OCEANSIDE – Residents of the Oceana senior community are divided over a controversial community measure that will equalize land lease fees for everyone living in the community, lowering monthly rent payments for the majority of members while raising monthly payments for others.
Since Oceana was developed in the 1960s, 398 of the development’s older homes have paid a flat $15 monthly rate for land lease fees, while the remaining 534 units pay higher, escalating fees based on the Consumer Price Index.
The fees go towards the use of common areas throughout the community, which are subleased to the community’s homeowners association Oceanside Community Association through the common area landowner, Oceanside Land Company.
When the development was first started, owners of the earlier homes signed a sublease contract that guaranteed them a $15 monthly flat rate for the land lease, but that didn’t carry over to the additional newer homes that were built.
Steve Gillis, a resident in one of the homes that pay the higher escalating fees, discovered what he calls the community’s “dirty little secret” back in 2020 when a neighbor reached out to him with fears about losing her home due to increasing costs, which motivated him to look into the issue.
“Most people had no idea they were paying more than anybody else,” Gillis said, including himself.
Gillis, a former Wisconsin attorney, said he didn’t know about the rate disparities when he bought his house in 2012.
“Realtors weren’t disclosing it, and sellers weren’t either,” he said.
Gillis took the issue to the HOA board, which ultimately decided to put the issue on a community-wide ballot set later in March to let the residents decide whether or not to equalize the fees.
For Gillis, equalizing the land lease fees is fair considering that everyone in the community has equal access to the common areas, but many residents in the homes feel otherwise, especially with the majority of the homes with escalating fees already outnumbering them.
Together, they have formed a nonprofit organization, Flat Lease Alliance, to push back against the equalization effort and “preserve the 99-year contracts signed by every homeowner in the Oceanside Community Association.”
Residents paying escalating fees pay just over $100 more than those in flat-rate homes, with fees increasing about every decade.
“It just irritates the heck out of them,” said Stephen Graves, one of the residents leading the Flat Lease Alliance charge. “After the increases hit, there’s a lot of hostility between the two areas, and the larger the disparity the greater the hostility.
If equalized amongst all 932 homes, the fees would likely take the escalating fees down by about $40 to $50 per home while increasing the monthly costs for the flat rate home by more than $60.
But many residents in flat-rate homes are scared that such a steep monthly increase will overburden their already fixed financials. Many of the residents in these homes are elder seniors who survive on social security and other fixed monthly incomes.
“I don’t know where else I can tighten the belt,” said Lori Nichols, a flat rate resident.
Nichols said she originally looked into buying one of the newer homes in Oceana when she first moved there but stopped after she learned about the escalating fees while reading through her contract. She then backed out and opted for one of the flat-rate fees.
“The houses were nicer and you didn’t have to do anything,” Nichols said. “But then I saw the escalating fees and I said no, show me something else, so I purposely bought the $15 land lease house that has never been redone and everything is old because I couldn’t plan on what their fees were going to be every year.”
According to the Flat Lease Alliance, the currently 50-year-old land lease contract guaranteeing them $15 per month is still good for nearly another 50 years (the land lease contract expires after 99 years).
The group argues that changing the fees to equalize them across the board in Oceana would be illegal and hopes to hire legal counsel to dispute the equalization effort if passed. So far the residents have pooled some money together to hire someone but need more funds for continuing legal expenses. The group started a GoFundMe page to help raise money.
However, Gillis argues that the current disparity between flat-rate homes and dwellings with escalating fees is illegal.
“Unequal assessments are not lawful, and our governing documents do not have the authority to separate us into two categories,” Gillis said.
Though the land lease equalization debate has created a divide between the Oceana community, there is one thing many on both sides can see eye-to-eye on: the developers were looking to make money, and they did so at the expense of the homeowners.
“This community was developed in 1963 by four partners who wanted to make a lot of money and did a pretty good job at it,” Graves said.
“The developer’s design was entirely self-serving,” said Gillis.