The Association
Commerce Oil created the Lot Owner’s Association. The bylaws were drafted by the first Board. Commerce Oil’s initial design called for 98 buildable lots and that is the number referred to in the deed restrictions condition 8. The lot at 90 Intrepid Lane was originally two lots owned by Peter Ceppi (owner of the land where the Community Farm is located). The two lots were combined by the Town when the pond filled and the lower lot, near the pond, was deemed to be wetlands and unbuildable. Hence 98 lots became 97 lots. The commonly owned pond lot is technically the 98th lot, but this lot does not share ownership.
As new homes were going up, the first residents wanted to take an active part in the evolving community. In 1994 they created bylaws to govern the Association and elected the first officers. The Association has always focused on common property issues and avoided becoming involved in Town zoning and tax assessment issues. It does not take a political position. Many early lot owners volunteered to serve on the Board and on committees that were formed for defined tasks, such as deciding on the design of street signs and creating a stone wall entrance at America Way and North Road
In 1978 Vic Calbretta bought the lot at 11 America Way from Commerce Oil before the plans for East Passage Estates were complete. His deed did not include the restrictions that are in East Passage Estate deeds and he was not a member of the Association. In 2010 he asked the Board to let him join the Association and pay an assessment because he had many friends in the neighborhood and wanted to be able to attend events. The Board approved a social membership for the Calbrettas on the understanding that they cannot vote. They became the 98th member. Even after Vic’s death in 2018, his wife has continued to pay an annual assessment and attend the cookout and dinners.
By the millennium, many lot owners did not have the free time nor the interest to serve on the Board. Some homes became second homes with owners living elsewhere much of the year. A handful of homes were rented out year-round and a few became commercially owned. The pool of willing volunteer Board members continued to decline, and the Board had to recruit members.
Tax-exemption, background: The Association is classified by the state as an unincorporated “non-profit corporation” and files a Federal 1120-H US Income Tax Return for Homeowners Associations, but it is not tax-exempt. In the past the Board looked at becoming exempt from state sales tax. The Association would first have to file and receive a Federal tax-exempt determination letter from the IRS and then apply for a sales tax exemption certificate from Rhode Island. A lawyer would be needed to handle the filings and the IRS charges a fee to obtain a tax-exempt determination letter. Obtaining IRS tax-exempt status could come with restrictions or limitations on the Association. These should be understood before initiating a filing with the IRS. Rhode Island has a very complex sales tax code, and the Association does not pay a great deal in sales tax. Wine is not taxed, beer is. Food products are tax-exempt, but prepared/ready-to-eat food it is taxed. Landscaping services are not taxed. Tent rental is taxed, but entertainers do not charge a sales tax. The actual state sales tax paid must be measured against the cost of receiving sales tax exemption and limitations that might be imposed.