It has come to the attention of many people that our property values have not gone up; but have declined.
Why is this happening?
Property on the lakes or golf courses has always been "prime" -- until now. What has caused this to take place?
When it was reported that Cherokee Village was having financial problems it stimulated another question of "Why?" The Suburban Improvement District (SID) collects Association Dues yearly to maintain the Parks, both Golf Courses, and both Club Houses with pools. The SID also provides the City with money toward the maintenance of the streets and roads. So, where does all the money go?
Here is what a property owner has searched to find out with legal assistance.
From the minutes of the SID meetings, it appears that the last meeting of the board of the SID in 2002 was held on Sept. 19, 2002. The next meeting was held on March 20, 2003. At this March meeting, it was announced that, since the September 2002 meeting, the SID signed a contract with American Land Company (ALC). The contract created a system on which SID assessments have not been paid back on the market for resale. It was represented that this contract was presented at a public meeting on January 8, 2003. The contract is dated Nov. 5, 2002; but it does not appear that the contract was ever presented and approved in a board meeting of the SID.
In the implementation of this contract, ALC handles the SID foreclosures on lots within the SID, on which SID assessments are delinquent. This contract provides that ALC has the exclusive right and option to purchase the interest of the SID in some or all of the delinquent tax properties, at the election and discretion of ALC. This contract was for a five-year period but automatically renews annually and has been in place since 2002. No other person or entity has an opportunity to compete in this process. While these lots are held by the SID, there is no payment of SID assessments.
When ALC elects to purchase a lot in Cherokee Village from the SID, it pays to the SID 5 percent of the gross selling price received by ALC from a third party buyer. Presumably, ALC keeps the other 95 percent. It appears that it is ALC's decision and not the SID as to the selling price of a lot to a third person buyer.
Since the implementation of this contract, ALC has been principally selling lots on eBay. In some cases, ALC acquires lots from the SID under this contract arrangement at a price determined by ALC. In some cases, ALC does not pay SID assessments on these lots. The SID assessments become delinquent and are once again foreclosed and are again subject to being recycled.
From court records and from minutes of meetings of the SID Board, it appears that thousands of lots have been foreclosed, and then resold under this contract between the SID and ALC. From the minutes of SID Board meetings, it appears that the primary benefit being returned to the SID is the five percent of gross selling price. Board minutes reflect that the highest volume was experienced in 2005. In that year, it was reported by the board 2,895 lots were sold. The five percent return to the SID in that year, under the contract, was approximately $261,208. We will leave it to you to calculate the revenue retained by ALC. While this may look appealing, this was as good as it got for the SID under this contractual arrangement.
Since 2005, the average value of Cherokee Village lots sold and the return to the SID has steadily declined under this arrangement, as reflected in the minutes of the SID Board. In the board minutes of Feb. 14, 2008, Mr. Floyd Hannon expressed concern over the lot sales. These minutes show that, in all of 2008, the SID received $19,602, and that the average price of lots had fallen to approximately $547. These minutes report that, in 2009, lot sales were very poor. In all of 2009, the SID received only $16,347.51. This has proceeded to the point that, at the May 9, 2011, meeting ,Board member, Floyd Hannon requested guidance on the ability to terminate the ALC contract; but was told that it could not be terminated because it required five-year notice to terminate it.
Why has this loss of property value happened? In large part, it is because ALC has flooded the market with Cherokee Village lots and, in the exercise of its exclusive discretion under the contract, has increasingly over the years elected to sell the lots at lower and lower prices through mass marketing on eBay. ALC and the SID Board have recognized this problem in the past. At a meeting on April 10, 2006, Mr. Eben Daggett, an official of ALC, stated to the Board that ALC would temporarily cease selling lots. He stated that this step was to allow individual lot owners ("moms and pops") in Cherokee Village to sell their lots, in an effort to increase the value of lots being sold.
If the purpose of this contract was to restore Cherokee Village lots to the tax rolls, it has clearly not worked. All it has done is to devalue the property of existing Cherokee Village owners. Even ALC has failed to pay SID assessments on its own property, previously acquired through the foreclosure proceedings. ALC is now allowing its own property to be, once again, foreclosed for non-payment. In a recent foreclosure action, ALC was named in an action filed on June 22, 2011, in Fulton County Circuit Court, Case No. CV-2011-66-4. You can go to the courthouse and look it up for yourself.
Earlier this year, some property owners elected to challenge the validity of the SID -- ALC contract in a California Court. That case was dismissed on jurisdictional grounds. ALC is obligated to pay the SID in excess of $60,000 in legal fees incurred in that case. However, in an SID board meeting on March 18, 2011, ALC related that it could not pay and gave a promissory note to the SID in the amount of $61,239.98. The status of payment is not known.
What is happening now? Certain Cherokee Village property owners have recently elected to challenge the contractual relationship between the SID and ALC. A suit has been filed in both Fulton and Sharp Counties against the SID, ALC and its principals. These suits were filed in an effort to stop the cyclical foreclosures, to halt the needless devaluation of property in Cherokee Village and to help find a better method to collect the payment of SID assessments.
Let's unite so that our property values go up versus down in these especially hard times. If you are interested in more information about this effort and wish to join the effort for the preservation of Cherokee Village property, please contact me.