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Captain’s Cove .......... Pages
44 Ocean Pines PROGRESS December 2022 CAPTAIN’S COVE
CURRENTS
Seven owners renew litigation battle
Case against CCGYC, CCG Note includes some allegations from earlier case that had been voluntarily withdrawn
By TOM STAUSS
Publisher
Seven Captain’s Cove property owners are suing the community declarant/developer, CCG Note, and the Captain’s Cove Golf and Yacht Club, for some of the same reasons cited in a suit they filed this past June and voluntarily withdrew in October.
The new lawsuit adds new allegations and is not as focused on the Hastings/Mariner Townhome project as the earlier suit, although there is overlap. In addition, the plaintiffs are not accusing CCGYC directors who are investors in CCG Note of self-dealing or breach of fiduciary duty as the earlier suit did.
All seven plaintiffs are members of the Concerned Citizens of Captain’s Cove. The plaintiffs are Teresa Birckhead, president of the group, Jim Hayes, William Leslie, Barry Magrogan, Joyce Platterspiel, Linda Reece and Tom Reidy.
They’re represented by Douglas Kahle of Basnight, Kinser, Leftwich and Nuckolls of Chesapeake, Va., who filed the suit in Accomack County Circuit Court Nov. 7.
Among the allegations is that the defendants are converting “Captain’s Cove private streets” to public use contrary to CCGYC Declaration of Restrictions and Articles of Incorporation.
The suit alleges that Captain’s Corridor will be used to funnel traffic in and out of the proposal townhome project, contrary to langage in the Declaration, Section 11/A.
CCGYC President Tim Hearn has said that one half of Captain’s Corridor near the townhome project is owned by the Hastings/Mariner family and would be conveyed to CCG Note at settlement.
It hasn’t been conveyed to CCGYC, contrary to the plaintiffs’ claim, he has said.
“One half of Captain’s Corridor near the proposed townhome site isn’t owned by CCGYC,” he added. “The plaintiffs don’t seem to understand that not all of Captain’s Corridor was conveyed to CCGYC decades ago.”
Cove streets including Captain’s Corridor are already accessible to the public as Captain’s Cove is not a gated community. Therefore there can be no effort under way to “convert” Captain’s Corridor for public use, Hearn said.
The suit further alleges that the Cove Board of Directors, under “the control of CCG Note, allowed CCG Note to pay less than $50,000 per year on a contractual obligation” related to the completion of road construction in Sections 1 through 13.
Instead, interest only payments of less than $10,000 per year have been paid to CCGYC by CCG Note.
Hearn told the Cove Currents recently that this allegation is baseless because a promissory note obligating CCG Note to pay CCGYC $50,000 per year was never executed by the parties, which he said was the fault of the Board of Directors managing Captain’s Cove prior to the 2012 settlement agreement.
The 2012 settlement agreement says CCG Note “agrees to pay” the association $50,000 per year for 20 years for debt service on a loan CCGYC was to secure for road improvements.
Hearn said it was later revealed that no such loan existed. He said the former board and general manager misled the parties about the existence of an actual loan.
“Given that no loan ever existed, it is absurd to come back and state that CCG Note is obligated to pay debt service on a fictitious loan,” he said.
The suit alleges that CCGYC does not have To Page 47
From Page 45 the authority to exempt Stonewall Capital from paying assessments on 30 lots it purchased from CCG Note in Sections 1, 7 and 10 in 2019. The suit quoted Jim Silfee, a CCGYC director and investor in CCG Note, as “falsely” stating that Stonewall Capital was exempt from paying assessments.
Hearn acknowledged that the declarant/developer can’t delegate the dues exemption it enjoys to a buyer of lots in multuple sections of Captain’s Cove, and could only do so if a buyer purchases an entire section.
But he said the plaintiffs seem to be unaware that CCGYC is billing Stonewall Capital for the annual dues of the 30 building lots it owns.
“They’re not exempt,” Hearn said.
Indeed, the Cove Currents has been informed that Stonewall Capital appears on an accounts receivable list of property owners who are delinquent in paying annual dues to the CCGYC.
The plaintiffs allege that CCGYC does not have the authority “to charge assessment-paying members the cost of constructing a bulkhead along Starboard Street, a cost that should be paid by CCG Note.” According to the suit, the association is proposing to install a bulkhead along the edge of Starboard Street abutting CCG Note lots at the expense of the Cove association.”
