by Lloyd Sherman, July 2, 2019
No financial justification for Village Homes and Land
Given the current climate in the Village along with the division that exists as to the direction the Village appears to be taking, reports issued will most likely lean one way or the other and not be fully objective. I will admit on the front end of this report that this one will not be any different. I have been very clear that I am opposed to the formation and continued operation of this assessment draining operation. Nothing being done by this department of the POA couldn’t be done by the real estate community at no cost to the property owners. For reasons unknown to the property owners, the POA promotes the need for what has become yet another SUBSIDY.
In last year’s budget presentations, we heard that only three (3) of our recreational amenities were NOT losing money, where the Dog Park was held up as the one example where we weren’t losing money. So, the financial justification for operating a division that can be done by private enterprises at no cost to property owners remains puzzling to many of us. That being said, let’s move onto an analysis of exactly what this operating department within the POA has accomplished during their tenure. Please refer to the attached report for further details on each category.
NOTE: This information is from the Central Arkansas MLS and does not include other properties like POA-owned lots. Only information processed through the MLS!
Listed by other brokerages
Listed by Other Brokerages – A total of 13 homes listed by various other for-profit brokerages were sold by VHL. Resulting commissions for these sales generated $78,853.25 in brokerage commissions. In the for-profit world, half of that amount would have gone to the agent who handled the transaction. Four (4) of these properties were sold in 2017; seven (7) in 2018; and two (2) in 2019 through the first six months. So as to be clear, this $78,853.25 are the results for over two years in operation.
Builders Guild
Part of Builders Guild – The two properties appear to have been built by the Builder’s Guild members and were not sold by VHL but were picked up and sold by ReMax. It also appears contracted listing percentage was 5% per property and 9 Hendaye had a 3.5% co-brokerage fee. These two (2) would have rendered $11,340 in commissions bringing the overall production total of VHL to $90,193.25.
Built/Building
Built/Building – This category shows houses that are under contract but not yet closed. The only property that doesn’t have a Pending Closing Date (PCD) is 42 Cresta Way which has been showing as taking backups for several months now. If all commissions were listed at normal rates, this category would generate another $40,310 in “revenues” to VHL.
Note: These are pre-sales and not closed homes!
Lots listed by VH&L
Lots Listed by VHL – MLS only shows one lot that was listed by VHL and sold by VHL. This category generated another $750 in POA “revenues”.
Lots listed by others
Lots Listed by Others – MLS shows these lots listed by other brokerages but sold by VHL adding an additional $3,520 in POA “revenues”.
Summary
In what we will call two (2) years of active operation, VHL has generated $94,463.25. You cannot count the $40,310 because until they are closed and funded, they remain prospects. We cannot count the revenues associated with Discovery Packages because they are essentially “pass-through” revenues (revenues and costs off-set each other). There is no for-profit operation that could operate on essentially $47,000 a year in revenues and pay half of that amount to the agent who sold the property.
The question remains, why do we need another assessment draining operation to perform tasks that were already being handled by the private for-profit businesses in the area? I would love to have an answer to that question. IF there was some justification for the existence of this operation, why is the marketing program designed specifically to monopolize the market? For-profit brokers are not allowed to sell the Discovery Package! Let that sink in! It has been reported that Tellico Village experiences 500 Discovery Packages a year. Do you know why? Because they involve all realtors and builders in their program. Even with the results shown of late by VHL, there is no way to obtain the growth called for in their cherished CMP without involving the entire real estate community.
So again, I ask! How does a non-essential, unnecessary, assessment draining operation like this make any sense in the scheme of the Village’s development? Couldn’t the money being spent on this operation be spent more productively on say, I don’t know, INFRASTRUCTURE?
Village Homes & Land Production Since Inception
7.2.19VHL-Productionby Lloyd Sherman, July 2, 2019
Photography by Joseph Dowden
Edited and formatted by Cheryl Dowden
Anonymous
07/02/2019 — 3:34 pm
Lloyd, you just don’t get it. You facetiously said Infrastructure. But we are trying to build an empire here.
Wes
07/02/2019 — 3:51 pm
I visited Tellico Village last month. I can understand why people move there. It is beautiful. The POA fees are higher than ours but you can tell they take pride in their village. All of the store fronts were Full with businesses. The one thing that really stood out to me was the amount of houses for sale. Less than 10!!! I would suggest our POA and board make a visit to Tellico and see how a successful Cooper Community operates. By the way, the fitness center costs there were half of what they are here and they have up to date equipment
NittyGritty
07/02/2019 — 5:40 pm
Tellico Village will likely be successful until their next big flood/tornado comes along or Cooper pulls out.
