2017 annual report - hilton head plantation 2017 annual report web.pdf2017 annual report hilton head...

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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

Hilton Head Plantation Property Owners’ Association, Inc.

2017 BOARD OF DIRECTORS

Jerry Cutrer, President Members:Jonathan Doe, Vice President Robert Clemens Jim Lucas, Treasurer John Gilbert Ann SchwabAudrey King, Secretary Toney Mathews Mary Ann Strayer

STAFF:

General ManagerT. Peter KristianCMCA®, LSM™, PCAM®

Executive Secretary/Front Desk SupervisorSharon P. White

Front Desk/ReceptionistHolly DiGesu

Assistant General ManagerTodd LindstromPCAM®

Staff Accountant/HRNatalie Keene, CMCA®

Records ClerkAngela Graves

Director of MaintenanceDavid Mills

Maintenance StaffJames Mills-P/TDaniel Mills-P/T

ARB InspectorJim Nasuti

ARB Administrator/Community RelationsBetsy Weppner

Community RelationsSpecialistMichele Chisolm

Director of ActivitiesChrissy Kristian, CMCA®

Recreation andScheduling CoordinatorMerideth Johnson

Special Events CoordinatorMargie Lechowicz

CommunicationsCoordinatorDenise McAllister

Tennis ProKeith Ferda

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

Director of SecurityArt Benoit

Deputy Directorof SecurityCapt. Warren Gaither

LieutenantsTerrence BoydJoseph FarmerVanessa Green

SergeantsMichael HarrellWilliette Lee

OfficersOff. Adasha BrooksCpl. William BruceCpl. Tomika BusbyOff. Robert BuschPfc. Russell ConwayOff. Crystal CummingsCpl. Cody ForbesCpl. Randy GambleCpl. Raymond GibboOff. Timeya HudsonOff. Brown MarcusCpl. Donald MartinPfc. Juaneka McClayCpl. Carl OlsonOff. Lashay ParkerPfc. Adrian PinckneyCpl. Donald RunyonPfc. Theoron WeeksOff. Angela WilliamsonOff. Kierra Wright

P/T OfficersPfc. Arvel GrahamOff. Brandon Singleton

DispatchersCpl. 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 (12/31/17):HILTON HEAD PLANTATION: 3,711 ACRES 72 MILES OF ROAD 88 LAGOONSFAMILY DWELLING UNITS: 4,141 UNDEVELOPED LOTS: 137 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

I hope you will take a few minutes to review the following pages that summarize 2017 operations, but I take great pleasure in assuring you that the state of your POA is strong, finishing the year over budget in revenues and under budget in expenses. This condition of financial and operational stability has been built over many years on four key elements:

• A long tradition of conservative financial management;

• Volunteers on standing committees who review issues and provide input to the Board;

• A member-elected Board of Directors who set policy and provide guidance to the staff; and

• A highly effective and experienced professional staff who administer day-to-day operations and finances and implement Board policy.

2017 saw the POA transition from an emphasis on physical matters to fiscal issues. The early part of the year was taken up with a continuation of the clean-up from Hurricane Matthew. With that major undertaking completed, Hurricane Irma leaving relatively little damage, and the pending retirement of internal loans funding the Spring Lake Pool, your association was able to begin the process of restoring the Weather Casualty Fund to an appropriate level. Because of past financial planning, we were able to spend nearly $4,000,000 in hurricane-related repairs by drawing down on reserves, a modest per residence increase in assessments, and a short-term working capital loan. Assessment adjustments in 2017 and 2018, of $250 respectively, will produce approximately $2,200,000 in additional revenues for clean-up and working capital loan retirement; the 2018 Board will need to determine whether an additional adjustment will be required in 2019 to complete the rebuilding of reserves. I cannot let this subject pass without a special “thank you” to Town Council and staff, and particularly Town Manager Steve Riley for obtaining a reversal of FEMA’s original position to not cover removal of hurricane debris from gated communities on Hilton Head Island. Had FEMA not ultimately agreed to cover these costs, the combined 2017-2018 assessment adjustments would have likely totaled $4,000 per residence rather than $500.

In addition to completing the hurricane clean up, 2017 saw a number of other significant accomplishments within the Plantation:

• The Dolphin Head Bluff Revetment repair and rebuilding project was completed.

• Hargray completed installation of fiber optic cable and Spectrum began a similar investment. These improvements, along with our monopine cellular

President’s Letter to Property Owners

tower and enhanced distributed cellular antenna system, make the Plantation one of the most technologically advanced communities in the Lowcountry.

• Two major road resurfacing projects were completed.

• A new and improved Gate Pass system was installed, replacing the old system no longer supported by its vendor.

• A portable electronic speed sign was purchased as a passive enforcement tool.

• Pine Island Beach received a significant quantity of new sand, thanks in part to the Town honoring its commitment to provide funds for this purpose. Our application to install a revetment to provide long-term protection for the Pine Island isthmus was denied by environmental regulatory authorities, but a permit was obtained for a bridge/boardwalk from the headland to the beach and a multi-year extension for placement of additional sand.

• A new berm was installed and landscaped at the intersection of Whooping Crane Way and Seabrook Drive.

• An updated Succession Plan was adopted to provide guidance in the event of senior staff changes.

This wonderful community in which we live results from the combined efforts of a dedicated group of volunteer members of the Board of Directors and an outstanding staff of full and part-time employees. Our General Manager and Assistant General Manager continue to provide seasoned leadership to the POA, while the Finance and Accounting, Activities, Communications, Community Relations, Maintenance, Recreation, and Security Departments consistently deliver excellent performance in a professional manner.

