You've worked hard to personalize your attack on us in order to avoid addressing a rapidly increasing level of concern among members. You've sent out a personal attack letter. You criticized us for making a legitimate filing with the SCC on the proposed utility sale. But we will work harder to stick to the important issues facing Lake Holiday.
In February and March of this year, hundreds of Lake Holiday members complained to the SCC seeking fair utility rates and access, and your best response was to waste Association funds sending out a three page letter full of misrepresentations. These members were concerned about the skyrocketing utility bills proposed by you. Instead of addressing their concerns, you choose to mock their request for the SCC to determine “fair and reasonable rates,” suggesting these people had been duped by us. Your letter was nothing more than a smear campaign targeting one of the Association's own members. And what was the final result? The SCC said your filing was “defective and should be given no effect.” Why you didn't disclose that to members? When you petitioned the SCC to reconsider its decision, you described how the Utility desperately needed money and in the past had to make payments to the Utility to keep it operating. You stated defiantly:
It will no longer make such payments.
But in your April President's Report, you reported you injected another $300,000 in the Utility. Was it a misrepresentation that the Utility desperately needed the money or was it a misrepresentation that you would no longer make such payments? We think you owe the membership an answer. And if you don't own up, they might tack on a late fee!
And Chris, in case you'd like to hide behind the argument that you don't have direct responsibility for the Utility, let's bring one thing out in the open that you routinely try to conceal from members: you serve as the Chief Executive Officer of the Utility. That's what Dave ingegneri testified to the SCC. When you're the CEO, it means the buck stops – or starts – at your desk.
Let's take a look at some of your other recent comments.
allison's FICTION: Your allegation that we filed “a claim of damages payable to [us] of more than $4 million.”
FACT: We filed a lawsuit against you and certain directors, and you along with these other directors will pay over 99% of the judgment directly to the Association, not to us. We have not been damaged by $4 million, and we have never made that allegation. Rather, we think that you and certain directors damaged the Association. We filed our lawsuit because we felt you squandered assets and were favoring one member over all others. You sold $825,000 of lots to one buyer that the buyer quickly resold for over $2.2 million – a profit of almost $1.4 million. Furthermore, you gave the buyer an option to buy all of the lots in Sections 1A and 7 for the low price of $25,000 per lot – and you fixed the price at that low level forever into the future. You even threw in a waiver of all dues and all fees for 2 years! You did not even bother to get the appraisal required by an agreement you signed. The buyer sold these lots at prices up to $75,000 per lot, and who knows what price they would have brought the Association in the future. We made a written offer on a lot in Section 7 for $50,000 in April of 2005. The Association responded that the lot was “not for sale….” You turned around and sold the same lot for $25,000 – that's 1/2 the price we offered – to the same buyer described above. We want to stop you from squandering assets, favoring one member over all others, and then expecting members to cover your mistake of selling Association land too cheaply by raising everyone's monthly bills. At some point, these bills make it too expensive to live or just own land at Lake Holiday.
ALLISON's FICTION: Your claim that the utility sale will result in “2 ½ million to LHCC” that will be used for capital improvements by 2009.
FACT: The utility sale does not result in $2.5 million in new money to the Association, even if you use fuzzy math. On October 21, 2005, you signed the contract with the buyer of the utility, so we presume you know the terms. The sale produces $800,000 at closing. It results in a reimbursement of $550,000 in capital expenditures and expenses. That's not new money, Chris. That's a wash. The lion's share of the net proceeds – $1,140,000 – is $76,000 paid each year for the next 15 years – and it has a pretty big condition attached that may not be met. For the first 8 years of the deal, 70 new tap fees must be paid or the Association doesn't get the money that year. How is money that may never be paid to the Association in the year 2021 going to help it pay any bill, particularly one coming due in 2009?
ALLISON's FICTION: The utility sale “remains, by far, the best alternative for all of our members.”
