting election materials.

WEBSITE: www.hiltonheadplantation.com

• Online Classified Ads – This popular feature on HHP’s Website enables residents to rent or sell items or services and to acquire bargains from their neighbors.

• Email Services – Since 2006, the POA has offered email notifications to residents for any or all of the four different services: Urgent Information (hurricane information, weather alerts, and other emergency situations); Safety Alerts (criminal activity and safety tips); and Plantation Activities (Coffee with Peter, Trash and Treasure Sale, Pet Parade, Holiday Lighting Contest, etc.). Also, part-time or non-resident property owners may opt to receive Plantation Living electronically rather than via U.S. mail. When they sign up for one or all of these email services, they receive periodic information about the topic selected. To date, over 2,200 residents have signed up (either via HHP’s Website or by visiting the POA Service Center) to receive these email notices. There are a few registered members from Canada, the UK, Germany, Mexico, Saudi Arabia, Switzerland, the Bahamas, and Bermuda.

The Communications Department periodically promotes the Email Services feature to residents – in Plantation Living, on the electronic announcement boards at both entrances, and as a Featured Event on the Website.

• Safety Alerts – In order to communicate swiftly to HHP residents, a Safety Information Alert is featured on the Website.

• Online Resident Directory – After the POA’s last hardcopy Resident Directory was produced in 2005, it was determined that the costs and time involved were prohibitive. Also, as soon as the Directory was printed, it became inaccurate since members’ information changes continually. To counteract these challenges, and to serve more Internet users, a decision was made to implement an online, member-generated Resident Directory in September 2008. Approximately 1,750 residents have joined thus far, with additional participants signing up daily.

2014 POA Operations - Communications

Electronic Community Announcement Boards

Working in conjunction with the Administration and Maintenance departments at the end of 2010, the Communications Department was involved in the introduction of the first digital announcement board at HHP’s Main Gate. A second digital board was introduced to the community in March 2013 at the Cypress Gate. Both signs have been met with overwhelmingly positive feedback. The department is responsible for uploading daily messages to the community.

Communications Projects

The department is involved in presenting information to the residents for various projects such as the plan to add a new cellular monopine in the community, as well as the Spring Lake Pool renovation project. Information is distributed via the Plantation Living newsletter, email notices, community meetings, and by other means.

Other projects included:

• Eco-friendly bags – The Communications Depart-ment arranged for Bishop Eye to partner with the POA to produce 2,500 eco-friendly grocery-type bags, with each partner’s logo on either side of the bag (at no cost to the POA). The bags will be given to new HHP homeowners and other residents at possible events such as the Coffee with Peter.

• HHP Street Map – The Communications Department compared printing quotes and secured advertisers to offset the cost of printing. The department also spent countless hours updating and checking the map for accuracy.

• 2015 Resident Opinion Survey – Work has begun on the triennial survey by gathering questions from Department Heads in September. The Board approved the survey, and it will be inserted into the April 2015 issue of Plantation Living and online until the end of May 2015, with results available by approximately August 2015.

• French publication – The department arranged for a French journalist and his photographer to tour HHP in April. General Manager Peter Kristian was interviewed for a potential article in Geo magazine (slated for the end of the year). The French guests also visited other communities in the southeastern U.S. and were quite impressed with HHP.

• Large-Scale Managers’ Workshop – In September, 120 general managers from around the U.S. (and Dubai) visited HHP and four other Lowcountry communities for a workshop to learn Best Practices that they could take back to their own communities. The POA worked on this project for two years; the Communications Department focused on sponsorships for the workshop, and also gathering the sponsors’ logos for inclusion on the Communities Associations Institute’s national Website.

• The HHP Website was updated to show two recent HHP awards: The Island Packet’s Readers’ Choice Award for: “Best Housing Community/Neighborhood” (2010, 2011, and 2014) and Hilton Head Monthly’s Readers’ Choice Award for: “Favorite Gated Community” on Hilton Head Island.

• The HHP Website’s homepage was updated to inform that HHP is located near Beaufort, Savannah, and Charleston. There are also new links to “cultural sites” (the Arts Center) and excellent schools (Beaufort County Schools). Noted also is information about the plan to improve cell phone and wireless services due to the new monopine and DAS system upgrade.

