# Revolution Starting @ Point @ Poipu



## Kauai Kid (Aug 2, 2009)

I recently received the following email from Roger K Veach (rkveach@comcast.net) and thought all deeded owners at the Point should become aware of the intentions to replace DRI as managers of the Point at Poipu.

Personally, I've been very unhappy with DRI's management of *OUR *Resort. 

Sterling, 2 DEEDED oceanfront weeks purchased when it was Embassy Resorts.

Aug. 1, 2009
Dear Concerned Deeded Owners of the Point at Poipu (CDOPP)

The purpose of our organization is to inform you and then take appropriate action of the issues concerning our resort.

After attending the Owner's meeting in Feb. 2009 we became very concerned about the practices of our management company, Diamond Resorts Internation (DRI)

Our maintenance fees increased by 50% and can continue to increase by 20% per year with board approval, according to Hawaii timeshare law.  DRI has a 3 year contract and expects it to be renewed for an additional 3 yrs.  They have stacked the Board of Directors of our two boards with Diamond employees so that they are the majority on both boards
and can vote in their own best interest.  Unfortunately the owners voted them in being unaware of their intentions.  The increases and contract renewals were in the form of a resolution that was not released to us despite repeated requests for copies. 

Management fees have risen sharply, but services have decreased.  The free breakfasts, receptions, cocktail parties, coupons, etc. have all been eliminated.  

We have requested the list of deeded owners, guaranteed in our by-laws, so that we many communicate with each other.  DRI refused to release this information with an excuse of privacy. Our board president's requests are ignored and they have meetings by phone conferences demanding instant voting. The by-laws dictate 15 days to investigate the items. 

We have contacted other management companies who are willing to manage our resort at a much lower fee.  With your involvement we hope to replace DRI.  We want a board run by our own deeded members, interested in running our resort for the owners and not the management company.  We want a management company that does not serve by conflict of interest and violation of our by-laws.  

DRI dirrectors control the boards, pass resolutions awarding themselves no bid contracts.  We are investigating the legality of this conflict of interest. 

We hope you can attend the next board meeting on Aug. 21,2009 in Las Vegas, details to follow.  Also plan to attend the annual board meeting in Feb. 2010 at Poipu.  More dues increases will be on the agenda at these meetings.  Your input is vital.  

Please pass this on to other deeded owners you know so they can join us.  Forward their name, address, phone, email to the email address above. 

It is very important that you reply ASAP so we know we can count on you.

Respectfully submitted,

Roger K. Veach


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## Fisch (Aug 3, 2009)

This can be good news.

I won't be able to attend either event.  However, depending on these other management companies and their track record.  I would allow someone else to vote for me on anything that benefits us.

Al


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## nazclk (Aug 4, 2009)

*Fee*

How about if all of you just don't pay your maintenance fees for the year 2010  until they comply with the bylaws.


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## Poobah (Aug 5, 2009)

*Revolution*

It will be interesting to see what comes of this. At a certain level nothing has really changed infrastructure wise. The developer/owner has always controlled the BOD. What has changed is that DRI brings a different attitude to the mix. DRI views its Poipu owners as suppliers, not customers/partners. 

The prior owners for better or worse seemed to be generally interested in care and feeding of the owners. DRI has no interest in this. The owners are a revenue source and they are squeezing as much as they can. The points thing is a perfect example: pay them to downgrade your unit, pay them to give up your deed, pay them to join the Trusts, etc. etc.

At the Point we are paying effectively $200 a night. This is getting to the point ( no pun intended) where the Maintenance Fees are not cost effective. You can go on VRBO and get places for $200 a night; particularly in this economy.

Will be following this closely.

Cheers,

Paul


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## lv_maui (Aug 6, 2009)

Kauai Kid said:


> I recently received the following email from Roger K Veach (rkveach@comcast.net) and thought all deeded owners at the Point should become aware of the intentions to replace DRI as managers of the Point at Poipu.



In reading this post, Mr. Veach appears to not understand the legalities of Associations.  DRI is keeping themselves in as board members due to their voting power.  It would be interesting to know how many votes DRI has versus non DRI.

