Letter From the Sobu Flats HOA Board

Please see the letter below from the Sobu Flats HOA Board.

Dear Fellow Sobu Homeowners,

As your board we would like to share our thoughts regarding the potential sale of our building. We unanimously support the sale of the property, and we would like to explain how we came to that position.

• As discussed at the meeting, our reserves are currently very low. We anticipate several upcoming repair projects and expenditures that we have postponed for some time:
  • The building’s plumbing system has been deteriorating for many years, to the point that water shutoffs for emergency repairs are a near weekly occurrence. If left unaddressed, a catastrophic failure is a question of when, not if.
  • The roof has been in a state of disrepair for some time and has caused serious damage to multiple units on the 8^th floor, with related costs borne by the Homeowners’ Association. Our property manager Maggie Jewell has worked very hard to perform triage and prioritize spot fixes, but the entire roof needs to be replaced soon.
  • The security situation around the property has been an ongoing concern, demonstrated most dramatically by a recent incident in which a resident was shot in the head on the walkway between the front entrance and the side guest parking lot. Thankfully and very nearly miraculously, she made a full and swift recovery, but like the plumbing system and the roof, relying on our luck continuing courts tragedy. We have seen multiple incidents of trespassing, with at least one homeless person taking up residence in the basement for an indeterminate period of time – another was reported doing so last weekend. Packages at residents’ doors have been vandalized and stolen. Multiple cars in the parking lot have been broken into. Unfortunately, crime has increased around Buckhead in general, with multiple shooting incidents over the past few months. A Sobu homeowner was very nearly carjacked in broad daylight on East Paces Ferry Rd. just across Piedmont. The recent special assessment was devoted entirely to security measures – you may have noticed the new exterior lighting and the presence of security officers on the weekend. Unfortunately, we are going to have to suspend the weekend patrol very soon, as the funds from that assessment have been exhausted, and we haven’t been able to address serious gaps in our security cameras’ coverage due to cost.
  • Our HV/AC units in the common areas are beginning to break down and will need repairs. We have substantial water leak issues in the basement which will need to be addressed. These are the most immediate needs, but other issues, like cosmetic deterioration in the common areas, contribute to a general decline in quality of life.

We are all Sobu homeowners, and we feel the sting of dues increases and special assessments as deeply as you do, but we have reached a point where putting off dues increases would be a dereliction of our duty. As such, we are proposing a 10% increase in dues this year and will be levying another special assessment at the maximum permissible amount mid-2018. We also anticipate a similar increase for 2019, as necessary repairs will be both expensive and continuing. It is important to remember that these increases are unavoidable if we wish to avoid catastrophic and costly problems on the property.

• As you are likely aware, property taxes almost rose drastically this year, and the last minute reprieve has created serious political headaches – Atlanta Public Schools recently announced that they may have furlough staff due to delays in receiving revenue. It is highly likely increases will happen next year. This means an increase that could be around 20 times more than this past year.  
• Per our Declaration of Condominium, no unit may be leased without a permit issued by the board, and only 25% of all units may hold leasing permits at a time. The board has not prioritized enforcement of this rule in the past, but recent changes create significant liabilities if we do not exercise due diligence in keeping the leased percentage of the property below 25%.  Beginning in February we will start levying fines against every owner known to be renting units without the permission of the board. The fine is $25/day or roughly $750/month. If we are assembled prior to that time, the fines will not be required and will not be assessed.
• We have concerns regarding the ability to remain solvent as an HOA. We are in a “catch 22,” as we need more money to perform necessary repairs and general upkeep, but in pursuing it we may cause more dues delinquency and potentially foreclosures, thereby decreasing cash flow and causing the HOA to go bankrupt. This is a real possibility that has happened to condo associations across the country. This sale is our best chance to avoid this possibility. 
• The real estate agents handling the sale have stated several times that the buyer is interested in closing the sale as quickly as possible and has already begun their due diligence work in hopes of closing quickly. The agents have said that we may be able to close as soon as January or February.
• An important part of the purchase offer is a one year leaseback, which we find very exciting. At closing, each owner will sign a one year lease with the purchaser, and the cost of the lease ($2/sq. ft./mo.) will immediately be deducted from proceeds of the sale. For one year after closing, owners will be able to stay in their units without paying monthly rent, association fees, or electric/gas/water/waste disposal bills. During the leaseback, all maintenance of the property (including fixtures and appliances in each unit) will be the responsibility of the new owners, not the lessees, and the new owners may even provide new amenities like security personnel and concierge service (these aren’t guaranteed, but have been mentioned several times in discussions with the real estate agents and buyers). Sub-leasing will also be allowed, which means that you can even recoup some or all of the initial cost of the leaseback – or potentially even turn a profit.
• We have also been informed that Paces Green and the property next to it (on the west side of our property) have been sold or are in the process of being sold to a construction project that will reach a height well above our own. This means that upon completion of this project we will have lost our views to the west and the south. Direct sunlight on the pool may be reduced to an hour or two each day. Our property is zoned with a height limit of 150 feet, while many around us allow significantly higher elevations. This will decrease our property value for potential sales in the future as well since we cannot build higher than the properties around us. There is currently a construction project on the east side of our building on the other side of Shadowlawn that may also impact our views to the east.
• This offer is well above any potential price you could ever hope to get individually. The sale committee worked with another real estate agent for a full year without receiving any concrete offers, and similar nearby properties have struggled to get even as much as this offer. While Buckhead and Atlanta as a whole have been in a building boom lately, there’s no guarantee that it will continue, and conditions are already emerging that may significantly slow development in our area specifically. Just last month, the mayor enacted a moratorium on new developments that require additional parking density in Buckhead. Our potential buyer’s plans are not affected by the moratorium, but it will almost certainly be an obstacle to other buyers should this deal fall through.

Most of us on the board have lived at Sobu for more than a decade. It has been a wonderful home, made all the better by you, our friends and neighbors. We’ve laughed together around the pool, met each other (and each other’s dogs) in the back yard, chatted in the elevators and halls, and shared so many little bits of our lives, and it is not without some sadness that we recommend this sale to you. Regardless of that sadness, though, we have to face the reality that the building has serious and costly problems that can no longer be ignored or pushed aside. We’re very lucky to have an offer on the table that will allow us all to move forward, and we strongly recommend that you accept it.

Thank you for taking the time to read our thoughts and feelings on the subject. Please contact CMA or the real estate team with any questions.

Warmest regards,

Your Sobu Flats HOA Board