We have detailed the concerns shared by the members of CROV Association in the under-noted writing. This writing will also be shared with our County Commissioners and State Representative Dana Trabulsy, who shares our concerns over the management of CDDs such as our community.
It is our hope that our story would help people moving to Florida, specifically Port St Lucie and the Treasure Coast, as many who relocate trust the developers and the city / county officials, when they build new homes.
Many like us are naive and don't understand the downfalls. The story really goes deeper as it's rooted in state legislation that does not go far enough to protect the buyer. Full disclosure doesn't exist in a buyer/developer relationship in many instances when buying a new home in Florida. I can say that I will never buy another property without having legal consul fully review and explain the documents you sign at closing. I say this because unless you are well versed in contract language, the common person will never understand the full ramifications of what they are signing up for; in this community you are given the bulk of the documents AFTER signing with a statement that says, you have 48 hours to raise questions.
We formed a non-profit organization under the name of CROV Association, Inc to represent residents' interest. The acronym stands for Concerned Residents of Verano. We now have over 620 homeowners who have joined because they have concerns about our developer and the way they are developing and managing our community.
In the case of our development, PGA Village Verano, our club, Club Verano LLC and our amenities are owned by the Verano Development, LLC which is owned by our developer. When you buy a home in Verano, one of the documents you sign is called the "club plan." The "club plan" is a mechanism that builders use not only to outline rules & regulations, but to tie residents to the club and the club owner profit from the amenities (this was deemed illegal in Avatar v Gundal in June 2023).
In most communities, their clubhouse and amenities are figured into the price you pay for your house. Verano is different. What most people don't realize when they buy in Verano is a year after POA/HOA turnover, we will be presented with an option to buy our club and amenities. The cost to the community if the option is exercised will be somewhere in the neighborhood of $44M-$52M divided among the estimated build out of 2770 homes as estimated by the developer. It's a huge investment that the majority of people buying are not aware they're party to when they buy a home in Verano.
Up until 2023, our annual assessment/dues were divided into 3 buckets. Our dues are paid to the developer run HOA: there are 2 HOA's in Verano: Village Emilia (1774 homes) and Cresswind - 55 Plus within Verano (245 homes). The HOA takes their portion and passes the remainder on to the POA (Verano Property Owners Association). The VPOA takes their share, and the rest goes to Club Verano, LLC. Please note: Village Emilia, Cresswind and VPOA (Master) are non profit entities BUT The Club Verano, LLC is for profit (assessment hidden under Village Emilia non profit).
Prior to pressure from the CROV Association, the Club Verano LLC budget and financials were never shared with homeowners (so no one knew they were taking profit off the top and declaring a loss – This too was deemed illegal in Avatar v Gundel decision).
Now because of the pressure the CROV Association exerted, questioning why they are not held to the decision of Avatar v Gundel, the developer recently amended the Club Plan and required a separate payment for club dues they now call club fees. They are attempting to separate the club from section 720 of Florida law as a result of the Avatar v Gundel decision. In the new Club Plan they refer to the Club and Amenities as ‘commercial’ BUT it is not zoned commercial, it is coded with the County Appraiser as “Residential Common Element” and therefore they do not pay Ad Velorem taxes. If they were commercial, the taxes would be applied just like any other Gym in St Lucie.
Our developer withheld financials for Club Verano, LLC until 2023. According to HOA law section 720, the board must present a budget in order to assess annual dues. Verano residents called out the board which forced them to reveal financials in May of 2023 and for the first time provide a published budget for 2024. Just as a point of reference the first houses in Verano were built in 2007. The grand opening of Club Talavera was in 2014. The actual budget was not shared with residents. By now you should be asking yourself why they kept all the budget information from residents for so long.
Our board and management company have always told us the club was a for-profit entity without ever explaining what it means. On the surface, you think they're adding profit to the events or rentals. What it actually means is they are profiting from the dues the residents pay and did not want residents to know.
What the financials revealed is a line item called club owner dues. In essence they are taking the dues portion residents pay to Club Verano, LLC as an expense and pay themselves (we assume to Verano Development LLC) off the top before all other expenses are paid. And then they conveniently declare a bottom-line loss off Club Verano LLC. This past year one of our C.R.O.V. group members calculated, the Club owner paid themselves $1.8M of resident's dues off the top. We have copies of both the financial statements and the budget that show what we uncovered.