As for cocktail reception, etc., c'mon now.  We all know that these are developer perks that go away at sell out.  If owners want them, they will have to pay for them in their fees, which mean higher fees again.  Nothing comes for free.

As for other mgmt companies saying they will do it cheaper, they all say that at first but change their minds.  

IN order to have Mr. Veach be successful in ousting DRI, a very large effort must be put forth to gain the voting control from the deeded owners.  It would be interesting to see how this plays out.


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## Carolinian (Aug 6, 2009)

There is a huge conflict of interest when employees of a company use their board seats to feather the nest of that company.  Management should be hired help, not serving on the HOA BOD.  I suspect that someone must have counted noses and found that if they get the owners together they can outvote DRI.

I wish the owners luck in taking control of their resort back from management run amuck.

The bit about the membership list has not the slightest thing to do with privacy.  To the contrary it has everything to do with control.  If Hawaii non-profit corporation law is like that of most states, then members have a right in state law to that list.  If DRI is flaunting state law in denying that list, I hope the concerned owners go after them and barbeque them in court over that issue.


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## lv_maui (Aug 6, 2009)

Carolinian said:


> There is a huge conflict of interest when employees of a company use their board seats to feather the nest of that company.  Management should be hired help, not serving on the HOA BOD.



Yes, it is a conflict of interest on paper, but one by necessity for the developer.  If I had that kind of an investment in the resort, then I would want to make sure that it is managed the way that I want to see it managed.  If people do not like this, then they should go out and buy a 1000 weeks and use their voting power

There are plenty of resorts that are successfully managed by the developer.  And then there are some that are not.  Until there is a law that prohibits this kind of representation, I do not see this changing. 

If you want to change the voting control, you must be active in doing so including going to court over it.  The owner list should be available for a reasonable fee if it is not used for a commercial purpose.


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## Poobah (Aug 6, 2009)

*BOD Voting*

I was at one of the Point Owner's Meetings when it was under SunTerra. I was a teller for the election. The SunTerra employees on the BOD lost the "popular" vote, but won based on the proxies voted by SunTerra. 

The President of the BOD at that time wasn't even an owner at the Point!

The key is to get the proxies and the only way that is going to happen is to get a list of the deeded owners and start a campaign. Not an easy job. 

Having gone through the situation at Morritts, you discover that there are a lot of people who are just content to have a place in Kauai to go to. The rest is just noise. 

Cheers,

Paul


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## pianodinosaur (Aug 6, 2009)

I hope there is a way you could affiliate with HGVC.  DRI currently manages some absolutely wonderful resorts and I am sure the problems at Poipu Point must be present at other resorts they are managing as well.  Frankly, I would love to have easier access to the resorts in Lake Tahoe, Maui, Kaui, and Malaga.  It is not yet clear to me how an association with HGVC would benefit you, but there seem to be very few complaints on the HGVC board.

Good luck with your negotiations.


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## Carolinian (Aug 7, 2009)

On the OBX, timeshare owners organized and kicked out the developer at four resorts.  It also happened at a SA resort where I own a week.  It also happened on the OBX when a management company got its flunkies in control of an HOA, and members rebelled leading to a change in the BOD and the firing of the management company.

The key is the membership list and a campaign for proxies.  I suspect that a new developer like DRI which has made a bunch of negative changes is not going to have the degree of loyalty from members prone to such things as the original developer may have had.  Authoritatian, overbearing management is always going to try to keep that membership list out of the members, even though the members are legally entitled to it, because it is so critical to their control.  You will probably have to fight for it, likely in the courts.  I wish there were a way to levy massive punitive damages against developers or management which wrongfully fails to turn it over to a proper request by a member.

As to the conflict of interest, the appropriate and legal way to handle this in BOD voting is for any director with a conflict of interest on a particular subject to abstain from voting on that subject, such as management contracts for their own company.  I suspect if you check the minutes, you will see that a lot of self dealing probably went on instead of abstentions.





Poobah said:


> I was at one of the Point Owner's Meetings when it was under SunTerra. I was a teller for the election. The SunTerra employees on the BOD lost the "popular" vote, but won based on the proxies voted by SunTerra.
> 
> The President of the BOD at that time wasn't even an owner at the Point!
> 
> ...


