T Photo by Richard McLaughlin - OpenVision · Hilton Head Plantation Property Owners’ Association, Inc. P.O. Box 21940, Hilton Head Island, SC 29925 Tel. 843/681-8800 • Fax: 843/681-8801

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

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POA - Financial Statements

HILTON HEAD PLANTATION PROPERTY OWNERS' ASSOCIATION, INC.

Hilton Head Island, South Carolina

C O N T E N T S

INDEPENDENT ACCOUNTANTS’ REPORT

FINANCIAL STATEMENTS

Balance Sheet

Statement of Revenues and Expenses

Statement of Changes in Fund Balances

Statement of Cash Flows

Notes to Financial Statements

Supplementary Information on Future Major Repairs and Replacements





BALANCE SHEET DECEMBER 31, 2013

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

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Major Repairs Weather Capital LotOperating and Replace- Casualty Transfer Maintenance

Fund ments Fund Fund Fund Fund TotalsASSETS

Current Assets Cash and cash equivalents 2,044,115$ 1,413,940$ 954,243$ -$ 102,318$ 4,514,616$ Due from (to) other funds (880,643) (51,130) 101,829 927,462 (97,518) - Intercompany loan receivable(payable) - 50,000 150,000 (200,000) - - Members' assessments receivable 201,642 - - - - 201,642 Accounts receivable 69,683 - - - 519 70,202 Allowance for doubtful accounts (142,943) - - - - (142,943) Prepaid income taxes 11,401 - - - - 11,401 Prepaid expenses 130,268 - - - - 130,268

Total current assets 1,433,523 1,412,810 1,206,072 727,462 5,319 4,785,186

Property and EquipmentProperty and equipment 14,289,954 - - - 16,954 14,306,908 Projects in progress 9,713 - - - - 9,713 Accumulated depreciation (6,905,846) - - - (16,954) (6,922,800)

Net property and equipment 7,393,821 - - - - 7,393,821

Other AssetsLong-term investments 49,662 - - - - 49,662

Total other assets 49,662 - - - - 49,662

TOTAL ASSETS 8,877,006$ 1,412,810$ 1,206,072$ 727,462$ 5,319$ 12,228,669$

LIABILITIES AND FUND BALANCES

Current LiabilitiesAccounts payable 103,389$ -$ -$ -$ -$ 103,389$ Accrued payroll liabilities 117,524 - - - - 117,524 Accrued vacation pay 55,062 - - - - 55,062 Accrued income taxes 9,563 - - - - 9,563 Deferred revenue and restricted

contributions 68,326 - - - - 68,326 Deposits 144,895 - - - - 144,895

Total current liabilities 498,759 - - - - 498,759

Long-Term LiabilitiesDeferred compensation 80,046 - - - - 80,046

Total liabilities 578,805 - - - - 578,805

Fund Balances 8,298,201 1,412,810 1,206,072 727,462 5,319 11,649,864

TOTAL LIABILITIES ANDFUND BALANCES 8,877,006$ 1,412,810$ 1,206,072$ 727,462$ 5,319$ 12,228,669$



STATEMENT OF REVENUES AND EXPENSES YEAR ENDED DECEMBER 31, 2013


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Fund ments Fund Fund Fund Fund TotalsRevenues

Members' assessments 3,828,564$ 675,100$ -$ -$ 9,107$ 4,512,771$ Commercial vehicle permits and

daily passes 651,625 - - - - 651,625Interest income 6,308 247 1,630 - 66 8,251Tennis revenues 169,650 - - - - 169,650Bar code sales 5,496 - - - - 5,496Advertising revenue 129,292 - - - - 129,292Fees and service charges 109,567 - - 324,239 - 433,806Kids Kamp 60,727 - - - - 60,727Architectural review fees 47,240 - - - - 47,240Cable and cell tower franchise fees 113,310 - - - - 113,310Late charges and covenant violations 34,911 - - - - 34,911Real estate setup fees 32,100 - - - - 32,100Lot maintenance fund 9,360 - - - - 9,360Special events 11,132 - - - - 11,132Other 5,919 - - - - 5,919

