Where does your Sea Pines visitor gate fee go? Quest for answers may go to SC’s top court

As visitors pass through the guarded gates at the entrance to the Sea Pines community, many have the same question: Where does my $9 go?

Resident Dana Advocaat had the same question. What started as a request for financial transparency has turned into a lengthy legal battle against the Hilton Head Island real estate giant, with a series of appeals carrying the case to the steps of the state Supreme Court. After more than four years — and two court decisions in the homeowner’s favor — she still can’t access documents outlining how her community spends one of its largest revenue sources.

Advocaat, a longtime Realtor in the Hilton Head area, sued Sea Pines Community Services Associates, Inc. in March 2020 after the organization denied her request to inspect its gate fee agreement. The document dictates how much visitors pay to enter the large community and how leadership spends that money. In 2023, the CSA collected $4.3 million from daily passes , making up about a fifth of its total yearly revenue.

Historically, CSA’s gate agreement was available to Sea Pines homeowners if requested. But the organization quietly approved a controversial amendment to the agreement in 2018, which raised the daily gate fee from $6 to $8 . Since then, requests from members to review the document have been denied.

In the summer of 2018, an early version of that amendment was leaked to the public, prompting claims that the plan was “made in secrecy” and a petition protesting its adoption.

After another fee hike in 2020 , visitors to Sea Pines currently pay $9 to access the 5,000-acre oceanfront neighborhood. Current bylaws allow for the CSA’s board of directors to further increase gate fees with the approval of the Sea Pines Resort.

Advocaat is fighting for access to the gate agreement and other financial documents so the CSA can be held accountable for potentially misappropriated funds, she said. The draft leaked in 2018 proposed diverting gate fee revenue into a marketing fund; some residents contend that would violate the community’s covenant, which requires all gate fees to be spent on “ community services .”

“The ownership of properties (in Sea Pines) is individual. We all own our own properties,” Advocaat told The Island Packet and Beaufort Gazette. “But the fact is, we’re blended with commercial, and those commercial owners have really manipulated CSA to favor the commercial sector of our community.”

In court proceedings, the CSA has argued the 2018 amendment is not a bylaw and thus not subject to open records law for nonprofits. South Carolina’s legal system largely disagrees.

“It’s about transparency to the members, and it’s about accountability of the board.” said Ian Ford, a Charleston-based trial lawyer who represents Advocaat. “Those are basic principles of nonprofits.”

The CSA was “unable to provide any comment at this time” due to the ongoing litigation, a spokesperson said Wednesday afternoon. In an update sent to residents Monday, leaders of the Sea Pines Property Owners Association said the gate fee agreement would remain unavailable to members throughout the appeal process.

Sea Pines’ lengthy legal battle

When the lawsuit saw its day in court in September 2020, a circuit court judge ruled in Advocaat’s favor , arguing that she or any other community member was entitled to inspect the document due to the state’s Nonprofit Corporation Act.

As a stakeholder in the association, Advocaat has a right to view the records because “the agreement affects (her) property value,” Judge Brooks Goldsmith wrote, also requiring the CSA to reimburse Advocaat for all attorney’s fees if she wins the case.

After their loss in Beaufort County circuit court, the CSA then took the case to the South Carolina Court of Appeals, which also ruled in Advocaat’s favor this February.

Now, the CSA hopes to elevate its appeal to the South Carolina Supreme Court. The organization filed a petition Aug. 7 asking for the state’s highest court to consider taking on the case. Meanwhile, Advocaat’s counsel at the Ford Wallace Thomson law firm will submit an argument asking the justices not to grant a hearing.

“At that point, the Supreme Court has its options,” Ford said. “It may say, ‘We’re not going to hear this case,’ at which point the Court of Appeals ruling stands. Or they could say ‘We want to hear this case. We have questions.’”

But the gate agreement is only a small part of the CSA’s financial decision-making. Ideally, the lawsuit is a first step toward earning members full access to the association’s accounting records, Advocaat said.

“There’s a number of things that we’d like to get to the bottom of,” she told The Island Packet and Beaufort Gazette. “But we need to have a ruling, and I think that this gate agreement is going to be the can opener for all the other agreements.”

The case’s eventual outcome could have widespread ramifications on Hilton Head, where 70% of land belongs to privately owned neighborhoods such as homeowners associations. Members regularly clash with their organizations’ views on spending and transparency: In June, residents of Hilton Head Plantation protested the board’s decision to limit members’ access to committee meetings where vital policy decisions are made.

Residents of local private communities are regularly denied access to financial documents despite most likely being legally entitled to that information, said Ford, Advocaat’s lawyer. But due to real estate corporations’ relative power over individual residents, those decisions are seldom challenged.

“It’s very rare for a member to actually take the time and expense and trouble to enforce their rights in the court. There are very few cases on it,” Ford said. “And the reason is because it’s very hard for a member to fight the power and do this: fighting against a multi-million dollar organization for a principle. So that’s what Mrs. Advocaat is doing here. I salute her, and I think her fellow citizens should salute her.”

As the lawsuit drags into its fifth year, Advocaat is staying confident. She knows she has the law on her side, she said.

“I never imagined in 2020 that four years later, we still wouldn’t have this resolved,” Advocaat said of the fight for the gate agreement document. “It’s a very simple lawsuit. It doesn’t accuse anyone of anything. It merely states that by the right of law, we have the right to see it.”