FACT: In your latest President's Report, you boast that the Association has invested “approximately $1.5 million” in LHEUC over the past 18 months. Let's deduct the $300,000 investment in the Utility that you reported you made in the last month, because that could be a reimbursable capital investment if the sale is consummated. That means you sold the $1.2 million investment you made over the past 18 months for $800,000. But the situation is even worse than that. In deeds we discovered and forced you to provide as part of litigation discovery, the proposed buyer of the Utility attached a value of almost $500,000 to just 3 parcels of real estate: the land at the wastewater treatment plant, a well site, and a water tank. Deduct the $500,000 the buyer is paying for real estate from the $800,000 that the buyer is paying for all of the Utility, and you discover that the buyer is paying about $300,000 for the pipes, customers, and other assets. Let's assume that everything was worthless before you made your recent $1.2 million investment. That investment was made on your watch as President of the Association and CEO of the Utility. That means the buyer is paying $300,000 for your very recent $1.2 million investment! And keep in mind that this analysis assumes that the entire utility infrastructure existing before your investment – the existing plant, the customer base, the goodwill of the business, and the growth opportunity to serve the rapidly growing Lake Holiday community – is valued at the whopping sum of $0. Who in his right mind puts a $1.2 million addition on his house – and then sells it for $300,000? You tell the membership that this sale represents the “best alternative” but here's what Dave Ingegneri testified to before the SCC:
The total value of the various elements of consideration to be paid at closing is in fact less than the value of the assets being conveyed….
Why don't you include this in the letters you send to members?
ALLISON's FICTION: Your claim that there's no responsibility to get water and sewer to Membership Lots.
FACT: The Utility has an obligation to serve all customers at Lake Holiday, and this obligation extends to Membership Lots. This obligation has been in writing for over 30 years. You know about this obligation, because you worked overtime to remove it. You did not even bother to notify the very people affected by your proposed change – fellow members. They pay dues, and they count too, Chris. Had it not been for our efforts to let them know about your scheme, you might have gotten away with it. You've allowed one member to extend utility lines to his lots, but you routinely conceal the obligation to serve other members. You talk about upholding your fiduciary duty, Chris. How do you possibly reconcile your conduct on the utility issue with honoring that obligation? You've told Membership Lot owners that the Association can't legally do anything to improve their condition. Care to cite the laws you might be violating if you did? Membership Lot owners collectively pay over $400,000 in assessments annually. And there is some law that has a stranglehold on you, stopping you from using these funds to get them utilities and better roads? Really? Did you conconct this crazy notion on your own or did a lawyer paid for by M & S tell you that? Please tell us and other Membership Lot owners exactly which law this is, Chris. If it's any help, there's a link to the VA Code on our blog. Please cite the exact section so we can all read it for ourselves.
You criticize us because we don't live in the community – yet the majority of members you are supposed to be looking out for don't live at Lake Holiday. Is every member who doesn't live at Lake Holiday a villain? You criticize us because we don't attend meetings – yet hardly anyone does. Most everyone has come to realize that your meetings are disinformation sessions. The important information is discussed in executive session, but folks are kept far from those secrets. We are using our own funds to protect our rights while you use Association funds to engage in character assassination to draw attention away from your breech of fiduciary duty.
To the members of Lake Holiday, it is unfortunate all of the directors would abandon independent judgment and endorse the clearly libelous statements of Allison's February letter. It is even more unfortunate that these events have ended in litigation. But this was not a sudden or impetuous act on our part. We endured almost 10 months of non-response from Lake Holiday's management. We, like many others before us, were told we were misinformed at every turn, even when the documents and facts told us we were right. One obvious example of this is the issue of extending water and sewer to several of our Membership Lots. Months before we filed our lawsuit we asked Lake Holiday to extend water/sewer to 2 lots, and we were told it was not possible. So we repeated this request in our lawsuit. Lake Holiday's written response to our complaint was that it was “not required to extend water and sewer lines.” Meanwhile, we learned from the SCC that LHEUC has an obligation to extend lines – and it's been in existence for 30 years. This has been concealed from Membership Lot owners for over 30 years, and the board led by Chris Allison has perpetuated that mis-representation. Attempting to evade a legal obligation by concealing, ignoring, stalling, and misrepresenting the facts is a recipe for disaster.
Charles Santoni says