It has been my pleasure to serve as a member of the POA Board of Directors for six years and a distinct honor to serve as your Board President for the past year working with other dedicated Board members, staff, and committee members. Thank you for electing me and giving me the opportunity to serve. I have every confidence the success of our Plantation POA will continue in the future.

Respectfully submitted,

Jerry Cutrer, President

2017 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 POA 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 New Homeowners’ Welcome Packets come under the jurisdiction of the General Manager’s office.

During 2017, staff was focused on hurricane recovery from Matthew and then, turning on a dime, prepared for Hurricane Irma’s arrival. During 2017 the Bluff was rebuilt, thousands of cubic yards of debris was removed from HHP, and we embarked on a quest to secure an extension to our permit to place sand on Pine Island and build a boardwalk/bridge to Pine Island. These projects and our quick recovery from two major weather events were made possible by the wisdom of Board members past and present. The establishment of a Weather Casualty Fund, the installation of back-up generators at strategic facilities, and our agreements with the Town of Hilton Head Island all played a vital role in our ability to endure and recover.

The Department also continued to work with the Trustees of the Hilton Head Plantation Conservancy Foundation to raise funds to benefit the Whooping Crane and Cypress conservancies. Over $20,790 was raised in 2017 with the present HHPPOA personnel continuing to absorb the cost of administering the work of the Conservancy Foundation.

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 are more than two years behind in paying the 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

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 2017 we once again experienced the lowest delinquency rate since the year 2006.

We continued to make improvements to Plantation Living. In 2017 we added another color edition. Due to the popularity of these color editions, our advertising revenue surpassed our budgeted target for 2017 as we experienced the highest revenue from ad sales since the inception of the ad program. Advertisers continue to realize the value of using Plantation Living to promote their services and products to our over 4,141 households.

The Board’s proactivity was once again rewarded with the completion of the Hargray fiber optic project. This installation brings this state-of-the-art potential to every single family home within HHP. As a result of Hargray’s initiative, Spectrum is now in the process of upgrading their in-ground network adding competition. As always, Hilton Head Plantation boasts several choices for such services including Spectrum, Dish, and Direct TV.

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

The Pine Island Beach took serious hits from both hurricanes Matthew and Irma and continued to be a challenge to preserve. Our agreement with the Town of Hilton Head paid its first dividend as we were reimbursed for a renourishment project in May of 2017 totaling $100,000. This was the first payment for a three-year commitment, which started with the Town of Hilton Head Island’s fiscal year 2016/17. A long-term engineering solution to the Pine Island Beach

2017 POA Operations - Administration (cont’d.)

was realized with the approval from both DHEC and the Army Corps of Engineers to build a boardwalk/bridge to Pine Island and increase the amount of upland sand that could be placed on the beach by 10,000 cubic yards. Our permit was also extended to October 2022.

A program requiring guests to provide identification in the form of a driver’s license or other acceptable form of photo ID was continued. This procedure was designed to insure that the person requesting a guest 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.

The Bayshore project to bring an assisted living facility outside our Cypress Gate has come to fruition. This long-term pursuit was completed in the early fall of 2017.

You once again honored Hilton Head Plantation with Hilton Head Monthly’s Readers’ Choice Award for “Best Residential Community in the Lowcountry”. This distinction was also bestowed on HHP by you in 2014.

The Front Desk welcomed 392 property owners to the Plantation, signed up 406 owners/residents for Email Services, sold over 4,400 commercial decals, and sold 123 packs of note cards and 134 General Howard A. Davis booklets of which the funds go to benefit to the Whooping Crane and Cypress conservancies.

The Board continues to position Hilton Head Plantation for the future through infrastructure improvements and technology. We are also looking to the challenges of moving our workforce to their duty stations in a timely and efficient manner. As development increases further in Bluffton and Hardeeville, the challenge to transport our workforce will see further strains. The bridges to Hilton Head Island are in need of expansion and renovation. This should be a focus for the immediate future. Our Hurricane Plans will again be upgraded as we factor in our experience with Irma. One beneficial consequence of hurricanes Irma and Matthew is your signups for our email

blasts, which has surpassed 4,300 enrollees. This communication tool is a very efficient way of keeping all interested parties informed during such emergencies. One of our many focuses for 2018 will be to work with the few remaining properties that have not been able to make the needed repairs from hurricane Matthew.

All of the Board’s work has had a meaningful impact on home sales as HHP experienced the highest number of homes sold since the mid-2000’s. This surge, along with excellent fiscal management, will most likely retire our internal loan for the renovations to the Spring Lake Pool sometime this year, a full two years ahead of schedule.

Our bimonthly 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.

Peter Kristian, General Manager

2017 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.

Once again, the Town of Hilton Head’s Emergency Management Center notified our department that because of Hurricane Irma we would be evacuating our residents from the Plantation and out of Beaufort County. The Security Department implemented our evacuation plan and safely evacuated over 7,000 residents without incident. The General Manager, along with the Director of Security, Deputy Director, and 21 Security Officers, remained in place on Hilton Head Plantation and set up a command center at the POA Service Center. Keeping the gates manned and the patrols moving about on the Plantation played a large role in suppressing any looting that might have otherwise happened.

The main thing everyone should take away from this is ― we had a plan, we followed the plan, and the plan worked. 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 2017, crime on Hilton Head Plantation was very low. This was due in part to the homeowners’ vigilance, and the gate and Patrol Officers’ protocols seem to be working very well.