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## ecwinch (Aug 7, 2009)

lv_maui said:


> As for cocktail reception, etc., c'mon now.  We all know that these are developer perks that go away at sell out.  If owners want them, they will have to pay for them in their fees, which mean higher fees again.  *Nothing comes for free.*



Exactly. As much as we bash the developers, I think we need to recognize that certain "perks" we enjoy are funded by the presence of the developer. Not to say that the "perks" are always worth what we give up in exchange, but we should recognize that they almost always go away when the developer does.

So if you want that free drink at check-in, then learn to love thy developer or expect to add $4-5 bucks to your m/f. As they say, there is no free lunch.


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## Tiger (Aug 7, 2009)

FWIW Lawai Beach Resort down the road 2 miles has been  managed by a group of owners without fee for more than 5 years, subject to the board, all owners.  Elections yearly with info on all those running sent to all members.  We also have polls of owners positions on issues and occasional pleblisites on contentious issues.  Owners input is requested on many items such as decorating and other improvements.


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## vacationtime1 (Aug 7, 2009)

Poobah said:


> The key is to get the proxies and the only way that is going to happen is to get a list of the deeded owners and start a campaign. Not an easy job.





Carolinian said:


> The key is the membership list and a campaign for proxies.  I suspect that a new developer like DRI which has made a bunch of negative changes is not going to have the degree of loyalty from members prone to such things as the original developer may have had.  Authoritatian, overbearing management is always going to try to keep that membership list out of the members, even though the members are legally entitled to it, because it is so critical to their control.  You will probably have to fight for it, likely in the courts.  I wish there were a way to levy massive punitive damages against developers or management which wrongfully fails to turn it over to a proper request by a member.



This description of DRI is not the worst I have seen.

Starwood has taken this to a new level.  The CC&R's of WKORV _require_ the Association to provide Starwood with a list of owners upon request and _prohibit_ the Association from giving out a list of owners to anyone else.

Legally enforceable?  Probably not.  But it makes it extraordinarily difficult to solicit owner proxies and therefore creates an almost insurmountable bar to actual owner control.


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## lv_maui (Aug 7, 2009)

vacationtime1 said:


> This description of DRI is not the worst I have seen.
> 
> Starwood has taken this to a new level.  The CC&R's of WKORV _require_ the Association to provide Starwood with a list of owners upon request and _prohibit_ the Association from giving out a list of owners to anyone else.
> 
> Legally enforceable?  Probably not.  But it makes it extraordinarily difficult to solicit owner proxies and therefore creates an almost insurmountable bar to actual owner control.



I wish I could remember the specifics of Poipu but when I did a detailed review of this issue years ago, I found that the AOAO was a key factor in controlling the Associations.  The reason that it was set up this way was to avoid the issue of having different managers.  Whoever controls the AOAO, controls the VOA.  *How many of Poipu owners even know that there are really two Associations??*

It is something like this.  If an individual unit does not get 67% of the owners sending in their vote, then the AOAO board gets to vote for that unit.  Since the AOAO is controlled by the developer, they would never vote for anyone other than developer members.  Getting 67% of owners in a unit to vote is almost impossible.  Again, I cannot remember the specifics.


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## lv_maui (Aug 7, 2009)

Tiger said:


> FWIW Lawai Beach Resort down the road 2 miles has been  managed by a group of owners without fee for more than 5 years, subject to the board, all owners.  Elections yearly with info on all those running sent to all members.  We also have polls of owners positions on issues and occasional pleblisites on contentious issues.  Owners input is requested on many items such as decorating and other improvements.



This has worked pretty good for you in my opinion.  Once the Henry issue was outed, things got better.  I am not sure that Poipu is big enough to self manage, but it might.  Lawaii is much more complicated in units, etc for Associations.  

YOu say that there is no fee which technically is correct, but whether you save money in the long run with the payroll needed to replace the fee services is the question.  I definitely do think you save money, but do you get the expertise.  Qualified staff on Kauai is always a battle.