Total revenues 5,215,201 675,347 1,630 324,239 9,173 6,225,590

ExpensesSecurity 1,558,556 - - - - 1,558,556Administration 831,767 - - - - 831,767Depreciation 707,876 - - - - 707,876Landscape maintenance 541,196 - - - 11,406 552,602General maintenance 315,550 37,457 - - - 353,007General insurance 183,001 - - - - 183,001Tennis 169,016 - - - - 169,016Community services 127,649 - - - - 127,649General recreation 180,242 - - - - 180,242Communications with property owners 158,738 - - - - 158,738Drainage 68,180 - - - - 68,180Spring Lake pavilion and pool 118,999 - - - - 118,999Recreational grounds maintenance 91,474 - - - - 91,474Road repair 58,548 - - - - 58,548Kids Kamp 49,274 - - - - 49,274Main entrance 60,432 - - - - 60,432Legal 17,708 - - - - 17,708Plantation house 50,721 - - - - 50,721Special events 27,255 - - - - 27,255Property taxes 44,756 - - - - 44,756Storage are land lease 22,711 - - - - 22,711Major repairs and replacements 31,629 - - - - 31,629Storm cleanup 23,142 - - - - 23,142Income taxes (1,425) - - - - (1,425)

Total expenses 5,436,995 37,457 - - 11,406 5,485,858

Revenues over (under) expenses (221,794)$ 637,890$ 1,630$ 324,239$ (2,233)$ 739,732$



STATEMENT OF CHANGES IN FUND BALANCES YEAR ENDED DECEMBER 31, 2013


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Fund ments Fund Fund Fund Fund Totals

Balance - beginning of year 8,343,904$ 1,731,868$ 1,627,585$ (800,777)$ 7,552$ 10,910,132$

Revenues over (under) expenses (221,794) 637,890 1,630 324,239 (2,233) 739,732Interfund transfers 176,091 (956,948) (423,143) 1,204,000 - -

Net change in fund balance (45,703) (319,058) (421,513) 1,528,239 (2,233) 739,732

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



STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2013


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Fund ments Fund Fund Fund Fund Totals

Cash Flow From Operating ActivitiesRevenues over (under) expenses (221,794)$ 637,890$ 1,630$ 324,239$ (2,233)$ 739,732$ Adjustments to reconcile revenuesover (under) expenses to net cashprovided by operating activities:

Income and expense items not affecting cash flows:

Depreciation 707,876 - - - - 707,876Bad debt expense 50,000 - - - - 50,000Unrealized gain on investments (143) - - - - (143)

(Increase) decrease in:Members' assessments receivable (35,807) - - - - (35,807)Accounts receivable (17,955) - - - (120) (18,075)Prepaid expenses (12,846) - - - - (12,846)

Increase (decrease) in:Accounts payable and accrued

expenses 14,576 - - - - 14,576Deferred revenue and restricted

contributions 10,642 - - - - 10,642Deferred compensation 10,000 - - - - 10,000Deposits 12,995 - - - - 12,995

Net cash provided by (used in) operating activities 517,544 637,890 1,630 324,239 (2,353) 1,478,950

Cash Flow From Investing ActivitiesCapital projects and additions to

property and equipment (506,947) - - - - (506,947)Change in projects in progress (5,162) - - - - (5,162)Proceeds from sale of investments - 500,534 400,508 - - 901,042Advances from (repayments to) -

other funds 774,493 319,305 423,143 (1,528,239) 11,298 -

Net cash provided by (used in)investing activities 262,384 819,839 823,651 (1,528,239) 11,298 388,933

Cash Flow From Financing ActivitiesTransfers from (to) other funds 176,091 (956,948) (423,143) 1,204,000 - -

Net cash flows provided by (usedin) financing activities 176,091 (956,948) (423,143) 1,204,000 - -

Net increase in cash and cash equivalents 956,019 500,781 402,138 - 8,945 1,867,883

Cash and Cash Equivalents - Beginning of Year 1,088,096 913,159 552,105 - 93,373 2,646,733

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



NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013

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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.




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Note 2. Summary of Significant Accounting Policies (Continued)

Recognition of fixed assets and depreciation policy

As further detailed in Note 7, the Association depreciates property and equipment over their estimated useful lives, using the straight-line method. Newly acquired real and personal property and major improvements are recorded at cost. The Association does not capitalize common real property transferred at no cost 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.

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 fifteen percent of each year’s annual assessments to be used for this purpose. Existing funds for future major repairs and replacements are further discussed in Note 5.

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 from those estimates.

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. An allowance for doubtful accounts is based on historical experience.

Note 3. Concentration of Credit Risk

The Association places its cash and cash equivalents on deposit with financial institutions in the United States. Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provided temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts (NIBTAs) at all FDIC-insured depository institutions (IDIs) from December 31, 2010 through December 31, 2012. Beginning January 1, 2013, Dodd-Frank Deposit Insurance Provision expired, and as a result, funds deposited in a noninterest-bearing transaction account will no longer receive unlimited deposit insurance coverage by the Federal Deposit Insurance Corporation (FDIC). As of January 1, 2013, all of a depositor's accounts at an insured depository institution, including all noninterest-bearing transaction accounts, are insured by the FDIC up to the standard maximum $250,000 deposit insurance amount for each deposit insurance ownership category.