In 2017, our Officers logged a total of 125,959 miles patrolling the Plantation’s residential areas. Security Officers responded to 317 alarms from residential homes and businesses and, additionally, Officers responded to 3,647 calls for service from our residences and businesses. Included in these calls for service were 524 medical assists, 1,164

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

resident assists, 41 traffic collisions (2 were deer-related), 22 incidents of trespassing, 9 domestic disturbances, 4 cases of disturbing the peace, 20 cases of vandalism, and thousands of calls regarding animal complaints, improper parking, lost and found items, prowlers, and Covenant/Rules and Regulations violations. There were no burglaries or breaking into motor vehicles cases reported to the Security Department.

Additionally, Security Officers completed over 35,822 security checks for our away-from-home residents and commercial properties. Over the last 12 months, 326 State tickets were written for speeding to drivers on Hilton Head Plantation roadways for a total of over 400 traffic stops. Security Officers issued 4,610 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 25 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.

2017 POA Operations - Security (cont’d.)

Keeping crime on Hilton Head Plantation low and educating our residents about locking their doors when away from their homes and autos continue to be the priorities of the department.

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

(above) The HHP Dispatch Center processed 3,647 calls for service in 2017.

2017 POA Operations - Maintenance

The year 2017 arrived with a number of recovery projects still ongoing from Hurricane Matthew and tropical storm Hermine. HHPPOA’s maintenance staff worked with FEMA subcontractors and the Town of Hilton Head Island to identify and assist in the removal of qualifying stumps, damaged trees,

downed trees and debris in our ponds and drainage systems, and marine debris in our marshes and

wetlands. We repaired areas of our perimeter fence damaged by fallen trees and limbs. Open spaces and common areas were cleaned where outside contractors had piled debris that did not qualify for FEMA removal and those areas were regraded to establish a positive flow of stormwater. Our marine contractor restored the severely damaged bluff walk and revetment along Port Royal Sound, and our ground maintenance

contractor restored General Howard A. Davis Island and added screening plants at the intersection of Whooping Crane Way and Seabrook Drive. Staff refurbished or replaced the damaged Spring Lake Pool equipment, furniture, cabanas, and repainted the pool bridge.

Other projects completed this year included replacing the ballfield backstop fence, installed new bases, and added topdressing/grooming to

the infield clay diamond. We installed a new mechanical lift in our maintenance repair shop, and replaced damaged wood and painted the exterior of the Plantation House. The interior walls and trim at the Spring Lake Pavilion and the POA Service Center were painted as well as the wooden sections of fencing that mark the perimeter of the Cypress and Bay Club community. Our crew maintained annual bushhogging of undeveloped lots.

The roads and leisure paths received a lot of attention with the milling and resurfacing of approximately two miles of asphalt throughout the Plantation. Over 5,000 square yards of root damaged asphalt were removed and replaced on our roadways and leisure paths combined. After delays from last year’s storm systems, Whooping Crane Way was finally sealcoated and restriped with new reflective markers installed at the paint lines. The Plantation House parking lot was sealcoated and painted and Dolphin Head Recreation basketball court received a fresh coat of asphalt overlay as well.

The POA lobbied the Town of Hilton Head Island for help with the Pine Island Beach renourishment and they approved a three-year commitment giving us financial assistance. After a few mini-beach renourishments on Pine Island Beach, Hurricane Irma showed off her powers by washing away tons of approved sand proving once again that our efforts are no match for Mother Nature. Staff and your General Manager spent many hours working to ascertain a DHEC and USACOE permit to apply additional sand to Pine Island Beach and to install a new boardwalk to access Pine Island.

In addition to our daily tasks such as grooming/resurfacing the 12 clay tennis courts and the bocce court, amenity event set-ups, housekeeping and grounds/landscape maintenance, we have weekly tasks such as building and installing mailboxes, replacing and repairing lights and minor electrical, replacing and repainting signs, minor plumbing, pond aerators, stormwater minor drainage repairs, and basin cleaning. We also grind landscape debris into viable mulch and deliver it for groundcover to property owners. All HVAC equipment is on a monthly preventative maintenance schedule.

2017 POA Operations - Tennis

Spring Lake Tennis took another hit when Hurricane Irma came through in September. The damage was minor compared to Hurricane Matthew in 2016. We added around 8 tons of new material compared to the 240 tons we added for Matthew. Other than expected debris clean up, no other destruction occurred.

The Spring Lake Tennis facility had 121 annual memberships (230 people) during 2017. Although the courts were not in operation for one week due to Hurricane Irma, they were still busy with over 18,000 hours of court time used. A combined 1,400 residents and their guests used the tennis facility throughout 2017.

Due to the increase in USTA league tennis, the sponsored/past Hilton Head Plantation Property Owners’ Membership program added seven new annual 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 number of team records are broken and 2017 did not disappoint, with 60 teams consisting of men’s, women’s, mixed, combo, 18s, 40s, 55s, 65s, 70s, and 75s divisions. Sixteen teams won their respective local league and participated in the State Championships, with two teams winning as State Champions.

On the “lighter side” of competition, Spring Lake Tennis held its Friday/Saturday socials, which are hosted by the Tennis Committee. They were well attended with themes such as Octoberfest, Luck of the Irish, St. Patrick’s Day, and Soup & Chili.

The Traditional Wimbledon Team Tennis (33 years in existence) had over 50 participants followed by the “Champagne, Strawberries & Cream Award Celebration.”

Another popular event was the Hilton Head Plantation Challenge. The format was revised with a player from Spring Lake partnered with a player from the Country Club of Hilton Head. There were two levels, 3.0 and 3.5-4.0. The new format was lots of fun (no kept scores) and was a huge success. Over 100 people attended the award party.

