Adverse. Difficult. Painful. Those are just a few of the words used at the Daniel Island Community Association’s annual meeting on November 19 to describe the past 12 months. It has been a time marked by surges in unemployment both locally and nationally, a real estate market that has seen unprecedented lows, and a banking industry that has suffered greatly under the weight of foreclosures and other credit nightmares. The Daniel Island community, while not immune to the fluctuating economic climate, has fared better than most.
"I have said many times over the past year that I hope one day I’ll be gray and I’ll look back to 2009 and 2008 and say those will be the worst financial times that I’ve experienced," said Jimmy Bailey, vice president of community services for the Daniel Island Property Owners Association, as he addressed the crowd gathered at Church of the Holy Cross last week. "Because I certainly don’t want to go through a period worse than what we’ve been through the last year or so."
But even in the midst of those dark times, DICA has seen some bright spots, noted Bailey. Guided by the words in The Serenity Prayer, which Bailey displayed on the last screen of his PowerPoint presentation at the 2008 annual meeting, the DICA team decided to focus on what they could change, while accepting the things that were out of their hands.
"We said there are a lot of bad thing happening out there that we have zero control over," said Bailey. "…We cannot control the stock market, the real estate market or any of that stuff. So we are going to focus like laser beam on the things that we do have control over. And so we got to work on making sure that our budgets were lean, mean and efficient."
The Game Plan
They started by examining expenses that were variable, added Bailey. All salary increases and bonuses were cut (no one on the staff has had an increase in pay since June of 2008). They eliminated the 401K match program, travel and training expenses, and their drinking water service. The burden of health insurance cost was shifted from employer to employee and the staff began cleaning the office themselves instead of using a janitorial service. To save paper, they communicated more electronically. They also switched to a new, and less expensive, phone system. In addition, they adjusted certain landscaping expenditures (such as substituting expensive plants with more affordable options), while working hard to maintain standards.
Smaller, less impactful items were cut as well. You didn’t see the festive white lights sparkling on the grand live oak tree at the intersection of Seven Farms Drive and Daniel Island Drive this year, the cost to replace them an unjustifiable expense. Plans for two new community signs to feature island announcements were also scrapped temporarily. But clearly the most painful loss of all, noted Bailey, was eliminating two staff positions.
"We just looked at every single expense to try to get as lean as possible," he said.
The DICA staff has also worked more aggressively to collect unpaid community association dues from residents (at the present time, there is approximately $60,000 that remains uncollected for 2009).
"It’s no fun," said Bailey, of the collections process. "It’s certainly not fair to have all the folks who have paid subsidize those who haven’t. If accounts were past due after 90 days, a lien was filed. In some cases, there were still construction deposits that were lingering that we were able to tap to get assessments covered…There will be some cases where we may file some judgments in small claims court. I hope it doesn’t come to that. We’ll analyze each and every bad debt on its own merits."
Foreclosure Challenges
Adding to DICA woes is the increase in the number of island foreclosures, which can create problems in terms of property maintenance. According to Matt Sloan, president of the Daniel Island Company, there are currently close to 70 foreclosures in process on the island.
"The process is backlogged, so most of them have not occurred, it’s just that the notices have been filed," said Sloan, who noted that the figure represents just two percent of the housing stock on the island. "…There are markets around the country where it is many times that. I feel pretty good about that. The foreclosures here are not isolated to one product type or another…it’s kind of across the board. We’ll see more continue, but in general I see demand going up in 2010."
"We do look at every single foreclosure we’re faced with, and we decide how we’re going to pursue it," added Bailey. "Some banks take care of properties when they take them over. Some people that know all is lost don’t have any incentive to continue to maintain their property. So we have to decide what level of maintenance is appropriate from the association to prevent it from being an eyesore, and we also don’t want to spend too much if we don’t feel there is a chance of collecting…It’s a tough balancing act and something that we work on daily."
Daniel Island Community Fund
Bailey also reported that it’s been a lean year for the Daniel Island Community Fund (DICF), which gets its support from transfer fees on real estate transactions. At the beginning of 2009, the DICF Board voted to fund existing obligations, but all other expenditures were halted.
"(The transfer fees) just seem to be up and down," said Bailey. "There are no solid trends, but we’re cautiously optimistic that we might be able to lift our grant freeze sometime in 2010."
Good things to come
As a result of budget streamlining and healthy cash reserves, it looks as though DICA will finish 2009 on solid ground. According to Bailey, they are set to move forward on several capital spending projects in 2010, including $10,000 in landscaping renovations at Codner’s Ferry Park, upgrades to the Fairchild Street entrance at Daniel Island Drive, improvements to the pond near the Bellinger Island boat landing on Beresford Creek Street, and landscaping enhancements to the Scott Park Pool area (replacing the pool’s deck area is also likely to be on the agenda for early next year).
Bailey also took time to recognize the island’s elected officials (DINA President Stacey Lindbergh, Charleston City Councilman Gary White, Berkeley County Councilman Tim Callanan, Berkeley County School Board Chair Doug Cooper, and Rep. Jim Merrill) for their efforts on behalf of the community. Island resident, Mac McBride, was also spotlighted by Bailey as a "tireless volunteer" for Daniel Island.
"I don’t know that there would be a Farmer’s Market. I don’t know if Mayor Riley would have been here (at the November DINA meeting) talking about breaking ground on Governor’s Park, and I don’t know if a lot of other positive things would have happened on Daniel Island over the years if it were not for the great citizen leadership of Mac McBride."
In closing, Bailey left his audience with a hopeful message.
"Despite the past year and despite the difficulties, we feel pretty good about where we are," he said to those gathered. "I know that as we come out of this difficult economic time, our organization is focused on what’s important…. Happy Thanksgiving and holiday season to all of you. Just know that me and my staff, all of us come to work here on Daniel Island with a great sense of pride, and we come trying to make this the best place anywhere to live. That’s our commitment and it will continue to be."