Communications Committee

The department values the hard work and expertise of a dedicated volunteer committee that tirelessly contributes to various projects.

2014 POA Operations - Communications (cont’d.)

2014 POA Operations - Tennis

The Spring Lake Tennis Facility had 103 Annual Memberships (200 people) during 2014 and the courts were busy with more than 17,000 hours of court time used. A combined 1,200 residents and their guests used the tennis facility throughout 2014.

Due to the increase in USTA League teams, the sponsored/past Hilton Head Plantation Property Owners membership program has added six (6) new memberships.

A big contribution to the overall revenue for the club has been Spring Lake’s increased participation in the USTA League and Interclub program. Every year a record number of teams are broken, and 2014 did not disappoint with 51 teams consisting of men, women, mixed, combo, 18’s, 40’s, 55’s, 65’s, 70’s, and 75’s Divisions. Eight (8) teams won their respective local league, and participated in the State Championships, with a few teams making it to the State Finals.

On the “lighter side” of competition, Spring Lake Tennis held its Friday/Saturday Round Robins, which are hosted by the Tennis Committee. They were well attended with themes such as Oktoberfest, Luck of the Irish, Pizza/Pizza, and Firecracker Round Robin and Picnic. The traditional Wimbledon Team Tennis (30 years in existence) had over 60 participants followed by the “Champagne, Strawberries & Cream Award Celebration.” Another popular event was the Hilton Head Plantation Challenge. Teams consisting of men, women, and mixed doubles from Spring Lake Tennis and the Country Club of Hilton Head “squared off” for a fun-filled day of competition, followed by an Awards Party with over 100 people in attendance.

The Bocce Ball Program (in its 9th year of operation) consisted of two leagues ‒ spring and fall ‒ with a championship tournament and party at the end of each session. The courts were busy with over 1,100 hours used. The Bocce Club consisted of 73 memberships. The courts were resurfaced five times throughout the year, and two new bocce bags and a measuring device were purchased for members’ use. Also all of the ball holders were replaced at each ends of the courts.

During 2014, tennis court maintenance included resurfacing and re-taping six (6) courts and adding two (2) tons of top dressing to the remainder of the courts. Most of the windscreens were replaced; a few tennis nets, a new divider net, and a new court rake and drag mat were purchased. Also, new carpeting was replaced inside the pro shop. One of the top certified tennis court contractors from Hagerstown, Maryland provided his yearly facility inspection and offered suggestions on the daily and annual court maintenance.

POA - Financial Statements

HILTON HEAD PLANTATION PROPERTY OWNERS' ASSOCIATION, INC. Hilton Head Island, South Carolina

C O N T E N T S

INDEPENDENT AUDITORS’ REPORT 1 – 2

FINANCIAL STATEMENTS

Balance Sheet 3

Statement of Revenues and Expenses 4

Statement of Changes in Fund Balances 5

Statement of Cash Flows 6

Notes to Financial Statements 7 – 14

Supplementary Information on Future Major Repairs and Replacements 15




HILTON HEAD PLANTATION PROPERTY OWNERS' ASSOCIATION, INC.

BALANCE SHEET DECEMBER 31, 2014

The accompanying Notes to Financial Statements are an integral part of these statements.

- 3 -

Major Repairs Weather Capital LotOperating and Replace- Casualty Transfer Maintenance

Fund ments Fund Fund Fund Fund TotalsASSETS

Current Assets Cash and cash equivalents 2,369,328$ 2,014,081$ 1,054,338$ -$ 110,619$ 5,548,366$ Investments 49,885 - - - - 49,885Due from (to) other funds (920,984) (49,933) 639,644 439,346 (108,073) - Members' assessments receivable 60,350 - - - - 60,350 net of allowance of $110,497Accounts receivable 17,074 - - - 895 17,969Prepaid taxes 12,545 - - - - 12,545Prepaid expenses 138,189 - - - - 138,189

Total current assets 1,726,387 1,964,148 1,693,982 439,346 3,441 5,827,304

Property and EquipmentProperty and equipment 14,487,321 - - - 16,954 14,504,275Projects in progress 102,662 - - - - 102,662Accumulated depreciation (7,226,219) - - - (16,954) (7,243,173)