Hearn said no such charge is being planned and that “bulkheads on the gut have never been required for any of the hundreds of lots along that waterfront. In addition, there is no evidence that the Army Corps of Engineers would ever allow such a bulkheading activity into a wetland area.”
He said that stormwater, erosion and sediment control permits have been obtained by CCGYC from Accomack County in anticipation of paving Seaview Street at some date in the future. But CCGYC is still awaiting permits from the U.S. Army Corps of Engineers, and it’s unknown whether and when that might happen.
There is no governing document in Captain’s Cove that obligates the declarant/developer to complete road construction in Sections 1 through 13 in the community, and it’s been policy since 2002 that CCGYC is responsible for street improvements according to an amendment to the Declaration in that year.
The suit repeats a complex argument from the earlier suit, alleging that CCG Note or an affiliate in violation of restrictive covenants sold several Captain’s Cove numbered residential building lots to the former Captain’s Cove Utility Company operated by Hearn, which then sold them to Aqua Virginia.The lots, consisting of about six acres, were set aside for possible future use as rapid infiltration basins (RIBs) by Aqua.
The CCGYC deed restrictions allow for these lots to be used for residential or utility purposes, as confirmed by the State Corporation Commission’s approval in the sale to Aqua, a detail ignored by the plaintiffs, Hearn said,
In response to a similar allegation in the earlier suit, Hearn called the plaintiffs’ description of the Aqua sale and the acquisition and sale of the future RIP areas “bizarre.”
He said that all CCG Note investors who served on the Cove Board at the time recused themselves from any decisions related to the transaction.
He said CCGYC benefitted from the sale of roughly four acres, receiving $175,000 in the transaction.
He also said that the sale of the RIB lots “limited” future potential uses of the site to RIBs only, a benefit to property owners in the area.
“Contrary to what the plaintiffs contend, residential lots in Captain’s Cove expressly can be used for utilities, including a pump station, treatment plant, or any other use associated with a utility,” he said. “The agreement limits these lots to RIBs only, a relatively passive use compared to what could go there. This benefits property owners in the area.”
The latest suit also repeats allegations from the earlier suit that the Captain’s Cove water and waterwater treatment system now owned by
To Page 49
Phillips, Hearn field questions during feisty members’ forum
Sixty-five percent of dues increase attributable to legal fees
By TOM STAUSS
Publisher
Captain’s Cove Yacht and Club Club President Tim Hearn and Senior General Manager Colby Phillips fielded questions from members during an at times feisty and well-attended annual meeting of the association Nov. 12 at the Chincoteague Center.
The members forum consisted of opinion offered by members on a variety of political issues or questions of Cove management.
Early in the forum segement of the meeting a member asked about a million dollar bad debt allowance in the approved budget for 2022-23..
Phillips responded that an accounts receivable working group has been addressing the issue and that reducing bad debt is a “top priority” for the Cove association.
Success at collecting delinquent dues from members means there will be less of a need in the future to increase dues on those who pay, she said.
“Our goal is to reduce (delinquencies) so we don’t have to increase dues,” she said.
Some members expressed concerns about the Cove’s canal dredging program, which was reduced somewhat from past years because of issues with the dredge boat.
She said that a list of canals that will be scheduled for dredging in 2023 will be assembled for the next property management team meeting in early December.
She also invited anyone who wants to be part of the dredging work group to contact her.
In response to a question about the Marina Club roof replacement project, which has been delayed because of difficulties in finding a qualified contractor, Phillips said the Cove initially received two bids and awarded the project to one of the bidders, who then decided not to sign a contract.
With the assistance of project consultant Gillis-Gilkerson, she said that there are three new bids for the project, ranging from $350,000 to $500,000.
The property management team is close to recommending a contractor for the project, she said.
In response to a question about the $100 increase in dues for 202223, Hearn said it was attributable to inflationary pressures on costs, new line items including legal fees associated with two lawsuits, and health benefit increases.
He later told the Cove Currents that 65 percent of the $100 increase resulted directly from the increase in legal expenses required to defend the association in the two cases, one of which has been dropped and the other pending.
In response to a question about the missing $1 million in cash accounts uncovered during the transition from Troon to in-house financial management, Hearn said the change in liquidity doesn’t mean “someone stole” $1 million from the Cove association.