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## lv_maui (Aug 7, 2009)

Kauai Kid said:


> I recently received the following email from Roger K Veach (rkveach@comcast.net) and thought all deeded owners at the Point should become aware of the intentions to replace DRI as managers of the Point at Poipu.



I wonder if DRI's attorney have contacted you or Mr. Veach yet.  They tend to do this off of internet postings.  Any comments??


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## Carolinian (Aug 9, 2009)

lv_maui said:


> This has worked pretty good for you in my opinion.  Once the Henry issue was outed, things got better.  I am not sure that Poipu is big enough to self manage, but it might.  Lawaii is much more complicated in units, etc for Associations.
> 
> YOu say that there is no fee which technically is correct, but whether you save money in the long run with the payroll needed to replace the fee services is the question.  I definitely do think you save money, but do you get the expertise.  Qualified staff on Kauai is always a battle.



There are resorts of 15 units and smaller on the OBX which self manage. Small resorts can do it, too.

One of the issues I look at in buying at a resort is who controls the HOA.  If it is a developer dictatorship, I give that resort a pass.  If management has their thumb on the board, I also pass it up.  I only buy if there is democratic control by the week owners.


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## T_R_Oglodyte (Aug 9, 2009)

This is a complete and total waste of time and energy.

Per the Timeshare Program documents, the  management company can only be removed if more than 50% of owners vote to replace the company.  That is *not* not more than 50% of owners voting at a quorumed meeting; that is more than 50% of all owners.  IOW - every non-voting, non-proxied ownership is effectively, a vote in favor of retaining management.

Then consider that as of a couple of years ago, around 40% of total units at the resort were in the Hawaii trust.  By now that number could easily be up to 50%. 

Thus, it doesn't make a bit of difference what deeded, non-trust owners want The only vote that matters is the Trust vote.  *Even if every single deeded non-trust owner voted to end the management contract, they probably wouldn't have enough votes to terminate the contract.*

There isn't a single aspect of Club operations that I can think of that couldn't have been done without creating a trust.  As nearly as I can tell, the only salient reason for Sunterra to create the Trust was to ensure that the management contract could never be terminated.  I think they decided to never again give owners the power that the Vacation Internationale owners retained.


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## Carolinian (Aug 9, 2009)

That is indeed awful news for the owners.  They are absolutely at the mercy of management / developer.  I would personally never want to own at such a resort.

It might be worthwhile, however, to consult a local lawyer just to be sure that there is not some way to break out of this box.  Although the weeks held by Peppertree/Equivest in their points system were only a small percentage of the  votes at Outer Banks Beach Club I and II, those resorts took Peppertree / Equivest to court and won a ruling that the underlying owners of those weeks got to vote them in the HOA meetings, not Peppertree/Equivest.  State laws and condo docs are going to be different, I am sure, but maybe there is a similar legal argument that can be made in this situation.




T_R_Oglodyte said:


> This is a complete and total waste of time and energy.
> 
> Per the Timeshare Program documents, the  management company can only be removed if more than 50% of owners vote to replace the company.  That is *not* not more than 50% of owners voting at a quorumed meeting; that is more than 50% of all owners.  IOW - every non-voting, non-proxied ownership is effectively, a vote in favor of retaining management.
> 
> ...


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## T_R_Oglodyte (Aug 9, 2009)

The only activity that makes any sense if one were trying to remove DRI as resort manager is to develop an argument that the Trustee of the Trust would be violating it's fiduciary obligations to members of the Trust by retaining DRI as resort manager.  Trust members would then need to make that argument to the Trustee, and the Trustee would need to agree.


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## lv_maui (Aug 10, 2009)

*Yes*



T_R_Oglodyte said:


> This is a complete and total waste of time and energy.



thank you for putting into words that I could not use.  It really is a waste because of the way voting is set up.  However, it can be a relatively amusing way to keep DRI on their toes.


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## lv_maui (Sep 15, 2009)

*Any Update??*



Kauai Kid said:


> I recently received the following email from Roger K Veach (rkveach@comcast.net) and thought all deeded owners at the Point should become aware of the intentions to replace DRI as managers of the Point at Poipu.



Has anyone heard anymore about this topic and Roger's push to replace DRI and the attorneys that are on board to do so.


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