The Bocce program (in its 12th year of operation) consisted of two leagues, Spring and Fall. The courts were busy with over 1,000 hours used. The Bocce Ball Club consisted of 80 memberships. The courts were resurfaced four times throughout the year. Four new sideboards with stainless steel hinges, as well as four new sprinkler heads were replaced.

During 2017, tennis court maintenance included resurfacing and retaping six courts, and adding two tons of material to the remainder of the courts. Courts 1 & 2 fences were painted electrostatically. The remainder of the fences will be painted in 2018.

One of the top certified tennis court contractors from Hagerstown, Maryland provided his yearly facility inspection and offered suggestions on the daily and yearly court maintenance.

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. That focus is designed 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

The Community Relations Department continues its overall emphasis on education to reach out to new owners and longtime residents in our community. Potential Covenant violations come to the POA’s attention through distinct endeavors: the Security Department, members of the Covenants Committee, property owners, and support from the POA’s Architectural Review Board. The Covenants staff works in a cooperative manner with our homeowners to encourage personal responsibility in the maintenance of their property, which enhances and 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 2017, the Community Relations Department investigated and processed over 4,708 non-moving Covenant violations. Of the violations reported, 59 fine letters were forwarded to those residents who were non-compliant. The vast majority of violations were parking issues that were resolved through education and voluntary compliance. 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 our concerns. Major events in the past year-and-a-half resulted in our efforts being more amicable and understanding.

During 2017, the Covenants staff and committee members reviewed and evaluated existing rules and regulations. A few residents requested a review of fencing, motorcycles, and golf cart rules. Revisions and/or modifications for those venues were not recommended during the year.

A lighter approach to Covenants compliance is featured in a monthly article in Plantation Living starring “Harry Heron” who is the Master Covenants Bird and “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, as well as vehicle parking resolutions. Our commercial vendors are periodically reminded that all service providers must 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 dispose of their landscape debris in an environmentally sound manner. 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 featured a wonderful display of homes decorated for the Christmas and Hanukkah seasons. The holiday spirit was alive and well in 2017. The Tour list was by far larger than previous years. It was a popular experience for our residents to share with their families and guests.

Our discounted yearly Realtor Decal ($25) continues to be 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 packet for the realtor’s prospective homebuyers, with loads of Plantation information that is consistently updated.

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

2017 POA Operations - Community Relations

“Harry Heron” - the Covenants Bird

2017 POA Operations - Community Relations (cont’d.)

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. The objective continues to be keeping our community an attractive and pleasant place to call home.

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 tools used to protect this primary asset is 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 meets on the fourth Thursday of each month. Submissions to the ARB are due on the fourth Monday of each month.

The ARB Department publishes a quarterly article in Plantation Living : “The ABC’s of the ARB”. The purpose of this article is to provide residents with accurate information on exterior home improvement projects, including what information, documents, and building permits are needed for the submission through the construction phase.

During 2017, over 215 homes were purchased by new property owners in our plantation. As with any existing home purchase, the new owners were anxious to make their newly acquired property their own by remodeling the interior, exterior, and outdoor living spaces. Many new property owners visited the ARB office inquiring about the Plantation’s building and remodeling process, review fees, and submission dates. The office noticed an increase in home improvement permit requests for painting, window and door installments, garages, paver- driveways/repairs, new landscape designs, and tree removal. This surge in new ownership has created a building boom in our plantation. The increase involved

15 new homes being reviewed and approved for building, of which 8 homes have been completed, 4 are in the final stages of construction, and 3 have started construction.

In addition, the ARB approved 43 major additions. These include the following: 14 screen porches, 12 room additions, 9 garages, 6 Carolina rooms, and 2 bonus room additions. The ARB provided an administrative approval for 178 smaller home enhancements: 27 deck upgrades, 68 driveway/walkway improvements and paver enhancements,

45 window/door replacements, 2 outdoor kitchens, 13 fire pit additions, and 23 total new landscape designs adding elements of hardscape. Many reroofs and repaints were approved for existing homes. The ARB issued 692 Building Permits and 638 Tree Permits. The office responded to over 5,600 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. The program cuts down on paper usage, is cost-efficient, and makes it easier for the homeowner to access their house plans. Tree Mitigation: the ARB adopted this policy to prevent the decline of the existing arboreal assets of the Plantation and provide guidelines for tree removal and mitigation requirements. The ARB will provide permission to remove trees meeting the established criteria. Information can be found on the POA’s website: www.hiltonheadplantation.com under the Documents tab/Tree Mitigation.

The ARB plays a vital role in keeping HHP in harmony with nature while considering the diverse architectural and design desires of our property owners. In this manner, the ARB and its staff seeks to maintain and enhance property values.

In 2017, the Activities Department introduced a variety of new and exciting programs including the Mardi Gras Bingo Night, the St. Patrick’s Day “Blarney Bash,” the Good Grounds coffee tastings series, the Teen/Tween Aerial Adventure, and the Fall Harvest Party. The lineup of new seminar topics for the year included Casualty Losses after Hurricane Matthew, Understanding Settlement Around Your Home, Social Security Planning, the Stock Market Update, Lessons Learned from Hurricane Matthew – Insurance Seminar, Gun Safety, Reverse Mortgages, and Putting Together a Theater Production.

Other programs that continue to grow in popularity include the Cooking Live Series, the Caribbean Pool Party, Kids’ Night Out, the fall Trash & Treasure Sale, as well as the spring and summer Concert Series with Rob Ingman, Deas-Guyz, and the HHP Big Band. New to the summer concert lineup in 2017 were The Finns out of Greensboro, NC. Also back by popular demand was a spring Home Sense Series with The Home Depot, two AARP Driver Safety Courses, flu shots, a community Blood Drive, and the Wills vs. Trusts Seminar. In addition, we offered discount theater tickets for “The Clean House” and “Young Frankenstein.”