The Securities Investor Protection Corporation (SIPC) provides coverage for money market accounts up to $500,000 for each institution.

The Association from time to time may have amounts on deposit in excess of the insured limits. The Association’s uninsured cash balances amounted to $3,770,352 at December 31, 2013. The Association has not experienced any losses in such accounts.




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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 at December 31, 2013.

United States Treasuries: Stated at amortized cost which approximates fair value.

Fair values of assets and liabilities measured on a recurring basis at January 01, 2013, are as follows:

Quotedprices inactive

markets for Significantidentical other Significantassets/ observable unobservable Totalliabilities inputs inputs Fair(Level 1) (Level 2) (Level 3) Value

Long-term investments 49,662 -$ -$ 49,662$

Total 49,662$ -$ -$ 49,662$




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Note 5. Major Repair and Replacement Study

The Association’s management updated its study during 2013 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, 2013, the Association had approximately $1,412,810 restricted 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 6. Property and Equipment

The major components of property and equipment and their respective useful lives at December 31, 2013, are as follows:

EstimatedDepreciableLife - Years Balance

Land Non-depreciable 344,000$Land improvements 5 - 25 826,634Buildings and building equipment 5 - 40 4,538,577Machinery and equipment 3 - 10 908,804Fencing 10 - 15 304,659Roadways 15 3,537,917Stormwater management 40 2,101,137Leisure paths 10 436,190Bluff revetment 10 - 35 389,370Office furniture and equipment 5 306,682Motor vehicles 3 366,556Communications equipment 5 93,219Swimming pool equipment 15 65,098Signs and outdoor lights 5 - 8 71,111

Total operating fund 14,289,954Equipment-lot maintenance fund 3 - 10 16,954

Total land, property and equipment 14,306,908Add: projects in progress 9,713Less: accumulated depreciation (6,922,800)

Net property and equipment 7,393,821$



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Note 7. Prepaid Expenses

Prepaid expenses at December 31, 2013, consisted of the following:

Insurance 66,707$Fuel 16,883Fabric and mailboxes 36,678Land lease for recreational vehicle storage area 10,000

130,268$

Note 8. Deposits, Deferred Revenues and Restricted Contributions

Deposits, deferred revenues and restricted contributions at December 31, 2013, are as follows:

Architectural Review Board - builders compliance deposits 130,775$Facility usage deposits 14,120

Total deposits 144,895$

Prepaid assessments 46,156$Memorials and other restricted contributions 22,170

Total deferred revenue and restricted contributions 68,326$

Note 9. Deferred Compensation

On July 1 of 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 Association is accruing the cost of this deferred compensation arrangement over the terms of the agreement. As of December 31, 2013, the Association has incurred and funded $80,046 in employment expenses related to this arrangement.

Note 10. Income Taxes

The Association may be taxed either as a homeowners’ association or as a regular corporation. For the year ended December 31, 2013, 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, 2013. The Association is no longer subject to examination by tax authorities for income tax returns for years prior to 2010.

POA - Financial StatementsHILTON HEAD PLANTATION PROPERTY OWNERS' ASSOCIATION, INC.


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130,268$













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130,268$













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Note 11. 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 2013 are summarized as below:

Cash Credit Card

Family dwelling annual assessment 1,022$ 1,042$Residential lot annual assessment 613$ 625$Commercial office space per square foot 1.33$ 1.35$Outdoor recreational facilities (% of revenue) 5.12% 5.22%Private recreational property per acre 174$ 178$Public and commercial site (percentage of value) 1.38% 1.46%

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 12. 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, 2013.

Approximate future minimum lease payments under operating leases in effect as of December 31, 2013, are as follows:

Year Amount

2014 34,700$2015 34,7002016 34,7002017 3,800

107,900$

These lease terms range from one to five years and are renewable until termination by the Association.

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 totaled $22,711 in 2013.

Note 13. Interest Expense

The Association did not expend any cash on interest expense during the year ended December 31, 2013.