Net property and equipment 7,363,764 - - - - 7,363,764

TOTAL ASSETS 9,090,151$ 1,964,148$ 1,693,982$ 439,346$ 3,441$ 13,191,068$

LIABILITIES AND FUND BALANCES

Current LiabilitiesAccounts payable 215,224$ -$ -$ -$ -$ 215,224$ Accrued payroll liabilities 121,221 - - - - 121,221Accrued vacation pay 55,062 - - - - 55,062Accrued income taxes 9,563 - - - - 9,563 Deferred compensation 90,046 - - - - 90,046Deferred revenue and restricted

contributions 55,910 - - - - 55,910Deposits 156,158 - - - - 156,158

Total current liabilities 703,184 - - - - 703,184

Fund Balances 8,386,967 1,964,148 1,693,982 439,346 3,441 12,487,884

TOTAL LIABILITIES ANDFUND BALANCES 9,090,151$ 1,964,148$ 1,693,982$ 439,346$ 3,441$ 13,191,068$



STATEMENT OF REVENUES AND EXPENSES YEAR ENDED DECEMBER 31, 2014


- 4 -


Fund ments Fund Fund Fund Fund TotalsRevenues

Members' assessments 3,912,384$ 690,600$ -$ -$ 8,838$ 4,611,822$ Commercial vehicle permits and

daily passes 657,206 - - - - 657,206Interest and investment income 6,589 141 95 - 61 6,886Tennis revenues 171,988 - - - - 171,988Bar code sales 6,305 - - - - 6,305Advertising revenue 134,213 - - - - 134,213Fees and service charges 124,922 - - 340,884 - 465,806Kids Kamp 58,124 - - - - 58,124Architectural review fees 52,425 - - - - 52,425Cable and cell tower franchise fees 110,758 - - - - 110,758Late charges and covenant violations 12,171 - - - - 12,171Real estate setup fees 31,975 - - - - 31,975Lot maintenance fund 8,760 - - - - 8,760Special events 11,184 - - - - 11,184Other 4,774 - - - - 4,774

Total revenues 5,303,778 690,741 95 340,884 8,899 6,344,397

ExpensesSecurity 1,584,095 - - - - 1,584,095Administration 817,586 - - - - 817,586Depreciation 681,028 - - - - 681,028Landscape maintenance 566,587 - - - 10,777 577,364General maintenance 288,272 67,196 - - - 355,468General insurance 188,480 - - - - 188,480Tennis 167,205 - - - - 167,205Community services 140,348 - - - - 140,348General recreation 183,749 - - - - 183,749Communications with property owners 164,695 - - - - 164,695Drainage 71,438 - - - - 71,438Spring Lake pavilion and pool 118,744 - - - - 118,744Recreational grounds maintenance 92,104 - - - - 92,104Road repair 43,255 - - - - 43,255Kids Kamp 50,868 - - - - 50,868Main entrance 62,706 - - - - 62,706Legal 14,985 - - - - 14,985Plantation house 55,688 - - - - 55,688Special events 30,692 - - - - 30,692Property taxes 46,576 - - - - 46,576Storage are land lease 24,965 - - - - 24,965Repairs and replacements 24,641 - - - - 24,641Storm cleanup 12,185 - - - - 12,185Income taxes (benefit) (2,488) - - - - (2,488)

Total expenses 5,428,404 67,196 - - 10,777 5,506,377

Revenues over (under) expenses (124,626)$ 623,545$ 95$ 340,884$ (1,878)$ 838,020$



STATEMENT OF CHANGES IN FUND BALANCES YEAR ENDED DECEMBER 31, 2014


- 5 -


Fund ments Fund Fund Fund Fund Totals

Balance - beginning of year 8,298,201$ 1,412,810$ 1,206,072$ 727,462$ 5,319$ 11,649,864$

Revenues over (under) expenses (124,626) 623,545 95 340,884 (1,878) 838,020Interfund transfers 213,392 (72,207) 487,815 (629,000) - -

Net change in fund balance 88,766 551,338 487,910 (288,116) (1,878) 838,020

Balance - end of year 8,386,967$ 1,964,148$ 1,693,982$ 439,346$ 3,441$ 12,487,884$



STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2014


- 6 -


Fund ments Fund Fund Fund Fund Totals

Cash Flow From Operating ActivitiesRevenues over (under) expenses (124,626)$ 623,545$ 95$ 340,884$ (1,878)$ 838,020$ Adjustments to reconcile revenuesover (under) expenses to net cashprovided by operating activities:

Income and expense items not affecting cash flows:

Depreciation 681,028 - - - - 681,028Unrealized gain on investments (223) - - - - (223)

(Increase) decrease in:Members' assessments receivable 30,795 - - - - 30,795Accounts receivable 52,609 - - - (376) 52,233Allowance for doubtful accounts (32,446) - - - - (32,446)Prepaid expenses (9,065) - - - - (9,065)

Increase (decrease) in:Accounts payable and accrued

expenses 115,532 - - - - 115,532Deferred revenue and restricted

contributions (12,416) - - - - (12,416)Deferred compensation 10,000 - - - - 10,000Deposits 11,263 - - - - 11,263

Net cash provided by (used in) operating activities 722,451 623,545 95 340,884 (2,254) 1,684,721

Cash Flow From Investing ActivitiesCapital projects and additions to

property and equipment (650,971) - - - - (650,971)Advances from (repayments to)

other funds 40,341 (1,197) (537,815) 488,116 10,555 -Intercompany loan receivable (payable) - 50,000 150,000 (200,000) - -

Net cash provided by (used in)investing activities (610,630) 48,803 (387,815) 288,116 10,555 (650,971)

Cash Flow From Financing ActivitiesTransfers from (to) other funds 213,392 (72,207) 487,815 (629,000) - -

Net cash flows provided by (usedin) financing activities 213,392 (72,207) 487,815 (629,000) - -

Net increase in cash and cash equivalents 325,213 600,141 100,095 - 8,301 1,033,750

Cash and Cash Equivalents - Beginning of Year 2,044,115 1,413,940 954,243 - 102,318 4,514,616

Cash and Cash Equivalents - End of Year 2,369,328$ 2,014,081$ 1,054,338$ -$ 110,619$ 5,548,366$



NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014

Note 1. Organization

The Hilton Head Plantation Property Owners' Association, Inc. (the “Association”) is a statutory association organized as a not-for-profit corporation under the laws of the State of South Carolina. The Association was formed on May 30, 1973, to own, manage, and maintain the common elements, which include real and personal properties, and furnish services to the members of the Association, who are the owners of real property in Hilton Head Plantation, Hilton Head Island, South Carolina. The Association encompasses almost 4,000 acres and features parks, pools, lagoons, lakes, marshes, beaches, tennis courts, and unspoiled open space for use by the residents. The Association’s primary sources of revenues are assessments from members and commercial vehicle entry permits and daily passes.

Note 2. Summary of Significant Accounting Policies

Basis of accounting

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Revenue recognition

The Association recognizes revenue using the accrual method of accounting. Fees received for future periods are deferred and amortized to income over the period to which they apply.

Fund basis of accounting

To ensure observances of limitations and restrictions on the use of financial resources, the Association maintains its accounts using fund accounting. Financial resources are classified for accounting and reporting purposes in the following funds established according to their nature and purpose:

Operating Fund – This fund is used to account for financial resources available for the general operations of the Association.

Major Repairs and Replacements Fund – This fund is used to accumulate funds designated for future major repairs and replacements of existing facilities and equipment.

Weather Casualty Fund – This fund is used to accumulate funds designated by the Board of Directors for repair of damage to common properties resulting from weather disasters, including hurricanes, flood, tornadoes, etc.

Capital Transfer Fund – This fund is used to account for the capital transfer fees charged to purchasers of land and improvements within the Plantation for future capital projects and major improvements to existing fixed assets.

Lot Maintenance Fund – This fund is used to account for an annual assessment on vacant lots purchased after August 1983, which is restricted to provide lot clearing services on an as needed basis.

Cash and cash equivalents

For the purposes of the statement of cash flows, the Association considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.




Note 2. Summary of Significant Accounting Policies (Continued)

Investments

Debt securities owned by the Association are classified as available for sale and are therefore recorded at fair value. There were no held to maturity or trading securities as of December 31, 2014. Purchase premiums and discounts are recognized in interest income using methods approximating the interest method over the terms of the securities. On a periodic basis, available for sale investments are evaluated for other-than-temporary impairment in accordance with U.S. generally accepted accounting principles.