There is a recent Florida appellate case (Avatar Props. v. Gundel) that is now affirmed after the Florida Supreme Court denied the appeal of the defendants. I've attached the case ruling for your review. I want to make clear we have not seen our developer adapt to the ruling. To the contrary, they are making moves to protect their own interest.
The situation of Avatar v Gundel is very similar to our situation in Verano. In the Avatar v Gundel case, the appellate court ruled that the club could only assess members for the club expenses and cannot profit from the assessments to club members. The suit also settled the practice of placing a lien on a resident's property for non-payment. The result of the suit was a $35M settlement for improper HOA fees.
Our developer uses the same scheme as Avatar. Based on the Avatar v Gundel ruling we believe our developer is illegally profiting from dues residents pay to Club Verano, LLC. Presently, we have legal consul evaluating our situation.
The CROV Association understands from discussions with law firms there are at least 11 other communities in Florida that are under a similar arrangement as Avatar v Gundel. We believe Verano is one of the 11.
The CROV Association believes state legislatures have gone too far in the favor business. Section 720 often works against the homeowner. One of the restrictions in the developer's favor is wording in the covenants to force arbitration and prevent residents from enjoining in class action suits.
Arbitration is expensive and tends to charge high fees to arbitrate issues that demand punitive damages. In many instances when many people are impacted by an issue, it doesn't make sense that individual cases are a requirement, and residents cannot join together in class action suits.
Legal consul we conferred with unilaterally felt section 720 laws favor developers and render most homeowners helpless fighting the large corporate builders in Florida. We need our legislators to stop worrying about corporate donors and start to work in residents' best interests.
People moving to Florida and building new homes are often taken advantage of. In our case, our developer never disclosed our community they've been developing for 17 years has no reserves. They don't disclose that they deficit fund and that at turnover a shortfall can lead to an assessment for residents. And they don't disclose verbally that the plan is to sell the club to residents one year from turnover that will result in another large assessment. You have to seek out the information and know where to look.
In our case, we are never notified when our developer amends club documents. When they amend documents, they post them with the county. We get no vote or say on the changes. We believe they often go beyond the meaning of the laws.
One recent example is they are denying the CROV Association use of our club facilities that we pay dues to use. We've held two meetings at the club. Now that they know who we are, they are denying us use of the facility to hold our next meeting. We believe this is another direct violation of Section 720.
Our management company and board members are very hostile toward residents. Many residents have made the point that they ignore their fiduciary responsibilities to residents. We have reminded them in their annual board meetings that fiduciary, requires them to work in the members' best interest in addition to being fiscally responsible. We have many examples, from recent records review, that the developer run Board and the Property management company they chose, are not operating in the resident’s best interest.
Only our state legislators can correct the imbalance with legislation that revamps section 720 in favor of homeowners. When your POA can change rules, regulations, and covenants at will without member approval and the protection of state regulation, there is something inherently unfair about the situation. For many years residents of the PGA Verano have been trying to get our local representatives dating back to Sen. Joe Negron and Rep. Larry Lee to update/change the Fla. State Statute 720.
We have gained the interest of two county commissioners: Jamie Fowler and Cathy Townsend as well as State Representative Dana Trabulsy - we have a meeting with them on May 1, 2024. They share our concern over our Community, its similarity to Avatar v Gundel and the how the CDD is managed (also run by Kolter).
While CROV has over 600 resident members, we are forbidden by our Board President to use our Ballroom to hold meetings, including our request to invite state and county representatives to speak to residents.
Clearly, our VPOA developer run board is violating our rights under section 720 which states:
(1) All common areas and recreational facilities serving any homeowners' association shall be available to parcel owners in the homeowners' association served thereby and their invited guests for the use intended for such common areas and recreational facilities. The entity or entities responsible for the operation of the common areas and recreational facilities may adopt reasonable rules and regulations pertaining to the use of such common areas and recreational facilities. No entity or entities shall unreasonably restrict any parcel owner's right to peaceably assemble or right to invite public officers or candidates for public office to appear and speak in common areas and recreational facilities.
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