Cape Gazette
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Five Points homeowners seek to halt CVS

Group says land donation to library violates agreement
By Ron MacArthur | Apr 19, 2013
Photo by: Ron MacArthur Construction of a CVS pharmacy is underway near the entrance to the Villages of Five Points.

The Villages of Five Points Property Owners Association says the community's developer has not complied with a Sussex County ordinance – so construction of a CVS pharmacy in the community should be halted.

Developer Christian Hudson denies the charge, saying he has complied with his obligations under the conditional-use ordinance granted for the project.

At issue is a 2.5-acre parcel adjacent to the CVS site that was donated to the Lewes Public Library. The library has now announced plans to use the parcel.

The donation, made Dec. 31, 2012, when a deed was signed by developer Olde Towne Pointe LLC transferring the title, took the property owners association by surprise.

The association says the developer is skirting around a condition of approval for the construction of the pharmacy. On April 5, the association's board of directors sent letters to residents and county officials stating concerns about the donation of the 2.5-acre parcel, seeking to halt construction of the pharmacy.

The developer says nothing could be further from the truth, and he says he has the deed to prove it. Under conditions in the deed, the library has 10 years to use the property for a library facility; if it doesn't, the land would be transferred to the property owners association.

But, the property owners association says there is a catch. For the association to receive the land donation, the association must be a 501(c)(3) nonprofit organization. But, it's not.

Association President John Gilbert said during the conditional-use hearing, property owners supported the application because if the library didn't get the land, they property owners would get it. Members even appeared at the Sussex County Council meeting wearing red “Yes to CVS” shirts.

Gilbert said later, when it was announced the library had selected a parcel adjacent to the current library for its new building, it was clear the property owners association was in line for the 2.5-acre parcel – but, the association says, the deed is written in way that excludes the association.

Hudson, manager of Olde Towne Pointe, doesn't see it that way.

“I'm dismayed and disgusted,” Hudson said. “I don't understand what they are doing because we did live up to our obligation. They are slandering my good name and no one even bothered to contact me about it.”

The property owners association sent out a letter to it members, as well as Sussex County Council and Sussex County Planning and Zoning commissioners, accusing Olde Towne Pointe of not following a condition stated in the ordinance that allows construction of the CVS. The association wants construction of the pharmacy stopped or the deed rewritten. “We want county council to do its job,” Gilbert said.

Gilbert said Olde Towne Pointe agreed to cover the costs of creating the 501(c)(3) status for the property owners association for 10 years. “But there is no way this can happen,” he said.

Library has plans for parcel

The library plans for the property. Library Director Ed Goyda said the library will construct a reading garden to offer remote programming on a small section of the 2.5-acre parcel. The library then plans to sell the rest of the property to raise funds for the new library construction project.

On the advice of legal counsel, Goyda said, the library is permitted to sell part of the property as long as library services are provided at the site.

A question of nonprofit status

The property owners say if the library doesn't build on the site within 10 years, the donation would be transferred to a wholly-owned subsidiary of the Villages of Five Points Property Owners Association operating as a qualified U.S. Internal Revenue Service code 501(c)(3) nonprofit organization. The property owners board contends the association cannot seek nor would it qualify to be a 501(c)(3) nonprofit organization.

According to the IRS, 501(c)(3) nonprofit organizations fall under the following categories: Religious, educational, charitable, scientific, literary, testing for public safety, to foster national or international amateur sports competition or prevention of cruelty to Children or animals organizations.

John Stern Jr., a CPA hired by the property owners association, said the Villages of Five Points does not meet any of the IRS specified criteria for 501(c)(3) status. The association could file for 501(c)(4) nonprofit status as a social welfare organization, he said. “But these types of organizations cannot receive charitable contributions,” he wrote in a letter to the association.

“Because the deed states the the Villages of Five Points can be granted the land only by becoming a 501(c)(3), the association can never receive the land,” Stern wrote.

“When we were promised the land, nothing was ever said about a 501(c)(3) organization,” Gilbert said, reiterating the existing deed does not conform to the conditional-use ordinance.

If the property owners association does not accept the land donation, the deed states the title would be transferred to New Covenant Presbyterian Church in Lewes.

Hudson said the deed was approved by Sussex County officials as a condition of approval.

Donation part of conditions for approval

Olde Towne Pointe was granted a conditional-use application for the project by Sussex County, which allowed the sale of 1.5 acres for construction of the CVS. One of the conditions placed on the approval was the donation of a 2.5-acre adjoining parcel to the Lewes Public Library or the Villages of Five Points Property Owners Association.

Hudson said it was always the intent to donate the parcel – valued at $3.8 million – to the library, which meets the definition of a charity. Even though the library chose another construction site for its new facility, the library still accepted the land donation.

“I think the property owners association is mad because they didn't get the property, but we wanted the library to get it. It was a four-year ordeal to make it happen,” Hudson said.

According to the association, Olde Towne Point “has artfully crafted a deed that ignores the express conditions set by the county,” which violates the ordinance.

Hudson said his attorney is taking a look at the matter, and he would have a response to the property owners association.

“We have lived up to our obligations; there are no legal grounds to argue on,” Hudson said. “They are attempting to beat us up in public, and I can't see what their goal is. I don't own the parcel. I can't fathom why they would send this letter out.”

 

The Villages of Five Points in Lewes is a large mixed-use community with 586 building lots. Less than 60 lots remain unsold. (Photo by: Ron MacArthur)
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