Assessments receivable and allowance for doubtful accounts

Residential and commercial property owners are subject to annual assessments to provide funds for the Association’s operating expenses, future capital acquisitions, and major repairs and replacements. The Association’s policy is to retain legal counsel and record a judgment against the property owners of the properties whose assessments are delinquent. Late charges are assessed on delinquent accounts based upon the number of days since the due date, and when payment is not received within ninety days interest is charged at 1.5% per month on the assessment amount and all other late charges. An allowance for doubtful accounts is determined based on historical experience and management’s assessment of the current state of assessments receivable. The allowance for doubtful accounts is maintained at a level deemed sufficient to absorb probable losses as of the balance sheet date.

Property and equipment

Newly acquired real and personal property and major improvements are recorded at cost. The Association does not capitalize common real property transferred from the developer. Such assets owned by the Association but not recorded in these financial statements include the common areas, roadways, the Spring Lake Recreation Area facilities, the Dolphin Head Recreation Area, and the Plantation House. The Association generally cannot dispose of common property. The Association depreciates property and equipment over their estimated useful lives using the straight-line method.

Fund for major repairs and replacements

The Association’s governing documents and applicable state laws do not require the Association to accumulate funds for future major repairs and replacements, although the Association’s Amended Declaration permits 15% of each year’s annual assessments to be used for this purpose.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

Fair value of financial instruments

The fair value of a financial instrument is the amount at which it could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale. GAAP establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).




Note 3. Concentration of Credit Risk

Financial instruments that potentially subject the Association to concentrations of credit risk consist principally of cash and cash equivalent accounts held at financial institutions and assessments receivable. The credit worthiness of the parties to these transactions is subject to continuous review and evaluation.

The Association places its cash and cash equivalents on deposit with financial institutions in the United States. The Securities Investor Protection Corporation (SIPC) provides protection from loss resulting from brokerage firm fraud or failure for cash and securities up to $500,000 for each brokerage firm. The Federal Deposit Insurance Corporation (FDIC) insures deposits held at insured financial institutions up to $250,000 for each deposit ownership category.

The Association from time to time may have amounts on deposit in excess of the respective insurance and protection limits. As of December 31, 2014, the Association had no uninsured cash balances at FDIC insured depository institutions, and held amounts at brokerage firms exceeding the SIPC protection limit by $4,621,530. The Association has not experienced any losses in such accounts.

Note 4. Investments and Fair Value Measurement

Accounting principles generally accepted in the United States of America provide a framework for measuring fair value. The framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Association has the ability to access.

Level 2 Inputs to the valuation methodology include:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted prices that are observable for the asset or liability;

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specific (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value. There have been no changes in methodologies used during the year ended December 31, 2014.

United States Treasury STRIPS: Stated at fair value which is determined by the present value of the instrument.




Note 4. Investments and Fair Value Measurement (Continued)

Fair values of assets and liabilities measured on a recurring basis at December 31, 2014, are as follows:

Total Level 1 Level 2 Level 3

Investments 49,885$ 49,885$ -$ -$

Total 49,885$ 49,885$ -$ -$

Total unrealized gains on investments as of December 31, 2014 are $1,437. No investments are in an unrealized loss position as of December 31, 2014. All investments held will mature within a one-year period from the balance sheet date.

Note 5. Prepaid Expenses

Prepaid expenses at December 31, 2014, consisted of the following:

Insurance 68,323$Fuel 38,904Fabric and mailboxes 20,962Land lease for recreational vehicle storage area 10,000

138,189$




Note 6. Property and Equipment

The major components of property and equipment and their respective useful lives at December 31, 2014, are as follows:

EstimatedDepreciableLife - Years Balance

Land Non-depreciable 344,000$Land improvements 5 - 25 826,634Buildings and building equipment 5 - 40 4,511,310Machinery and equipment 3 - 10 936,789Fencing 10 - 15 304,659Roadways 15 3,736,999Stormwater management 40 2,101,137Leisure paths 10 436,190Bluff revetment 10 - 35 389,370Office furniture and equipment 5 305,979Motor vehicles 3 368,468Communications equipment 5 89,577Swimming pool equipment 15 65,098Signs and outdoor lights 5 - 8 71,111