It could be the result of growth in accounts receivables from those not paying their lot assessments on time, he said
Noting the hiring of CohnReznick to conduct a forensic audit of the six months of 2021-22 that Cove finances were controlled by Troon, “once
New lawsuit filed
From Page 47 Aqua lacks the capacity to provide water and wastewater treatment services to the townhome project.
Hearn previously disputed that contention, telling the Cove Currents that, in hearings before county authorities, Aqua executives testified that there is adequate capacity at the current level of build-out in Captain’s Cove to accommodate the townhome project. “At roughly 50 new homes per year [built in Captain’s Cove], it will be at least 20 years before the future RIB areas might be needed,” he said. The plaintiffs further allege that the CCG Note proposes to convey as many as six numbered Captain’s Cove lots [in Section 13, backing up to Fleming Road], to be converted into non-residential use [a proposed ambulance station to be operated by the Greenbackville Fire Department] in support of a CCG Note proffer to the county related to the townhome project.
The plaintiffs contend that residential lots in Captain’s Cove can’t be used for non-residential purposes.
But Hearn, in comments during the annual meeting of CCGYC in November, said that the Greenbackville Fire Department is looking more favorably on a CCG Noteowned parcel on Stateline Road for a new firehouse and ambulance station.
If that approach to future growth continues, the Fleming Road option will not be a factor in the fire department’s growth plans, Hearn said, with the plaintiffs’ arguments no longer on point.
The State Line Road parcel is four acres, but the fire department needs only one-and-a-half acres for what it envisions, Hearn said.
It’s located between the Long and Foster office and the main entrance into Captain’s Cove.
Finally, the suit alludes to future plans to construct a road in an area called Seaview Street, which the plaintiffs allege would benefit lots in the area owned by CCG Note at the expense of Cove members.
The plaintiffs contend that CCGYC doesn’t haven’t the authority to build new roads under governng documents, but rather only has authority to “properly maintain” them.
Hearn disagrees, contending that nowhere in the Cove’s governing documents is there language preventing the CCGYC from undertaking new road construction paid for by association dues.
To Page 51
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Members’ forum
From Page 49 the audit is done we’ll know where that $1 million comes from,” he said.
Hearn fielded a question about the obligation to pay annual dues when a builder or developer other than CCG Note “steps up” to build and sell new homes in Captain’s Cove.
He told the membership that there can be only one declarant/ developer in Captain’s Cove under Cove governing documents, and that as that declarant/developer CCG Note is exempt from paying annual assessments on the lots it owns in the community.
He said that the only way a builder/developer can avoid paying annual lot assessments on lots it buys from CCG Note is for that builder/ developer to purchases an entire section.
There is no section in Captain’s Cove controlled by CCG Note in its entirety.
Lots owned by builders therefore are billed for annual assessments just as any other owned by other CCGYC members.
In response to a complaint that the entire senior mangement team was not in attendance at the annual meeting, Phillips said there were only two absences.
One was Jimmy Giddings, director of roads and maintenance, who was away helping out with hurricane clean-up.
The other was Food and Beverage Manager Charlie Getz, who was working at the Marina Club.
In response to a question about private loans on the books, which have been used to finance road construction in recent years, Hearn said initially the loans were done anonymously to protect the identity of the lender, a prominent businessman who lives in Salisbury.
When his identity was made public despite the agreement for anonymity, he immediately called a loan. After awhile he resumed lending to Captain’s Cove, overcoming fears of harassment, Hearn said
“He’s in the concrete business and knows people,” he joked.
Earlier Hearn said that anyone who wants to loan money to the Cove association at 6 percent should contact the property management team.
He updated the members on delays in improving Seaview Street. While reporting as he has previously that permits from Accomack County are in hand, the Cove is still awaiting permit approval from the U.S. Army Corps of Engineers, which he said is short-staffed and afflicted with staff turn-over.
He said Seaview Street, which is bayfront property with only a dirt road, is in a heavily-regulated zone contributing to delays.
There is a place-holder $1.2 million for road improvements, but the project has not been bid out and no one really knows how much it will cost.
Also during the forum, Cove director Mark Majerus commended management team staff by name for dealing with all the dramatic changes in Captain’s Cove this past year.
