Most POA fees in Beaufort County’s gated communities going up — some are skyrocketing

Editors note: This article has been updated to reflect changes in some numbers.

Some of Beaufort County’s gated communities are increasing their annual property owners association fees by thousands, pricing some homeowners out and sidelining prospective buyers.

In the past three years, at least 10 communities have raised their fees more than the 14% rate of inflation during that period, according to a survey by The Island Packet and Beaufort Gazette.

Haig Point and Palmetto Bluff have had the largest increases, raising their POA fees more than 25%. Haig Point went from $12,800 in 2021 to $17,962 this year.

Palmetto Bluff’s annual fees — a POA and mandatory base club fee — went from $8,869 in 2021 to at least $11,210 this year. Palmetto Bluff has not announced a POA fee increase for 2023 but its mandatory base club fee went up $150 a month, from $4,895 to $6,695 annually in last three years.

“We’re not just a bunch of whiny homeowners,” Palmetto Bluff resident Laurie Monroe said of the recent 37% mandatory base club fee jump, which doesn’t include golf. “It’s a beautiful community. It’s a high-cost community with facilities that are first-rate. Everybody’s prepared to pay their share. Just that [this] was not viewed as a fair share.”

When homeowners purchase property in a community, they sign a covenant and agree to pay all Property Owners Association, Homeowner’s Association and mandatory club fees. Sometimes communities have limits on how much they’ll go up, but they can almost always be overridden by communities, making it uncertain how much homeowners might be paying in the future.

Generally, a POA fee is placed on the whole community. An HOA or regime fee is paid in addition to POA fees and applies to specific neighborhoods within the community, real estate agents said. For example, those living in the Racquet Club Villas in Sea Pines pay both the Sea Pines POA fee and the Racquet Club Villas HOA fee.

These fees generally cover expenses such as security, landscaping and the maintenance of amenities such as swimming pools and clubhouses. In some cases, like Long Cove and Palmetto Bluff, the POA fees pay for golf membership, in others they are separate.

The same goes for mandatory club fees. In some communities, the POA fees takes care of everything. In others, HOA and mandatory club fees are broken out as separate line items.

“Every club has a different set of amenities that it supports. It has a different number of staff that they support,” said Rob Duckett, president of operations South Street Partners, which owns Palmetto Bluff. “Clubs lose money, right? Restaurants and clubs lose money. Both operations of quality lose money. The difference between the operating losses and break even are the dues.”

There’s also initiation or transfer fees, which are one-time, non-refundable fees homeowners pay the private community for the right to buy a home there and access its amenities. These can run into the tens of thousands of dollars.

The increases show just how much some homebuyers are willing to pay to live in an exclusive area.

“Since COVID, not only is it not a barrier anymore [to home sales], but these places feel confident enough that they’re raising their annual dues and their initiation fees,” said Peter Geary, a Realtor on Hilton Head.

As a result, Geary said he’s seeing more older homebuyers choosing not to live in luxury communities.

“You’re on a fixed budget at that point of your life, fixed income and the last thing you want are variable costs,” he said. “So you want to lock something in and you want to be able to depend on it in the future.”

The other scenario, Geary said, is lots that sit for months at below-market prices because buyers don’t want to pay the initiation and annual fees connected to them.

“People always call me about the dirt cheap lots on Haig Point, and then I tell them the annual fees,” he said. “They go, ‘OK, never mind, that’s not what we’re talking about. We’re looking for an inexpensive property.’”

Haig Point, on Daufuskie Island, has more than 30 listed lots under $50,000 on Zillow. On Hilton Head Island, the least expensive lot is listed for $72,500.

‘I don’t have a crystal ball’

The annual fees aren’t what homeowners who bought into the communities years ago imagined.

“I think had we been aware that a developer had the ability and would execute and increase club dues of this magnitude we would have thought twice about our lot purchase,” Monroe said. He purchased a lot in Palmetto Bluff in 2007 then built a “retirement dream” home on the land in 2020.

It begs the question of how potential buyers can get an idea of what fees could be in the future before making a financial commitment to a private community. Buyers are locked into the fees unless they sell their property.

Sometimes, homeowners want to downsize or move but have had trouble selling their homes because buyers are scared off by the escalating annual fees.

There are no state or local laws limiting how much annual fees can be raised, according to Cathy Olivetti, who specializes in real estate law.

The individual community’s agreements, or covenants, with homeowners dictate how much annual fees can be raised and what the process is for doing so.

Haig Point, for example, has covenants detailing that POA fees can only be raised by 5% or the CPI rate each year. If they want to raise their fees more than that, they must have a community vote, which succeeded in raising fees last year.

“Everybody’s covenants might be a little different and in some communities, they may have a cap on something, or they may have requirements on how the assessments have to be levied,” Olivetti said. “It may be that they have to have a meeting and have to have a certain percentage of people be there and vote.”

She recommends homebuyers look at community covenants as a way to predict what future raises could be.

You can’t afford the fees, then what?

Community covenants dictate what happens if a homeowner doesn’t pay their fees.

“In most cases it allows the HOA to put a lien on your house, and then the HOA can foreclose on it,” said Meredith Bannon, a real estate litigator. “Just like a mortgage.”

As a lawyer who represents local HOA’s, Bannon said she commonly works with these cases, but the frequency fluctuates with the economy. There aren’t as many as there were in previous years, she said.

Local communities have been known to publicly list members who haven’t paid their POA or HOA fees for the month, or threatened to revoke amenity access, according to Olivetti.

