Why you should defy payment of the Special Levy

Photo: Sigmund (Unsplash)

We are convinced, based on the feedback received from many of you, that you are indeed fed up with decisions imposed by the PHOA without considering the needs of the Homeowners they are supposed to serve. Even more frustrating and disconcerting is the fact that many of the decisions being taken (the most recent one being the imposition of a special levy of R15k per household per annum over the next 3 years) will have an adverse and devastating financial impact on many households on the Estate. The nature and the quality of decisions taken over the past number of years demonstrates that we have a Board that does not have a good grasp of governance and the fundamental principles of business.

In view of the above, it is worth pointing out the following flaws in the processes followed as well as the quality of the decisions:

1. The same Board has been quick to point out that it has unfettered rights to impose a special levy as per paragraph 6.5 of the Pecanwood Memorandum of Incorporation (MOI) and yet fails to point out that the right is confined to the business of the company as defined in paragraph 4 of the MOI. The business of the company as per paragraph 4 excludes any expenses or expenditure related to the Golf and Boat Clubs. The two entities are owned by a Malaysian company, Magnitude Knight whose holding company is Country Heights.

2. Most of the costs that have resulted in the imposition of the special levy are for the two entities owned by the Malaysians. The Homeowners will have no claim for the upgrades made on the two entities as they don’t belong to them and the Lease Agreement with the Malaysians is very clear that should they decide to terminate the Agreement or sell the two entities to another investor, any upgrades, or investments on the two entities accrue to themselves or the new investor. That begs the question, in whose interest are we, as Homeowners, incurring such huge costs? The answer is clear, the Malaysians are the 100% beneficiaries in this case.

3. The monthly lease paid to the Malaysians is R187 000.00 plus VAT. However, most Homeowners seem oblivious of the additional costs relating to the maintenance of the two businesses and management thereof. The Malaysians are not incurring a cent for the maintenance and management of their assets and that costs Homeowners millions of Rands annually. Effectively, the Lease payment is significantly smaller than the costs of Maintenance, Upgrades and Management of the Golf and Boat Clubs. The Lease Agreement is skewed 100% in favour of the Malaysians. It is an indisputable fact that when any investor puts money in an investment, they expect a Return and, in our case, we simply accept meekly that it is okay to enrich the Malaysians and their local supporters at our own cost! That does not make sense at all.

4. That takes us to the next point: the decision by the Board to impose a special levy which is inconsistent with the MOI whilst funding projects pertaining to the Golf and Boat Clubs, should be tabled as a Special Resolution that has nothing to do with the MOI. This is so that Homeowners who want to support the said projects can do so out of their own free will instead of forcing every Homeowner to bear the costs for businesses that do not belong to them. The alternative will be to amend the MOI so that the Golf and Boat Clubs are funded as if they belong to the Homeowners and if the majority are okay with that, so be it.

The PHOA has failed dismally to be transparent about several costs that have been the subject of disputes with Homeowners who are concerned about the management of costs by the current Board and the appointed Management. There are just too many arbitrary decisions on items or services that have a huge impact on the Cost base of the PHOA. Is it therefore not surprising that we are close to paying R10k per month in levies? Our Estate has become the most expensive in terms of levies paid by Homeowners relative to similar Estates. The unintended consequence is that it will become increasingly difficult to sell our properties should we wish to exercise that right.

In conclusion, we must defy paying the special levy and other related demands that are not only non-compliant but adversely affect our financial health. A process is underway to lodge disputes with CSOS to challenge these irresponsible decisions by the Board. Please add your name to the list of those prepared to save the Estate.

© Pecanwood Corruption Watch