He reminded members that members of the Security staff have all been trained in emergency medical response techniques.
They’re the first responders to emergencies in Captain’s Cove before EMTs from local fire departments arrive on the scene.
They’re there “for security and health as well,” he said.
Hearn similarly offered praise for management staff, who he said navigated a “crazy year” as well as it could have, and he praised Phillips as an “incredible leader.”
He extended his praise for county officials who he said sometimes “find themselves in treacherous circumstances.”
He was probably referring to decisions by members of the county planning commission and board of supervisors earlier this year, approving plans for a townhome project proposed by CCG Notes for the back entrance to Captain’s Cove at State Line Road.
During the forum, member Michelle Mathews-Kalinock asked for greater transparency in the availability of documents, requesting that financial reports dating back to 2012 and resumes of Cove staff be posted on the Cove Website.
There was no immediate response to her request.
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Return to in-house management dominated year
By TOM STAUSS
Publisher
Senior General Manager Colby Phillips recapped accomplishments and changes within Captain’s Cove management this past year. She made her comments during the Nov. 12 annual meeting of Captain’s Cove Golf and Yacht Club, held at the Chincoteague Center.
Changes in the property management team included John Costello’s new title as Director of Operations, with golf team oversight added to his responsibilities. Jimmy Giddings was given the new title of Director of Roads and Maintenance to include golf maintenance oversight.
Charles Getz was hired as food and beverage director, Sara Shifflett was hired as controller, and Julia Knopf’s role was upgraded to include marketing and coordinaton of community events.
Tammy Bowden was appointed interim golf superintendent after the sudden resignation of her predecessor.
At the Marina Club, Josh Vickers was promoted to executive chef and Craig Aspdin was promoted to sous chef and assistant cook.
Phillips reviewed challenges faced by the property management team this past year.
Gift cards sold by former management company Troon/ Indigo Golf Partners with the revenue going to Indigo resulted in a decision by the Cove to ask members to seek reimbursement of unused credits directly from Troon.
Because of Troon not providing monthly financial statements and a lack of communication, the team “worked to make sure finances were managed well with strong oversite despite not knowing where we sat the first half of the fiscal year,” Phillips said.
These difficulties resulted in an “unexpected” and rapid transition from Troon to bringing management in-house.
“After years of a strong and stable relationship with Billy Casper Golf, then Indigo Golf Partners, Troon management very soon showed that they were unable or unwilling to support our community’s management needs, and our existing onsite staff tackled the challenge of self-management with dedication, skill, and professionalism to maintain the standards that our Members expect,” she said.
To counter rumors and false information posted on social media, Phillips said “the team worked to communicate to members [that they should] reach out to the team directly with their questions,” she said.
After several receptionists, wait staff and managers had issues with hostile members and guests, a security staff member was located at the Marina Club for better oversite with any issues, Phillips said.
A former food and beverage director quit with no noice three days prior to Memorial Day weekend.
“The team immediately stepped up to get
To Page 54
Captain’s Cove honors volunteers
Jenny McIntyre named Volunteer of the Year
Captain’s Cove Golf and Yacht in an event Nov. 3 at the Marina Club Club honored numerous volunteers who make community activities throughout the year possible.
“What an amazing group of people setting aside time to bring such great things to our community!” said Colby Phillips, senior general manager.
Jenny McIntyre was named Volunteer of the Year.
Carol Pedrick was named the Difference Maker.
Community Champions were Eileen Klinfelter, Rob “Max” McCarthy, Dawn Wagner, Maryjoe DeLoe and Bernadette Palaski.
Carol Pedrick (left) addresses the group; Jenny McIntire with Colby Phillips.
54 Ocean Pines PROGRESS December 2022
CAPTAIN’S COVE CURRENTS Majerus, Pelino reelected to CCGYC Board
By TOM STAUSS
Publisher
Incumbents Mark Majerus and Pat Pelino were reelected to the Captain’s Cove Golf and Yacht Club’s Board of Directors in results announced at the Cove association’s annual meeting Nov. 12.
They will serve three-year terms as directors. There were two Board seats contested in this year’s election.
Majerus captured 1,252 votes and Pelino 1,191.
Also running for the Board were Michelle Mathews-Kalinock, with 575 votes, and Frederick Traut with 564 votes.