During the year, we continued the tradition of our various holiday programs such as the Easter Sunrise Service, the 4th of July – HHP Day Celebration, the Halloween Pet Parade, and the 12th Annual Veterans Day Observance Ceremony once again hosted by the Hilton Head Island High School NJROTC Unit. The year concluded with the Children’s Holiday Party and the Holiday Hayride.

We continue to offer a diverse schedule of fitness classes such as Low-Impact Aerobics, Total Body Conditioning, Gentle Yoga, Chair Yoga, Total Fitness, Intermediate and Beginner Pilates, Morning Water Aerobics, and Deep-end Water Aerobics. We also continued to offer sessions of Qigong throughout the year.

Numerous HHP families continued to support our “Kids Kamp” summer program, and we experienced an increase of 15% in total enrollment from 2016 to 2017. With the total enrollment rising from 287 in 2016 to 331 in 2017, the weekly average enrollment also increased from 134 in 2016 to 166 in 2017. The daily average enrollment rose

significantly from 92 in 2016 to 123 in 2017. We still offered Kids Kamp for eight weeks, and some of the new weekly themes for 2017 included “Survivor Week,” “Disney on Parade Week,” “Celebration Nation Week,” “Fitness Frenzy Week,” and “Hooray for Hollywood Week.” Special events this year included inflatables from Fun Time, a visit from the Kona Ice Truck, a Disney karaoke party, a visit from the HHP Dog Club, a visit from the Hilton

2017 POA Operations - Activities

2017 POA Operations - Activities (cont’d.)

their donations and support of the POA, facilities, activities, special events, and landscape. We continue to be amazed with the generosity of these special people, and the Department thanks the community for its continued support and assistance.

Head Island Fire & Rescue Dept. and their big red fire truck, Field Day, a pool party, and the End-of-Kamp Show.

Residents continued to enjoy the beautiful new Spring Lake Pool. Attendance increased from 2016 to 2017 by 7% with over 54,000 individuals enjoying the new and improved Spring Lake Pool for its second season which lasted from the beginning of April through the end of October.

A few of the major projects that took place in 2017 included resealing and striping the parking lot at the Plantation House, replacing the carpet at the Plantation House, resealing the basketball court at the Dolphin Head playground, adding additional sand to both the Dolphin Head and Spring Lake playgrounds, and installing a new backstop for the ball field.

Additionally, the POA continued to provide the opportunity for donations through the Memorial & Honorarium Program. Several new benches and trees were added throughout the Plantation under this program. The POA also continues to implement a Veterans 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. The most recent brick order was installed at the end of the year.

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

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 2017 greatly exceeded the annual target, finishing the year with the highest amount in Plantation Living history. 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. Since 2013, the Department has produced three color issues each year which increased to four color issues (March, June, September, and December) in 2017.

A substantial savings in postage costs has been achieved 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 version of the newsletter online.

Annual Report

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

General Howard Davis booklet

These historical booklets were finalized in December 2016 for sale. The HHP Conservancy Foundation sponsored the printing of the booklets and proceeds will be returned to benefit the foundation. The booklets were spotlighted in the January 2017 issue of Plantation Living as well as via email blasts. Those residents who donated $100 or more to the Conservancy Foundation received a complimentary booklet.

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 residents sign up for one or all of these email services, they receive periodic information about the topic selected. To date, nearly 4,300

2017 POA Operations - Communications

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. After HHP’s challenging days during Hurricane Matthew in October, 2016, and for many subsequent months, the community again evacuated (for the most part) when Hurricane Irma paid a visit in September 2017. Thankfully, the damage from Irma was not as devastating as Matthew. Nevertheless, the Department was extremely busy sending multiple daily emails to keep residents informed and encouraged.

• 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 member 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 2,100 residents have joined thus far, with additional participants signing up daily.

• Search feature on website – In an ongoing effort to improve the user’s experience, the Department implemented a search button at the top of the website. Further work will be conducted to streamline and improve the search process.

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 electronic announcement board at HHP’s Main Gate. A second board was added 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:

• Note Cards - Scenes from around HHP were taken by resident photographers, and note cards were produced and are sold to benefit the HHP Conservancy Foundation.

• Hurricane Guide – HHP’s Hurricane Evacuation Guide was inserted into the June 2017 Plantation Living and posted on the website.

• 2018 Resident Opinion Survey – The Department began work on the triennial survey towards the end of 2017. The 2018 Survey will appear in the April 2018 issue of Plantation Living and will also be posted on the HHP website.

• New Gate Pass system – The Department worked with the Security and Administration departments to inform residents of this new system. An instructional email blast was sent out in July 2017, and was also featured on the front page of the August 2017 issue of Plantation Living.

Communications Committee

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

2017 POA Operations - Communications (cont’d.)

POA - Financial Statements

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

December 31, 2017

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 – 15

REQUIRED SUPPLEMENTARY INFORMATION

Required Supplementary Information on Future Major Repairs and Replacements (Unaudited) 16


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Independent Auditors’ Report

To the Board of Directors and MembersHilton Head Plantation Property Owners’ Association, Inc.Hilton Head Island, South Carolina

We have audited the accompanying financial statements of Hilton Head Plantation Property Owners’Association, Inc., which comprise the balance sheet as of December 31, 2017, and the related statements of revenues and expenses, changes in fund balances and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hilton Head Plantation Property Owners’ Association, Inc. as of December 31, 2017, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.