Total operating fund 14,487,321Equipment-lot maintenance fund 3 - 10 16,954

Total property and equipment 14,504,275Add: projects in progress 102,662Less: accumulated depreciation (7,243,173)

Net property and equipment 7,363,764$

Note 7. Deferred Compensation

On July 1, 2005, the Association entered into an agreement to pay the general manager the sum of $50,000 on the five-year anniversary date of the agreement, which occurred and was paid during 2010, and the sum of $100,000 on the ten-year anniversary date of the agreement. These deferred payments are subject to the condition that the general manager remains employed by the Association on those dates. In the event the general manager dies or suffers a permanent disability, payment shall be made to him or his estate on a prorated basis. The agreement was amended in December 2014 to accelerate the payment date of the second payment to January 31, 2015. The Association is accruing the cost of this deferred compensation arrangement over the terms of the agreement. As of December 31, 2014, the Association has incurred and funded $90,046 in employment expenses related to this arrangement.




Note 8. Deposits, Deferred Revenues and Restricted Contributions

Deposits, deferred revenues, and restricted contributions at December 31, 2014, are as follows:

Architectural Review Board - builders compliance deposits 141,275$Facility usage deposits 14,883

Total deposits 156,158$

Prepaid assessments 34,966$Memorials and other restricted contributions 20,944

Total deferred revenue and restricted contributions 55,910$

Note 9. Members’ Assessments

The Finance Committee recommends an annual budget of revenues and expenditures, along with related assessment amounts, which is approved by the Board of Directors. The annual assessment rates for 2014 are summarized as below:

Cash Credit Card

Family dwelling annual assessment 1,043$ 1,064$Residential lot annual assessment 626$ 639$ Commercial office space per square foot 1.35$ 1.38$Outdoor recreational facilities (% of revenue) 5.23% 5.33%Private recreational property per acre 178$ 182$ Public and commercial site (% of value) 1.41% 1.49%

Payment by

The Association assesses late charges at various rates on past due property assessments. Liens are recorded against properties with past due assessments, and ultimately, personal judgments are sought against owners of property with past due assessments. Accounts are written-off after all reasonable efforts of collection have been exhausted or the related property has been sold in foreclosure.

Note 10. Operating Leases

The Association leases office equipment under operating lease agreements that expire in 2017. Total rent expense under these leases amounted to $12,421 during the year ended December 31, 2014.

In September 2012, the Association entered into a lease with the Hilton Head No. 1 Public Service District for a parcel of land comprised of approximately 6.375 acres for expansion of the Association’s storage area for its member’s boats and recreational vehicles. The lease has a term of five years with the option to extend the term for an additional five years and calls for rent in the amount of $22,275 for the first year and increases by a percentage determined by the consumer price index for each of the remaining years. Total lease expense under this lease was $23,165 in 2014.




Note 10. Operating Leases (Continued)

Approximate future minimum lease payments under operating leases in effect as of December 31, 2014, are as follows:

Year Amount

2015 34,700$ 2016 34,700 2017 3,800

73,200$

Note 11. 401(k) Retirement Savings Plan

The Association has a 401(k) Retirement Savings Plan for its employees which is a defined contribution pension plan. Employees must have 1,000 hours of service annually and have attained 21 years of age in order to participate. Employees may make elective contributions to the plan and for 2014 the Association made matching contributions on behalf of the employees up to a maximum of 5% of each employee’s compensation. The total cost to the Association of the plan for the year ended December 31, 2014, was $46,963.

Note 12. Interest Expense

The Association did not expend any cash on interest expense during the year ended December 31, 2014.

Note 13. Income Taxes

The Association may be taxed either as a homeowners’ association or as a Subchapter C corporation. For the year ended December 31, 2014, the Association elected to be taxed as a homeowners' association. As a homeowners' association, membership income is exempt from taxation, and the Association is taxed only on its non-membership income, less allowable expenses, at statutory rates. The Association did not incur any federal or South Carolina income tax expense for the year ended December 31, 2014. The Association is no longer subject to examination by tax authorities for income tax returns for years prior to 2011.

The Association evaluated all other tax positions that could have a significant effect on the financial statements and determined the Association had no uncertain income tax positions at December 31, 2014.

