WRONGDOING #2
Real Estate Property at 5919 LaCrosse Ave.
Circle C Developer built the above property in 1988. This property includes the Circle C Swim Center, Circle C Grill, 500 square feet Office Space and the Post Office Facility. The swimming pool is one of the main marketing tools and an amenity for selling houses in Circle C Ranch.
The ownership of the above whole property was transferred to the Circle C Association on 2/28/2001 with a market value of $111,000. CCHoA?’s former Directors of the Board called the transfer a ?“donation.?” However, evidence proves otherwise; it was more like an ?“Over-priced Lay-a-Way Sale.?”
THE FOLLOWING ARE THE FACTS:
1. The Association collected a special swimming pool assessment of $60 per lot in 1999 and $70 per lot in 2000 for a total of $309,222 from the homeowners and the builders.
2. In the Years of 1999 and 2000, two years BEFORE the ownership of the property was transferred from the Developer?’s Phoenix Holdings to the Circle C Homeowners Association, the Board of Directors funneled totally $218,726 ($51,416 in 1999 and $167,310 in 2000) into Phoenix Holdings. The Board stated that those amounts were reimbursements for the costs of capital improvements, repairs and other operational expenses. Who in the world would pay maintenance expenses and capital improvements two years in advance before owing the property?
3. Based on the Travis County Appraisal District Property Information, the Market Value of the property at the time of the transfer was $111,000.
4. The Board classified this transfer as a ?“donation?” in order to help the Developer to avoid Depreciation Recapture and Capital Gain Taxes. In other words, our former Directors were knowingly and intentionally helping the Developer to commit TAX EVASION. At the time, Steve Bartlett was the Vice President of CCHoA; he was also the top employee of the Developer?’s two companies ?– the President of Alien, Inc. and the Vice President of Phoenix Holdings.
WHAT HAPPENED AFTER THE ASSOCIATION BECAME OWNER OF THE ABOVE PROPERTY?
In the past six years, Circle C homeowners have been charged the following amounts for the capital improvements, repairs and operational expenses. The actual amounts of the expenses were much higher because property taxes and insurance were not included in the following amounts.
2004 - $297,385
2003 - $316,401
2002 - $256,192
2001 - $261,329
2000 - $167,310 (before the ownership was transferred)
1999 - $ 51,416 (before the ownership was transferred)
BIG WINNER: Circle C Developer
1. The Developer retains full control of the pool, but pays no expenses.
2. The above capital improvements, repairs and operational services were handled by the Phoenix Holdings, Alien, Inc. and Circle C Swimming, Ltd. which are all owned by the Developer. They operate as a business monopoly in Circle C Ranch.
3. The Board of CCHoA leased the above facilities back to the Developer?’s Phoenix Holdings for a tiny fraction of the market value rent, and almost all the rent was pocketed by the Developer.
4. The Developer uses our swimming pool as a money making machine by owning directly or indirectly a swimming team, making approximately $300,000 annually. The revenue of $300,000 was estimated by one homeowner who was familiar with the swimming team enrollment; actual amount was unknown.
BIG LOSERS: Circle C Homeowners
1. The Association received the ownership of the pool on paper only.
2. Homeowners do not have much control using the pool, but have the obligation of paying ALL capital improvements, repairs & operational expenses, property taxes and insurance.
3. Homeowners have been overcharged the expenses and capital improvements because all these were handled by the companies owned by the Developer.
4. Homeowners received little or no rent from the facilities which are leased back to the Developer by the old Board.