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Disclaimer of Opinion on Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the information on futuremajor repairs and replacements on page 16 be presented to supplement the basic financial statements. Suchinformation, although not a part of the basic financial statements, is required by the Financial AccountingStandards Board, who considers it to be an essential part of financial reporting for placing the basic financialstatements in an appropriate operational, economic, or historical context. We have applied certain limitedprocedures to the required supplementary information in accordance with auditing standards generally acceptedin the United States of America which consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management’s responses to our inquiries, thebasic financial statements, and other knowledge we obtained during our audit of the basic financial statements.We do not express an opinion or provide any assurance on the information because the limited procedures donot provide us with sufficient evidence to express an opinion or provide any assurance.

Bluffton, South CarolinaFebruary 9, 2018


HILTON HEAD PLANTATION PROPERTY OWNERS’ ASSOCIATION, INC.

BALANCE SHEETDECEMBER 31, 2017

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 661,503$ 2,020,108$ 1,056,807$ -$ 126,606$ 3,865,024$Investments 93,229 - - - - 93,229 Due from (to) other funds 850,335 399,104 (1,301,914) 179,327 (126,852) - Members' assessments receivable net of allowance of $65,991 40,321 - - - - 40,321 Accounts receivable 185,797 - - - - 185,797 Prepaid expenses 99,435 - - - - 99,435

Total current assets 1,930,620 2,419,212 (245,107) 179,327 (246) 4,283,806

Property and EquipmentProperty and equipment 17,429,699 - - - 16,954 17,446,653Accumulated depreciation (7,910,581) - - - (16,954) (7,927,535)

Net property and equipment 9,519,118 - - - - 9,519,118

TOTAL ASSETS 11,449,738$ 2,419,212$ (245,107)$ 179,327$ (246)$ 13,802,924$

LIABILITIES AND FUND BALANCES

Current LiabilitiesAccounts payable 118,645$ -$ -$ -$ -$ 118,645$Accrued payroll liabilities 54,147 - - - - 54,147 Accrued vacation pay 43,903 - - - - 43,903 Line of credit - - 900,000 - - 900,000 Deferred compensation 25,000 - - - - 25,000 Deferred revenue and restricted

contributions 79,751 - - - - 79,751 Deposits 169,178 - - - - 169,178

Total current liabilities 490,624 - 900,000 - - 1,390,624

Fund Balances 10,959,114 2,419,212 (1,145,107) 179,327 (246) 12,412,300

TOTAL LIABILITIES ANDFUND BALANCES 11,449,738$ 2,419,212$ (245,107)$ 179,327$ (246)$ 13,802,924$



STATEMENT OF REVENUES AND EXPENSESYEAR ENDED DECEMBER 31, 2017


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Fund ments Fund Fund Fund Fund TotalsRevenues

Members' assessments 5,248,545$ 728,475$ -$ -$ (75)$ 5,976,945$Commercial vehicle permits and

daily passes 948,131 - - - - 948,131 Kids Kamp 76,435 - - - - 76,435 Tennis revenues 224,759 - - - - 224,759

Cable and cell tower franchise fees 164,240 - - - - 164,240 Fees and service charges 162,093 - - 354,353 - 516,446 Advertising revenue 168,066 - - - - 168,066 Architectural review fees 79,322 - - - - 79,322 Late charges and covenant violations 36,951 - - - - 36,951 Real estate setup fees 31,383 - - - - 31,383 Special events 15,296 - - - - 15,296 Interest and investment income 2,864 1,747 914 - 104 5,629 Bar code sales 7,170 - - - - 7,170 Disaster recovery, net of expense - - 98,717 - - 98,717 Other 19,634 - - - - 19,634

Total revenues 7,184,889 730,222 99,631 354,353 29 8,369,124

ExpensesDisaster recovery, net of proceeds 10,328 - - - - 10,328 Security 1,636,728 - - - - 1,636,728Administration 898,816 - - - - 898,816 Depreciation 804,307 - - - - 804,307 Landscape maintenance 701,420 - - - 1,138 702,558 General maintenance 339,707 59,530 - - - 399,237 Spring Lake pavilion and pool 198,677 - - - - 198,677 General insurance 191,401 - - - - 191,401

Communications with property owners 194,887 - - - - 194,887 Tennis 194,232 - - - - 194,232 General recreation 176,121 - - - - 176,121 Community services 160,713 - - - - 160,713 Recreational grounds maintenance 101,202 - - - - 101,202 Drainage 99,570 - - - - 99,570 Road repair 74,853 - - - - 74,853 Main entrance 66,744 - - - - 66,744 Property taxes 87,516 - - - - 87,516 Bad debt expense 36,038 - - - - 36,038 Repairs and replacements 50,580 - - - - 50,580 Kids Kamp 56,045 - - - - 56,045 Plantation house 46,729 - - - - 46,729 Special events 35,351 - - - - 35,351 Legal 11,137 - - - - 11,137 Storage area expense 24,388 - - - - 24,388

Total expenses 6,197,490 59,530 - - 1,138 6,258,158

Revenues over (under) expenses 987,399$ 670,692$ 99,631$ 354,353$ (1,109)$ 2,110,966$



STATEMENT OF CHANGES IN FUND BALANCESYEAR ENDED DECEMBER 31, 2017


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Fund ments Fund Fund Fund Fund Totals

Balance - beginning of year 11,088,567$ 2,444,451$ (2,389,521)$ (843,026)$ 863$ 10,301,334$

Revenues over (under) expenses 987,399 670,692 99,631 354,353 (1,109) 2,110,966 Interfund transfers (1,116,852) (695,931) 1,144,783 668,000 - -

