Sarah Ashford, a Jolly Harbour property owner affiliated with JHPOA Inc. (which claims to represent all freeholders despite lacking explicit consent), recently noted that CDAL's current owners aim to hand off "community management" once they finish developing. "Joseph [Krohn, CDAL's CFO] advised … the developers definitely do not want to be responsible for the community charge once all new building work has been completed," she wrote. On its face, a homeowner-led CDAL may sound appealing—but freeholders should realize that if CDAL has been gutted of meaningful assets, taking it on could mean inheriting its debts and infrastructure obligations without any compensating benefit.
1. The Developers' Likely Motive: Offload Liabilities
CDAL was originally set up to manage and maintain Jolly Harbour's roads, sewage, and common areas. Over time, however, it appears the company may have divested or encumbered its best assets—selling parcels, disclaiming revenue streams, or using them to fund expansions that benefit future developments rather than current homeowners. Now, as the new building projects near completion, the "owners" or "developers" prefer to exit daily management:
1.1 No Long-Term Accountability
- Once expansions are done, the developer can walk away, removing itself from high-cost repairs that backlog from decades of use.
1.2 Passing the Buck
- If freeholders naively take the "shell" of CDAL, they may effectively assume its liabilities. This includes:
- Unresolved bad debts
- Potential lawsuits
- Underfunded reserve obligations
- Neglected infrastructure
Sarah Ashford warns that if freeholders resist the current charges or push too hard on "historical negligence," the developer might accelerate handing over this liability-laden entity. The question: Why do they want to give it away so eagerly? Possibly because it is now asset-poor and liability-rich.
2. What "Taking Over CDAL" Actually Means
2.1 Acquiring a Corporation Lacking Resources
- If CDAL no longer holds significant property or cash reserves, the new homeowner-run board could be left with big capital projects (e.g., worn-out generators or sewage systems) but no revenue beyond monthly fees.
- The Reserve Study has indicated the major future expenses for Jolly Harbour; if CDAL cannot fund them, the cost burden immediately lands on homeowners—the very people who "took it over."
2.2 Liability for Past Debts
- CDAL may owe money to contractors, possibly have ongoing lawsuits (e.g., from property owners or vendors). Once freeholders assume control of the entity, that baggage could become their responsibility.
2.3 No Profit, But All the Headaches
- A typical reason for owners to "take over" an association is to ensure fees are spent responsibly. However, if the developer has already extracted most assets or guaranteed minimal future obligations, the homeowner group might only inherit:
- Day-to-day liabilities
- Forced expansions (like new pools or facilities for future developments)
- An urgent need to raise fees or special assessments
3. Why Now Might Be a Bad Idea
3.1 Gutted of Assets
- If indeed "CDAL has been gutted," meaning major corporate properties or other revenue streams have been sold or pledged, freeholders risk adopting an empty shell. The developer simply offloads the cost and risk of decaying infrastructure onto them.
3.2 Unresolved Maintenance
- Jolly Harbour's roads, sewage lines, and key installations require expensive overhauls. Without a proper capital base, the new HO-led CDAL might be forced to raise monthly fees drastically—leading to the same or worse friction we see now.
3.3 Better to Demand Accountability First
- Before consenting to any transition, freeholders could insist the developer fulfill key repairs or infuse capital into a Reserve Fund. A hasty takeover leaves owners with less leverage to ensure the infrastructure is restored.
4. The Path Forward: Don't Inherit Someone Else's Debts
Sarah Ashford's statement that "the developers definitely do not want to be responsible" underscores the developer's immediate incentive. Freeholders need to weigh:
4.1 Due Diligence
- Investigate CDAL's balance sheets, pending legal claims, and infrastructural backlogs. Understand exactly how many liabilities you'd be absorbing.
4.2 Insist on Developer-Funded Repairs
- If the developer truly wants out, they should first address or finance the backlog of worn-out systems that they originally built but have let degrade.
4.3 Negotiate Terms
- A well-structured transition might require the developer to transfer not only the corporate structure but also a healthy capital reserve or an agreed sum of money to cover near-term major repairs.
5. Conclusion: Avoid the Trap of a Liability-Heavy Takeover
"Taking on CDAL ourselves" without ensuring assets or funding remain in place can be a dangerous deal for freeholders. While a homeowner-run entity often yields more direct control over fees and maintenance priorities, it also assumes whatever debts, lawsuits, or neglected infrastructure remain. That outcome might be exactly what current CDAL owners want: to pass their burdens onto unsuspecting homeowners, leaving them with an empty shell. As Sarah warns, the developer's impetus to abandon ongoing responsibilities could lead to serious regrets for owners who jump into a takeover unconditionally.
Key Message: If freeholders are to accept the "transition," they should do so only after:
- Thorough due diligence
- A proper injection of funds
- Robust legal protection