Kiawah Island Community Association Board Returns $ 1 Million Coronavirus Loan


CHARLESTON, SC (WCSC) – The board of directors of the Kiawah Island Community Association has voted to repay a $ 1 million coronavirus loan they received through the Paycheck Protection Program.

The Kiawah Island Community Association released a statement to property owners on Thursday saying the board had planned to open on Jan.

Congress set up the PPP as part of the bipartisan Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, to help small businesses weather this crisis and keep their workforce.

Earlier in the day, First District MP Joe Cunningham urged the association to return the loan.

In a press release, Cunningham said he was “incredibly disappointed” that the organization “took advantage of a program that aimed to provide a lifeline to troubled small businesses.”

“When Congress approved billions in taxpayers’ money to help small businesses and their workers survive this crisis, it wasn’t for huge corporations with big pockets or wealthy community groups with millions of dollars in reserve funds,” said Cunningham.

He said he spoke to Lowcountry small business owners who he says are in dire need of help but have not yet received it.

“People like the Lowdown Oven and Bar on James Island or the Church Mouse Thrift Shop on Hilton Head,” he said. “We’re a close-knit community here in the Lowcountry, and when one of us suffers, we all suffer. The Kiawah Island Community Association should return this loan immediately so that aid goes where it was intended, a troubled small business . ” try to leave the lights on and pay the paychecks to their employees. “

KICA released the following letter to property owners:

Dear Kiawah Property Owners,

We are in uncertain times as the country faces unprecedented medical and financial upheaval. KICA will not be immune from these uncertainties and will likely face the following:

– Lower transfer fees on property sales (this is 1/3 of our budget for major repairs and replacements)

– Lower commercial access fees

– Lost ballroom rentals, shuttle fees, other usage fees and interest income

Using assumptions based on the 2008 downturn, employees estimated the total loss for 2020 to be over $ 1 million. Due to the uncertainties and possible significant losses, the board of directors instructed the workforce in March to develop an emergency plan to reduce the overall operating budget by ten percent. Since KICA is primarily a service company, their biggest hassle is payroll. Therefore, reducing staff costs is the only sensible way to reduce costs in the long term. Most other expenses cannot be eliminated, only possibly postponed. For example, a road or a drain that needs to be repaired won’t go away. At best, the costs can be postponed to a later date.

While we waited for the 10 percent contingency plan, we put a freeze on hiring and put workers on leave who couldn’t work from home or perform their duties according to physical distancing requirements. However, other personnel involved in security, landscaping, maintenance, finance, and administration are essential and remain on duty.

You should also know that KICA’s reserve funds are purpose-built funds that primarily support the maintenance of the island’s infrastructure (major repairs and replacements). We call in an external expert annually to assess the need for spending on maintaining our existing assets. In other words, these funds will not be used for ordinary business expenses and any expenses from these reserves will have to be repaid in the future. Essentially, drawing from the reserves just doesn’t address the problem and just passes the problem on to future boards.

With this in mind, and to keep all options open during this troubling time, we asked employees to apply for a loan through the Paycheck Protection Program (PPP) if they believed KICA met the PPP criteria. KICA’s $ 1 million PPP application was filed on April 4th. It was approved and KICA received funding on April 17th. The Finance Committee met on April 22nd requesting that a memo be drawn up to members explaining the economic impact of the pandemic on KICA’s budget. This announcement was posted on the KICA website on April 23rd with the expectation that it would also be emailed to all property owners.

However, on the same day, the Small Business Administration released new guidelines on PPP lending and it became clear that the revenues from the PPP loan program had been used up, robbing many of the small businesses that needed them most. As a result, the board decided to hold a special meeting on May 1 to see if KICA should keep the money in the ever-changing circumstances and new guidelines. The April 23 letter was accidentally not removed from our website for another four days. During this time, the letter was brought to the attention of the post office and the courier.

Last Tuesday, the post office and courier sent a request to KICA and we sent the following written response: “The Kiawah Island Community Association has taken a number of steps to address the economic uncertainty associated with COVID-19, including applying for the Paychecks from the SBA Protection Loan, which was funded in mid-April. Our board of directors is in the process of assessing our funding needs for the future. ”The story does not contain this statement and, as published, incorrectly implies that we have chosen to keep the funds.

In retrospect, we should have informed you earlier. We made a mistake thinking we would have time on May 1st to discuss this and then share our decision with the community at our public board meeting on May 4th. We sincerely apologize. We also regret the negative attention this has brought to Kiawah Island.

It is important to remember that Kiawah Island is a more diverse economic community than is publicly portrayed. We have approximately 1,300 property owners who depend on rental income and we have many residents who have either lost jobs or suffered other financial losses. As a community, however, we will survive without the wage protection loan. It is for this reason that the board voted today to return the loan as we know our sacrifice will be significantly less than that of small business owners struggling to survive. Throughout 2020 and 2021, we will make every effort to minimize costs without compromising services. However, depending on the course of future events, some services may need to be reduced and / or additional ratings considered.

We will surely communicate how we can get through this financial uncertainty.


Diana MezzanotteKICA chair

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