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Cash Credit Card


Payment by





Year Amount

2014 34,700$2015 34,7002016 34,7002017 3,800

107,900$








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Cash Credit Card


Payment by





Year Amount

2014 34,700$2015 34,7002016 34,7002017 3,800

107,900$







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Cash Credit Card


Payment by





Year Amount

2014 34,700$2015 34,7002016 34,7002017 3,800

107,900$







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Note 14. Commitments and Contingencies

During the year ended December 31, 2013, the Association was party to a landscaping maintenance contract dated January 21, 2011. Per the agreement, the Association continued their services with Palmetto Coastal through 2013. The annual fee for 2013 was $633,000, paid in equal monthly installments. On January 1, 2014, this contract was renewed for five years at an annual cost beginning at $693,450. 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 sixty 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 2013. The line of credit expired in June of 2013 and was not renewed, however, management is currently negotiating with the financial institution to reinstate this line of credit.

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

Note 15. 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 2013 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, 2013, was $46,897.

Note 16. Accounting for Uncertainty in Income Taxes

The Financial Accounting Standards Board (the “FASB”) issued an interpretation regarding Accounting for Uncertainty in Income Taxes. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The Association has evaluated the effect of the guidance provided by United States generally accepted accounting principles on Accounting for Uncertainty in Income Taxes. The Association evaluated all tax positions that could have a significant effect on the financial statements and determined the Association had no uncertain tax positions at December 31, 2013.

The Association recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. There were no interest or penalties recognized during the year ended December 31, 2013, relating to unrecognized tax benefits.




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During the year ended December 31, 2013, the Association was party to a landscaping maintenance contract dated January 21, 2011. Per the agreement, the Association continued their services with Palmetto Coastal through 2013. The annual fee for 2013 was $633,000, paid in equal monthly installments. On January 1, 2014, this contract was renewed for five years at an annual cost beginning at $693,450. The contract requires a 3.5% increase in fees by 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 sixty 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 2013. The line of credit expired in June of 2013 and was not renewed.



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 make elective contributions to the plan and for 2013 the Association made matching contributions on behalf of the employees up to a maximum of 5% of each participant’s compensation. The total cost to the Association of the plan for the year ended December 31, 2013, was $46,897.






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During the year ended December 31, 2013, the Association was party to a landscaping maintenance contract dated January 21, 2011. Per the agreement, the Association continued their services with Palmetto Coastal through 2013. The annual fee for 2013 was $633,000, paid in equal monthly installments. On January 1, 2014, this contract was renewed for five years at an annual cost beginning at $693,450. The contract requires a 3.5% increase in fees by 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 sixty 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 2013. The line of credit expired in June of 2013 and was not renewed.



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 make elective contributions to the plan and for 2013 the Association made matching contributions on behalf of the employees up to a maximum of 5% of each participant’s compensation. The total cost to the Association of the plan for the year ended December 31, 2013, was $46,897.






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Note 17. Interfund Transfers

A summary of interfund transfers for the year ended December 31, 2013, follows:

MajorRepairs &Replace- Weather Capital

Operating ments Casualty TransferFund Fund Fund Fund Total

Transfer of capital projects 202,948$ (956,948)$ (450,000)$ 1,204,000$ -$

Transfers declared fromexcess operating funds (26,857) 26,857 -

176,091$ (956,948)$ (423,143)$ 1,204,000$ -$

Note 18. Subsequent Events

The Association has evaluated subsequent events through March __, 2014, in connection with the preparation of these financial statements which is the date the financial statements were available to be issued. The Association has evaluated subsequent events through March 20, 2014, 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, 2013

(UNAUDITED)

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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 for the calendar year of 2013 to reflect any changes that occurred during 2013. 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 and do not take into account 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)

Communitywide infrastructure 7 - 40 3 - 28 3,702$Dolphin Head Recreation area 5 - 20 1 - 5 170 Machinery and equipment 4 - 25 2 - 19 961 Pipes and drainage structures 15 - 40 1 - 18 2,490Plantation House 5 - 25 1 - 17 359 Property Owners' Association - Office Building 3 - 20 1 - 12 275 Property Owners' Association - Shop 7 - 20 1 - 4 84 Roads, curbing, and leisure paths 10 - 15 1 - 15 5,325Security buildings and equipment 5 - 20 1 - 17 370 Signage 12 2 - 7 126 Springs Lake Pavilion 6 - 25 4 - 24 997 Spring Lake Pool 5 - 25 2 - 12 345 Spring Lake Tennis 4 - 25 1 - 16 212 Vehicles 4 - 10 1 - 4 328

15,744$

Documents

T Photo by Richard McLaughlin - OpenVision · Hilton Head Plantation Property Owners’ Association, Inc. P.O. Box 21940, Hilton Head Island, SC 29925 Tel. 843/681-8800 • Fax: 843/681-8801