Net change in fund balances (129,453) (25,239) 1,244,414 1,022,353 (1,109) 2,110,966

Balance - end of year 10,959,114$ 2,419,212$ (1,145,107)$ 179,327$ (246)$ 12,412,300$



STATEMENT OF CASH FLOWSYEAR ENDED DECEMBER 31, 2017


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Fund ments Fund Fund Fund Fund Totals

Cash Flow From Operating ActivitiesRevenues over (under) expenses 987,399$ 670,692$ 99,631$ 354,353$ (1,109)$ 2,110,966$Adjustments to reconcile revenuesover (under) expenses to net cashprovided by (used in) operating activities:

Income and expense items not affecting cash flows:

Depreciation 804,307 - - - - 804,307 Realized loss on investments 292 - - - - 292 Bad debt expense 36,038 - - - - 36,038

(Increase) decrease in:Members' assessments receivable (23,463) - - - - (23,463) Accounts receivable (149,821) - 200,000 - 259 50,438 Allowance for doubtful accounts 15,165 - - - - 15,165 Prepaid expenses 15,040 - - - - 15,040

Increase (decrease) in:Accounts payable and accrued

expenses (125,003) - (2,925,000) - - (3,050,003)Deferred compensation (25,000) - - - - (25,000) Deferred revenue and restricted

contributions 26,997 - - - - 26,997 Deposits 15,255 - - - - 15,255

Net cash provided by (used in) operating activities 1,577,206 670,692 (2,625,369) 354,353 (850) (23,968)

Cash Flow From Investing ActivitiesCapital projects and additions to

property and equipment (825,877) - - - - (825,877) Change in projects in progress 2,950 - - - - 2,950

Net cash (used in) investing activities (822,927) - - - - (822,927)

Cash Flow From Financing ActivitiesProceeds from short term debt - - 900,000 - - 900,000 Due from (to) other funds 412,917 26,986 581,500 (1,022,353) 950 - Interfund transfers (1,116,852) (695,931) 1,144,783 668,000 - -

Net cash provided by (used in)financing activities (703,935) (668,945) 2,626,283 (354,353) 950 900,000

Net increase in cash and cashequivalents 50,344 1,747 914 - 100 53,105

Cash and Cash Equivalents - Beginning of Year 611,159 2,018,361 1,055,893 - 126,506 3,811,919

Cash and Cash Equivalents - End of Year 661,503$ 2,020,108$ 1,056,807$ -$ 126,606$ 3,865,024$



NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2017

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Note 1. Nature of 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 (GAAP).

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)

Investments

Investment 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, 2017. 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, exclusive of portion of the annual assessment earmarked for the Weather Casualty Fund, to be used for this purpose and the Board has opted to exercise that option for 2017.

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.




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Note 2. Summary of Significant Accounting Policies (Continued)

Fair value of financial instruments

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

The Association from time to time may have amounts on deposit in excess of the respective insurance and protection limits. As of December 31, 2017, the Association had $977,841 in uninsured cash balances at FDIC insured depository institutions and held amounts at brokerage firms exceeding the SIPC protection limit by$2,622,877. 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.




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Note 4. Investments and Fair Value Measurement (Continued)

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, 2017.

• Money Market Mutual Funds: Valued at the Net Asset Value (NAV) of the shares held by the Association at year end.

Fair values of assets and liabilities measured on a recurring basis at December 31, 2017, are as follows:

Total Level 1 Level 2 Level 3

Investments 93,229$ 93,229$ -$ -$

Total 93,229$ 93,229$ -$ -$

There are no unrealized gains or losses on investments as of December 31, 2017. Interest income earned on these investments is presented in the Interest and investment income line item on the Statement of Revenues and Expenses. The realized loss on investments for the year as presented in the Statement of Cash Flows relates to account management fees.

Note 5. Prepaid Expenses

Prepaid expenses at December 31, 2017, consisted of the following:

Insurance 65,035$Fuel 10,611Fabric and mailboxes 13,789Land lease for recreational vehicle storage area 10,000

99,435$




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Note 6. Property and Equipment

The major components of property and equipment and their respective useful lives at December 31, 2017, are as follows:

EstimatedDepreciableLife - Years Balance

Land Non-depreciable 344,000$Land improvements 5 - 25 826,634Buildings and building equipment 5 - 40 4,540,906Machinery and equipment 3 - 10 938,204Fencing 10 - 15 303,007Roadways 15 4,207,068Stormwater management 40 2,101,137Leisure paths 10 175,044Bluff revetment 10 - 35 389,370Office furniture and equipment 5 290,885Motor vehicles 3 355,320Communications equipment 5 118,250Swimming pool equipment 15 2,768,763Signs and outdoor lights 5 - 8 71,111

Total operating fund property and equipment 17,429,699Equipment-Lot Maintenance Fund 3 - 10 16,954

Total property and equipment 17,446,653Less: accumulated depreciation (7,927,535)

Net property and equipment 9,519,118$

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. The agreement was amended in December 2014 to accelerate the payment date of the second payment to January 31, 2015. The Association accrued the full cost of this deferred compensation arrangement over the term of the agreement and is currently paying out the full $100,000 over a four year period. As of December 31, 2017, the remaining amount to be paid out relating to the above arrangement is $25,000.