“If they couldn’t pay I would advise a client to go to the management to tell them that they’re having a cash flow issue, and work out some kind of payment plan,” Olivetti said. “Like dealing with any other credit.

“And then if it’s really a problem, they need to consider selling the property.”

Here are the top 10 annual fees in Beaufort County

The Island Packet and Beaufort Gazette collected information about annual POA, HOA and club fees from REsides, a multiple listing service, as well as real estate agents, community websites and spokespersons to determine the highest fees in Beaufort County. Most are recent as of 2023:

Spring Island, Okatie

Spring Island’s current annual fee is $27,755; historical information wasn’t available.

The fees break down to an annual POA fee of $7,355 and $20,400 annually for club dues.

Colleton River, Bluffton

Colleton River’s annual fee for 2023 is $27,125, up 15% from $23,565 in 2021.

Annual fees give homeowners access to all of the community’s amenities and facilities, including two golf courses.

Previously, Colleton River Spokesperson Elizabeth Turner attributed the increases in transfer fees and annual POA fees to changes in the housing market and new community developments.

Berkeley Hall, Okatie

Berkeley Hall’s annual fee is $24,320, which increased about 23% from $19,769 in 2021.

Berkeley Hall spokesperson Alex Madeiros didn’t respond to messages asking for comment.

Belfair, Bluffton

Belfair’s annual fee is $20,588, broken down into $17,521 operational dues and $3,067 capital dues. This is about a 24% increase from $16,646 in 2021.

Belfair’s covenants set a dues increase at 10%, otherwise it needs to be approved by the membership, according to spokesman Ken Kosak.

“The fees go to the overall operation of the club and community,” he said in an emailed statement. “They also include capital dues, which go to fund various projects around the community, such as paving, stormwater drainage etc. There are no additional HOA fees on top of this as this is included as well to include common area landscaping, security and facility maintenance.”

Wexford, Hilton Head

Wexford’s annual fee is $18,860, which is about a 16% increase from $16,325 in 2021.

Wexford spokesperson Kathryn Clemmons didn’t respond to messages asking for comment.

Haig Point, Daufuskie

Haig Point’s annual fees are $17,962, which increased over 40% from $12,800 in 2021.

Haig Point isn’t a bundled community and homeowners can purchase club memberships separately, but are not required. Club memberships come in two tiers: $7,698, or $12,797 for unlimited golf access. With the higher club membership, annual fees would total $30,759 for 2023.

The fees break down into a $6,579 POA annual fee, and a $11,383 annual transportation fee. Unique to Haig Point, the community owns its own private ferry and ground transportation service.

Notably, Haig Point’s POA fee has gone down since 2021, but the transportation fee more than doubled.

“That’s inflationary if you think about what has happened over the last few years with gasoline,” said Adam Martin, vice president of sales and marketing.

“We employ about 60 people that just run that transportation system so the labor to find those types of people has gone up and the demand for those types of transportation services has gone up dramatically, too.”

Included in the transportation fee is 24-hour water taxi by reservation to Sea Pines, valet and home delivery services for groceries and airport shuttle service.

“We have three large ferries that carry between 60 to 85 passengers and over the last several years, each of those have been completely renovated,” Martin said. “They’ve replaced the engines, interiors, electronic, metal work, so on and so forth.”

Long Cove, Hilton Head

Long Cove’s annual fee is $16,458, which increased about 17% from $14,062 in 2021.

The annual dues allows property owners unlimited use of the community amenities, including a golf course.

A Long Cove spokesperson Lindsay Finger did not return messages requesting comment.

Callawassie Island, Okatie

Callawassie Island’s annual fee for is $15,714, which increased about 22% from $12,926 in 2021.

The fee structure is broken down into a $2,418 annual POA, a $1,033 monthly operating fee, and a $75 monthly debt service.

Callawassie spokesperson Lindsey Cooler did not return messages requesting comment.

Palmetto Bluff, Bluffton

The community’s annual fees increased at least 26% from $8,869 in 2021 to at least $11,210 this year.

The club’s required annual fees are two-pronged with a POA fee and mandatory base club fee. However, the 2023 POA fee hasn’t been increased for 2023, only the mandatory base fee, which increased $150 a month from $4,895 annually to $6,695 annually.

The base club doesn’t include the golf club, shooting club or boat club, which are all separate and also had price raises this year.

Unlike most private communities in Beaufort County, Palmetto Bluff is owned by a developer — South Street Partners — instead of its residents and club members. South Street Partner’s purchased the club from another developer in early 2022.

The community’s recreational covenant says the base club can never turn a profit, but there is no limit on how high the POA or club fees can be raised, according to Duckett, the South Street Partner president of operations.

“Palmetto Bluff dues have been artificially low. The [previous] developer had chosen to keep the dues below market because they wanted to incentive people to buy real estate,” Duckett said.

He said it was a strategy many developers took in the late 1990s and early 2000s after the recession, but they’re reevaluating that position as the local market booms.

“It’s a large percentage increase, but it’s not a large dollar increase,” Duckett said about the 37% club fee increase. “We are playing catch up because of years of charging dues that had been below market.”

When asked if that percentage increase is something homeowners can expect year over year, Duckett said it depends on the financial performance of the club. “But this isn’t a one year catch up. This is this is going to take a few years to get to where we need to be.”

Oldfield, Okatie

Oldfield’s annual fee is $10,744, which increased about 19% from $9,030 in 2021.

Oldfield did not return messages requesting comment.