Wes
07/02/2019 — 6:18 pm
Cooper has pulled out and they are still successful. Flood/ tornado could happen here so not sure what that comparison means
NittyGritty
07/02/2019 — 9:40 pm
It has been there a while, and they went through a lot of what we are going through now with the hostile meetings and lawsuits. It certainly is inspirational that they made it through all of that. We could too! Last I saw (very recently) Cooper was still marketing Tellico Village. The entire village is built in an historically problematic flood zone right below a big dam. The flood ratings had been miscalculated and later had to be corrected for the worse.
Tom Blakeman
07/02/2019 — 4:01 pm
Thank you Lloyd. Just more tax and spend economics by POA. I guess it feels good to say you have a fancy division like Village Homes and Land. Sad but true.
NittyGritty
07/02/2019 — 5:30 pm
Does VH&L sell other than POA properties? (Because, of course, being on the MLS does not mean that they are not POA properties.) If real estate companies sell POA property, it would not be “at no cost to the property owners.” POA revenues from the sale of POA property by real estate companies most definitely would be diminished by commissions paid by the POA.
Lloyd Sherman
07/02/2019 — 7:14 pm
Not sure I fully understand your point Nitty Gritty, but VHL was formed as Village Lots and Land with the purpose of lowering the inventory of POA owned lots. So, if your point is that if the other brokerages sold POA lots then the POA would have to pay a commission is correct. However, I believe the point you are missing here is that they aren’t selling enough of anything to justify their existence. Additionally, I have been told (and don’t know how accurate the number is) that this function has thus far cost the Village $1.2 million. That would equate to 1,600 lots at the minimum co-broker fee. The only leads the real estate community gets from VHL is (wait for it) LOTS! With an inventory nearing 4,000 now, there just isn’t a market to sell lots. But if you like wasting our assessment dollars, then go ahead and support this unnecessary function.
NittyGritty
07/02/2019 — 9:18 pm
Thank you Lloyd. Sorry to confuse you. To rephrase my question, does VH&L only sell properties owned by our POA? When you wrote “There is no for-profit operation that could operate on essentially $47,000 a year in revenues and pay half of that amount to the agent who sold the property”…I wondered if there might be a possibility that it is saving us money by supporting our own POA rather than a real estate company. I do not think it is necessary or polite to accuse me of enjoying wasting our assessment dollars. That is ridiculous and rude. I support finding the truth and sharing it, that’s all.
Lloyd Sherman
07/02/2019 — 10:39 pm
Nitty Gritty. I didn’t mean to come across as being rude. I read your email to sound as if you were supporting this function, or at least I interpreted it that way. We only issue about 60 new permits a year based on the last few years of history. Assuming the for-profit brokerages sold those 60, they would receive about $45,000 in commissions. So yes, realtors do sell POA lots at times, but because we are kept out of the loop, we can only sell those that someone brings to our attention. Regardless of commissions that are essentially being taken out of the pockets of for-profit businesses, the reality is there is nothing this group does that wasn’t already being done by builders and agents already in the real estate business. Now combine that with the cost of salaries, benefits, leased space, overhead, administration, etc. I just can’t come to any rationale for the existence of non-essential operations and would rather see our resources focused on the core needs of the Village. Having yet another real estate brokerage is not one of those core needs.
NittyGritty
07/03/2019 — 12:49 am
Lloyd, I appreciate your reply. (Appreciate The Best and Forgive The Rest!) If Cooper sold their own properties and some folks do sell their own properties, then the POA might not be forced to contract out their property sales. Maybe they cannot afford to? I am not saying that anyone is beyond reproach. But sometimes you do end up getting more when you give the benefit of a doubt.
Peggy
07/02/2019 — 5:34 pm
Thank you for this info LLoyd. You will be on the board next spring
Voletta Chavis
07/02/2019 — 9:07 pm
I can’t understand why Lloyd was elected to the board this last election because everyone I spoke to voted for Lloyd. I am very suspicious of our voting count procedure.
Lloyd Sherman
07/02/2019 — 10:43 pm
Thank you Peggy. I was a little taken back myself. Maybe this year the results will allow me to join the three from last year and we can together start representing the wishes of the majority. I can’t imagine how the “old guard” will sit still and allow the majority to be taken back without a severely brutal campaign.
HSVP J
07/02/2019 — 7:52 pm
The Board is powerless to shut VH&L down. The Board relinquished its authority to oversee the CEO’s decision to establish VH&L and create a huge divide between the for-profit real estate industry and the property owner subsidized VH&L. The CEO simply does not care who is harmed in her quest to implement her New Urban Agenda. The CEO wants to be the Official Developer of Hot Springs Village.
Mary Szczepaniak
07/27/2019 — 1:41 pm
Lloyd, the way I read NittyGritty’s post is he/she is asking if VH& L is selling properties outside of the Village?