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Note 8. Deposits, Deferred Revenues and Restricted Contributions

Deposits, deferred revenues, and restricted contributions at December 31, 2017, are as follows:

Architectural Review Board - builders compliance deposits 156,425$Facility usage deposits 12,753

Total deposits 169,178$

Prepaid assessments 30,925$Memorials and other restricted contributions 48,826

Total deferred revenue and restricted contributions 79,751$

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 2017 are summarized as below:

Cash Credit Card

Family dwelling annual assessment 1,349$ 1,376$Residential lot annual assessment 809$ 825$Commercial office space per square foot 1.75$ 1.78$Outdoor recreational facilities (% of revenue) 6.75% 6.89%Private recreational property per acre 230$ 235$Public and commercial site (% of value) 1.75% 1.78%

Payment by

Of the above annual assessment, $250 per property was earmarked by the Board to cover costs incurred by the Weather Casualty Fund due to Hurricane Matthew and other recent storms. The Association assesses late charges at various rates on past due property assessments. Liens are recorded against properties with pastdue 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 with varying rental terms. Total rent expense under these leases amounted to $10,540 during the year ended December 31, 2017.

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 an initial 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. The Association exercised the option to extend the lease for an additional five years and the lease will expire in August 2022.Rent is payable annually beginning in September 2012. Total lease expense under this lease was $23,799 in2017.




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Note 10. Operating Leases (Continued)

Approximate future minimum lease payments under operating leases in effect as of December 31, 2017, are as follows:

Year Amount

2018 30,991$2019 30,9912020 30,9912021 30,9912022 17,727

141,691$

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 2017 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, 2017, was $50,727.

Note 12. Interest Expense

The Association paid $2,933 on interest expense during the year ended December 31, 2017.

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, 2017, 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, 2017.

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, 2017.

Note 14. Commitments and Contingencies

During the year ended December 31, 2017, the Association was party to a landscaping maintenance contract which was renewed in January 2014. The contract required initial annual fees of $693,450, with 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 a 60-day prior written notice. The annual fee for the year ended December 31, 2017, was $735,664, paid in equal monthly installments.




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Note 14. Commitments and Contingencies (Continued)

In February of 2003, the Association obtained a $2,000,000 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. The line is renewed annually in July. 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 2017.

In July of 2017, the Association obtained a $1,200,000 line of credit from a regional bank to be used for storm repairs. This is a temporary line of credit that will expire July of 2018. Interest is payable monthly on principal drawn on the line of credit at the bank’s prime rate with principal due in one year. As of December 31, 2017, the Association had $900,000 outstanding on the line of credit.

The Association has an employment contract with the General Manager which provides for service to the Association through December 31, 2020.

Note 15. Interfund Activity

Interfund transfers

A summary of interfund transfers for the year ended December 31, 2017, follows:

MajorRepairs & Weather Capital Lot

Operating Replace- Casualty Transfer MaintenanceFund ments Fund Fund Fund Fund Total

Major repair & replacement capitalized projects 695,931$ (695,931)$ -$ -$ -$ -$Excess storm clean-up costs (39,783) - 39,783 - - -Transfer of equity from annual assessment for weather fund (1,105,000) - 1,105,000 - - -Transfers declared from excess funds (668,000) - - 668,000 - -

(1,116,852)$ (695,931)$ 1,144,783$ 668,000$ -$ -$

Interfund balances

During 2015, the Association’s Board of Directors elected to partially fund a capital project by borrowing$600,000 from the major repairs and replacements fund and $500,000 from the weather casualty fund, to berepaid by the capital transfer fund. Though no specific repayment terms were set forth regarding this balance, it is the Board’s intent to repay this amount through operating activities over time. The Association repaid $843,026 during the year ended December 31, 2017, and there was no balance outstanding as of December 31, 2017.




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Note 16. Major Repair and Replacement Study

The Association’s management updated its study during 2017 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 ofcurrent replacement costs, considering amounts previously designated for future repairs and replacements. AtDecember 31, 2017, the Association had $2,419,212 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. In the event that amounts budgeted may not be adequate to meet all future needs for major repairs and replacements, the Association has the right, subject to the terms of the Association covenants, to increase regular assessments, pass special assessments, or delay major repairs and replacements until funds are available.

Note 17. Disaster Recovery

During October 2016, Hurricane Matthew significantly impacted the region, interrupting the Association’soperations and causing property damage and significant vegetative debris. As of December 31, 2016, theAssociation accrued $2,925,000 for estimated costs associated with disaster recovery efforts. During the year ended December 31, 2017, the Association incurred expenses of $2,826,283 which resulted in disaster recovery revenue for the year ending December 31, 2017. The difference of $98,717 is reported as revenue on the Statement of Revenues and Expenses for the year ended December 31, 2017.

Note 18. Subsequent Events

The Association has evaluated subsequent events through February 9, 2018, 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


REQUIRED SUPPLEMENTARY INFORMATION ON FUTURE MAJOR REPAIRS AND REPLACEMENTSDECEMBER 31, 2017

(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 as of December 31, 2017, to reflect any changes that occurred during 2017. 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.

The following information is based on the study and presents significant information about the components of common property.

EstimatedEstimated Replacement

Useful Remaining CostLife Useful Life (in thousands)

Community wide infrastructure 7-40 1-26 3,818$Dolphin Head recreation area 5-20 2-10 187Machinery and equipment 4-25 1-15 999Pipes and drainage structures 15-40 1-15 1,025Plantation House 5-25 1-13 369Property Owners' Association - office building 3-20 1-15 285Property Owners' Association - shop 7-20 1-8 88Roads, curbing, and leisure paths 7-15 1-15 5,691Security buildings and equipment 5-20 2-14 405Signage 12 1-6 140Spring Lake Pavilion 6-25 2-20 1,042Spring Lake pool 5-20 4-19 441Spring Lake tennis 4-25 2-12 228Vehicles 4-10 1-4 323

15,041$