Guy Siebold won 74 votes, Anjali Chatelle had 56 votes, and Barry Marks, who had withdrawn from the contest, won 74.
In the race for Board alternate, former Cove President and Director George Finlayson captured 1,226 votes and will serve a one-year term as alternate.
Also running for alternate director were Seibold with 554 votes, Chatell with 53 votes, and Marks with 31.
CCG Note, the Cove’s declarant/developer, cast one vote per lot that it owns.
In theory, CCG Note could cast three votes per lot according to Cove governing documents, but the 2012 settlement agreement limited the three-for-one right. Now that right can only be exercised if the Cove association is under financial duress, and that’s not the case currently.
In theory, there are enough lots in Captain’s Cove not owned by CCG Note to defeat candidates backed by the developer, but this year as in year’s past there were not enough votes to make that happen.
Year-round residents of the Cove most likely were the support base for Mathews-Kalinock and Traut.
Annual summary
From Page 53 through the holiday weekend and took on the challenges with professionalism and dedication,” she said.
Unnecessary wine purchases by the previous food and beverage manager under Troon were uncovered, resulting in the team started selling the bulk of the unnecessary purchase to members at cost resulting in almost 75 percent of the funds recouped,” Phillips said.
Administrative improvements included the addition of new software called AppFolio.
This made it possible to introduce a member portal with options to share private member documents including renter information, multiple log-ins for each property, multiple properties tied to one log-in, violation status, and detailed account ledgers for member inspection.
In addition, AppFolio improved report generation, tracking of violations, mailing service for statements, and other functionality not possible with the previous software, TOPS.
Phillips noted the launch of the new member Website with a calendar included, integrating “all areas of Captain’s Cove into one place. A new member online forum on the Website was introduced.
She noted improved Environmental Control Committee oversight and variance applications.
Phillips said that Cove communication with members is strong,” noting the launch of the Cove Currents monthly publication and weekly e-blasts.
She said the management team has started a more aggressive campaign to collect accounts receivables, initiated a new golf cart policy to help with safety, introduced a new UPS drop-off and ATM machine at the Marina Club, launched a community calendar hand-out, established several working groups of management team personnel and members, upgraded non-member pricing for non-members, unveiled a new refrigerator magnet with team contact information, and assembled a new welcome packet for new residents of Captain’s Cove.
Phillips highlighted new programs and events this past including soccer classes, swim lessons, personal training, aquatic classes, arts and crafts classes for kids, junior lifeguards, princess tea parties, fall festival, bus trips, walking group, flags for heroes, Easter EGG Dive, CPR/AED classes, lifeguard certification classes, and water safety training working with the Chincoteague Fire/EMS.
Other new programs and events included family fun nights, holiday sip and shop, angel tree, yoga, Balls and Claws, volunteer banquet, pickleball, Veteran/Memorial Day/4th of July honoring of our service members, and training of the entire Security Team with AED/CPR.
One yard sale was held this past summer, two are planned for next year, and the resumption of summer community party is possible.
Phillips said that there have been more than 630 calls for service and more than 50 911/EMS calls, withAED used more than five times.
At the Marina Club, she noted the introduction of new point of sale (POS) softwate called Toast that allows for better tracking.
The team adjusted menu prices to reflect inflation and the menu to have “friendly pricing, giving us cost savings as well as increased profit,” she said, adding that other changes were made to decrease spending.
She said the team changed the dish machine company and acquired a new dishwasher with a cheaper lease that saves the Cove $400 per year and “we should expect to save another $2400 a year on the cost of chemicals. After five years we will own the machine outright, and that will save another $1800 per year.”
Other acqusitions included a new new beverage dispensing system from Pepsi that should save about $1200 per year and a bulk C02 system that she said “is much more convenient and saves about $600 per year.”
Phillips also said the Marina Club team launched a happy hour with a special bar menu to increase sales during off hours, burger night on Wednesdays and Rib night on Thursdays ‘to bring in more business on off days.”
She noted the decision to open the Marina Club seven days per week starting Memorial Day and ending Labor Day, a decision to use QuickBooks for accounting, and continuing efforts to finish roads resurfacing.
Also new this past year are efforts to monitor Lake Earnie and a farmers market.
Lake Ernie in Captain’s Cove borders about three dozen homes and sits just off Captain’s Corridor.