Note 14. Interfund Transfers

A summary of interfund transfers for the year ended December 31, 2014, follows:

MajorRepairs & Weather Capital

Operating Replacements Casualty TransferFund Fund Fund Fund Total

Transfer of capital projects 522,207$ (522,207)$ -$ -$ -$

Transfers declared fromexcess operating funds (308,815) 450,000 487,815 (629,000) -

213,392$ (72,207)$ 487,815$ (629,000)$ -$




Note 15. Commitments and Contingencies

During the year ended December 31, 2014, the Association was party to a landscaping maintenance contract which was renewed in January 2014. The annual fee for 2014 was $693,450 paid in equal monthly installments. The contract requires a 3.5% increase in fees January 1, 2015, and a subsequent increase of 2.5% for the three remaining years. The services included in the contract include turf management for centipede and winter rye grass, tree management, weed and insect control, and the maintenance of irrigation systems, lagoon banks, roadsides, and leisure paths. Both the Association and the landscape maintenance company have the right to terminate the contract for any reason by providing 60 days prior written notice.

In February of 2003, the Association obtained a $2,000,000 initial line of credit from a regional bank to be used only in the event of a natural disaster, such as a hurricane, to make immediate repairs to the common area structures and for storm debris cleanup. Interest is payable monthly on principal drawn on the line of credit at the bank’s prime rate with principal due in one year. No amounts were drawn on the line of credit during 2014.

The Association has an employment contract with the General Manager which provides for service to the Association through January 31, 2016.

Note 16. Major Repair and Replacement Study

The Association’s management updated its study during 2014 of the estimated remaining useful lives and the replacement costs of the Association’s common property components. The Association is funding such major repairs and replacements over the estimated useful lives of the components based on the study’s estimates of current replacement costs, considering amounts previously designated for future repairs and replacements. At December 31, 2014, the Association had approximately $1,514,100 in net assets designated for such future major repairs and replacements. Actual expenditures, however, may vary from the estimated amounts, and the variations may be material. Therefore, amounts designated for future repairs and replacements may not be adequate to meet future needs.

Note 17. Subsequent Events

The Association has evaluated subsequent events through February 16, 2015, in connection with the preparation of these financial statements which is the date the financial statements were available to be issued.

HILTON HEADPLANTATION

PROPERTY OWNERS’ ASSOCIATIONwww.hiltonheadplantation.com


SUPPLEMENTARY INFORMATION ON FUTURE MAJOR REPAIRS AND REPLACEMENTS DECEMBER 31, 2014

(UNAUDITED)

Management of the Association conducted a study during 2012 to estimate the remaining useful lives and the replacement costs of the components of common property at the date of the study. This study was updated as of December 31, 2014, to reflect any changes that occurred during 2014. Replacement costs were based on the estimated costs to repair or replace the common property components at current replacement costs. Estimated current replacement costs have not been revised since that date. An inflation rate of 3.5% is incorporated to account for the effects of inflation between the date of the study and the date that the components will require repair or replacement.

The following information is based on the study and presents significant information about the components of common property. (Amounts are rounded to the nearest thousand dollars.)

EstimatedEstimated Replacement

Useful Remaining CostLife Useful Life (in thousands)

Community wide infrastructure 7 - 40 2 - 27 3,757$Dolphin Head recreation area 5 - 20 3 - 4 172Machinery and equipment 4 - 25 1 - 18 975Pipes and drainage structures 15 - 40 3 - 17 2,520Plantation House 5 - 25 1 - 16 366Property Owners' Association - Office Building 3 - 20 2 - 11 279Property Owners' Association - Shop 7 - 20 1 - 4 84Roads, curbing, and leisure paths 10 - 15 1 - 15 5,410Security buildings and equipment 5 - 20 1 - 16 375Signage 12 1 - 6 128Springs Lake Pavilion 6 - 25 3 - 23 1,008Spring Lake pool 5 - 25 1 - 11 348Spring Lake tennis 4 - 25 1 - 15 217Vehicles 4 - 10 1 - 4 339

15,978$

Documents

2014 ANNUAL REPORT - Hilton Head Plantation HHP Annual Report WEB.pdf · 2014 POA Operations - Administration The General Manager’s office is responsible for providing staff support