Executive Summary
This analysis examines CDAL's proposed 2025 community budget and identifies numerous concerning issues regarding both the amount and nature of charges being imposed on freeholders. Our analysis suggests that the legitimate service charges should be approximately US$194 per month rather than the proposed US$497 per month. This lower figure is more in line with historical rates adjusted for inflation and reflects market rates for the actual beneficial services provided.
Key Findings:
- All amounts are in US dollars
- Calculations based on 795 freeholders for simplicity
- Actual cost allocation should consider:
- All 850 parcels (including 48 lots with fixed charges)
- Individual covenant variations
- Different service levels based on property type
- Specific beneficial services for each parcel type
Important Considerations
A. Differential Charging
-
Individual Covenants
- Different parcels may have different service entitlements
- Some properties (e.g., standard 6-block villas) may include additional services like painting
- Charges should reflect only services beneficial to each specific parcel
-
Fixed-Rate Agreements
- 48 lots pay fixed US$95/month via private agreements with CDAL
- This shortfall should be CDAL's responsibility, not other freeholders
- These lots should still be included in total parcel count for proper cost allocation
-
Property-Specific Services
- Service charges should be tailored to actual benefits received
- Common services should be allocated across all benefiting properties
- Specialized services should only be charged to benefiting properties
B. Excluded Costs
The following costs should be explicitly excluded from freeholder charges:
-
CDAL Business Expansion
- New office space costs
- Entrance relocation expenses
- Additional security huts for new developments
- Any infrastructure expansion not benefiting existing parcels
-
Non-Essential Amenities
- Sports facilities should be membership-based
- Facilities not on CDAL land
- Recreational facilities not part of essential infrastructure
- Commercial facilities generating separate revenue
Legal Basis for Charges
According to the land transfer covenants, charges must be:
- "Levied for and expended upon services provided to and for the benefit of the specific parcel"
- Based on "audited common expenses"
- Limited to services that directly benefit the property
- Charged at fair market rates
Analysis of Problematic Charges
1. Wage & Benefits ($1,620,508)
Management Staff Wages ($392,368)
- Two positions at approximately $196,184 each ($16,333/month)
- Issues:
- Extremely high for Antigua market rates
- Previously funded by developer, now shifted to freeholders
- No justification for such high salaries
Finance Department ($333,497)
- 8 staff at average $41,687 each ($3,474/month)
- Issues:
- Inflated for clerical positions in Antigua
- Excessive staffing for community size
2. Questionable Rent Expenses ($368,276)
| Facility | Amount | Increase | Issues |
|---|---|---|---|
| Tennis, Pickleball, Pool | $148,798 | 66.7% | Should be membership-based |
| Administrative Offices | $130,199 | 133.3% | Expansion costs not chargeable |
| Warehouse | $74,401 | 11.1% | After renovation |
| Security Huts | $14,878 | 33.3% | Expansion not chargeable |
Major Issues:
- CDAL charging rent for facilities it should own
- Dramatic increases without justification
- Double-charging through rent after renovation costs
- Charging for business expansion costs
- Including non-essential amenities that should be membership-based
3. Problematic Operational Expenses
Inappropriate Charges
- Infrastructure Replacement: $600,000
- Should be CDAL's responsibility under covenants
- Results from historical neglect
- Bad Debt Expense: $287,674
- Improper to charge paying owners for non-paying owners
- 953.2% increase from 2024
- Credit Card Commission: $87,759
- Should be point-of-payment cost or CDAL overhead
- Property Taxes: $124,151
- CDAL's responsibility as property owner
- JHPOA Fee: $35,578
- Cannot be mandatory
- No legal basis for inclusion
Inflated Operational Costs
- Vehicle Repairs & Fuel: $66,879
- Higher than waste removal costs ($62,576)
- Computer Software: $64,843
- Excessive for basic management software
- Pest Control: $48,880
- 57.2% increase without justification
- General Administrative: $34,868
- Includes non-essential items like "supervisor retreat"
Proper Cost Estimation
1. Security Services ($629,772)
- Security Contract (ASSL): $577,136
- Boat Patrol: $10,436
- Security Lighting: $42,200
2. Infrastructure Maintenance ($348,457)
- Sewage: $130,825
- Electrical: $113,311
- Water: $48,263
- Beach/Waterways: $10,787
- Roads/Bridges: $19,443
- General: $13,319
- Lighting: $12,509
3. Grounds Maintenance ($265,138)
- Landscaping: $65,138
- Grounds staff (reduced): $200,000
4. Essential Administration ($428,427)
- Management (2 positions at market rate): $120,000
- Administrative staff (reduced): $150,000
- Insurance: $108,427
- Office expenses (reduced): $50,000
5. Essential Utilities ($303,799)
- Sewage Plant: $111,599
- Property Lighting: $42,200
- Water (reduced for leaks): $150,000
Legitimate Monthly Charge Calculation
- Total Legitimate Annual Expenses: $1,975,593
- Proper Number of Parcels: 850 (including fixed-rate lots)
- Base Monthly Charge per Freeholder: $194*
*Note: This is a simplified calculation. Actual charges should vary based on:
- Individual covenant terms
- Specific services received
- Property type and location
- Actual beneficial services provided
Key Issues with CDAL's Approach
1. Cost Shifting
- Transferring developer responsibilities to freeholders
- Charging rent for facilities that should be infrastructure
- Passing business operating costs to freeholders
2. Inflated Expenses
- Excessive salaries and staffing
- Dramatic increases without justification
- Double-charging through various expense categories
3. Improper Charges
- Including non-beneficial services
- Charging for CDAL's asset maintenance
- Including JHPOA membership fees
4. Lack of Transparency
- No detailed breakdown of infrastructure replacement
- Unclear allocation of staff time and resources
- No justification for dramatic increases
Conclusion
CDAL's proposed 2025 budget represents a significant departure from both legal obligations and market norms. The proposed $497 monthly charge includes numerous inappropriate expenses and inflated costs. A proper analysis suggests a legitimate charge of approximately $194 per month would cover all necessary services at market rates. This represents a significant discrepancy of $303 per month per freeholder, or approximately $3.1 million annually across all freeholders.
This analysis demonstrates that CDAL is attempting to:
- Shift business operating costs to freeholders
- Charge for services not benefiting individual parcels
- Recover from their infrastructure neglect at freeholder expense
- Include inappropriate charges without proper justification
Recommendations
Primary Recommendations:
- Rejection of the proposed budget
- Implementation of proper cost allocation methods
- Return to legitimate service-based charging
- Independent audit of all expenses
- Removal of all non-beneficial charges
- Implementation of market-rate based pricing for all services
- Clear separation between CDAL's business costs and legitimate freeholder services
Additional Recommendations:
- Implementation of differential charging based on actual services received
- Proper allocation of costs across all 850 parcels
- Establishment of separate membership-based amenities
- Clear separation of CDAL expansion costs from maintenance charges