# Kauai Beach Villas - letter from Board Member



## DeniseM (Apr 21, 2017)

Received this via email:



> I am an owner at Kauai Beach Villas.  I serve on the Board of Directors.  I am up for election.  I would like you to cast a vote for me, Trish Harrington, when you receive your ballot.
> 
> We are in a critical place at KBV.  Dave Walters was the developer and President for many years.  Before his passing, he hired a new company to manage our resort-Wyndham Vacation Ownership.  They were hired to manage us as well as Ka Eo Kai, The Shearwater, The Makai Club, and Bali Hai Villas.  BHV included the purchase of almost half of the units there.  From my first visit to KBV after Wyndham took over I could see problems.  Things were not the same.  Corners were being cut, the units were not what I considered up to par, and the wonderful Aloha spirit was greatly diminished.
> 
> ...


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## uscav8r (Apr 21, 2017)

I thought the management change was a done deal. This letter indicates this may not be the case?


Sent from my iPhone using Tapatalk


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## DeniseM (Apr 21, 2017)

Management is never a done deal - the BOD can change management - usually at the end of the current contract.


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## davidvel (Apr 21, 2017)

DeniseM said:


> Management is never a done deal - the BOD can change management - usually at the end of the current contract.


Except when the Manager controls/runs the board.


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## uscav8r (Apr 21, 2017)

DeniseM said:


> Management is never a done deal - the BOD can change management - usually at the end of the current contract.


That's what I meant... that the contract with Wyndham had run its course and was switched by the KBV BOD. Whether or not Wyndham now controls KBV, if the prior BOD really did change to another management company (is this the case?) they cannot legally switch the management back to Wyndham until the contract period expires or if there is some sort of severance clause. 


Sent from my iPhone using Tapatalk


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## Rick Henage (Apr 21, 2017)

I note that you may not vote unless you appoint a proxy. In other words, I must assign a proxy to my vote, otherwise, I have to just assign my proxy for either the purpose of having a quorum (with no vote) or I must let the BoD vote for me. Neither is acceptable. Who will be attending that I can give my proxy and my vote to?

I agree with Trish... We do not want to let Wyndham control the BoD! From my last couple of visits, the focus is on Wyndham trying to get me to upgrade my timeshare to add another Wyndham resort. They tell me how valuable it is to own a timeshare in a Wyndham Resort, but when I offer to sell mine back to them (at any price), they have absolutely no interest. My feeling is that Wyndham is merely using KBV as a sales tool for pushing other Wyndham properties, and they are happy to run KBV into the ground in the meantime. If someone believes differently, please let me know.


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## jacknsara (Apr 21, 2017)

Aloha,
Last I visited with candidate Twardzicki at KBV (we seem to be there at the same time every year), he was planning to attend the meeting.  I'll send him an email and encourage him to log onto TUG.
I may choose to post any comments I have regarding the email sent by Harrington or other election issues in this other thread http://www.tugbbs.com/forums/index.php?threads/pahio-kauai-beach-villas-board-election.240675/  since that is the thread I included in my candidate statement.  Regardless of the election outcome, I am hopeful that TUG will acquire a few new readers / participants.
Jack


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## Charles Twardzicki (Apr 22, 2017)

I am Charles Twardzicki, I agree with most of what everyone writes about Wyndham having too much control of the BOD and that the corporate focus is not in the best interests of KBV owners.  My wife, Kathe, and I have been owners almost 20 years and we now visit twice a year around the holiday rush now that I have retired.  I have seen the slow decline at the resort when compared to what Wyndham does for its properties, and have expectations that Grand Pacific will continue to demonstrate the superior management abilities exercised so far into this contract.   I have read Jack's proposals for changing the costs to owners based on unit size and location and think it just might bring back a portion of the 1/1 units from delinquency and being a burden to the resort.  We have had several discussions on not only re-energizing the 1/1 decline but on many other issues that we know of at the resort.  I have attended all but one owners meeting held at KBV when at the resort and listen to the complaints and desires of those in attendance.
I do not at this time know how to be a proxy for the TUG members, but I do realize that unless we find a way to get an actual owner and user on the BOD, things won't change in the near-term.  We reservations to attend the annual board meeting this year in June and I am willing to act for those unable to attend.   Mahalo


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## jacknsara (Apr 22, 2017)

jacknsara said:


> Aloha,    DeniseM noticed that I am a candidate for the board of KBV and suggested that I post something about it.  . . .  For a . . .  rough draft of my speculations of the long term challenges, please send me an email which includes either or both “KBV” or/and “Kauai Beach Villas” in the subject line.  jackgoodstein@hotmail.com  I will batch send my response using blind copy (bcc).  . . .





Charles Twardzicki said:


> . . .  I have read Jack's proposals for changing the costs to owners based on unit size and location and think it just might bring back a portion of the 1/1 units from delinquency and being a burden to the resort.  We have had several discussions on not only re-energizing the 1/1 decline but on many other issues that we know of at the resort.   . . .



Aloha,
I have shared the "proposals" that Charles references only with folks who requested them.  I have not posted them directly on the tug forum although as the first quote indicates, it has been offered here before; the offer is still open.  It is a 4 page pdf that is somewhat dated.  I may eventually update it, but do not intend to do so before the current ballots are due.
Jack


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## ecwinch (Apr 22, 2017)

Rick Henage said:


> My feeling is that Wyndham is merely using KBV as a sales tool for pushing other Wyndham properties..../QUOTE]



I agree with the premise, but I really dont see how GPR is operating any differently. My email inbox is saturated with their solicitations, and based on Trish's statement on how they handled resales, it seems they operate by the same fiat.


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## ecwinch (Apr 22, 2017)

Charles Twardzicki said:


> I have read Jack's proposals for changing the costs to owners based on unit size and location and think it just might bring back a portion of the 1/1 units from delinquency and being a burden to the resort.



What in the bylaws gives the BoD the legal authority to set dues on anything other than unit size?

This seems more like a strategy to "tax" those owners who have the best views, subsidizing those owners who chose not purchase a interval with better views.


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## jacknsara (Apr 22, 2017)

ecwinch said:


> What in the bylaws gives the BoD the legal authority to set dues on anything other than unit size?
> 
> This seems more like a strategy to "tax" those owners who have the best views, subsidizing those owners who chose not purchase a interval with better views.



Aloha,

Currently nothing in the bylaws.  The controlling language is in the Declaration of Covenants, Conditions and Restrictions. The logic behind the suggestion is contained in the pdf I previously mentioned.  However, that recommendation is an example of a potential solution to a long range risk to the financial stability of the resort.  The real point of the analysis in the pdf is that without changes to the governing documents it may be only a matter of time until KBV faces a financial crisis and that consequently a priority challenge for the KBV board of directors should be to persuade a majority of owners to be sufficiently interested in KBV governance issues to vote.

I have been communicating with Kate Solovyan over the last few months to establish a complete set of governing documents in a dropbox for owners who are interested in reading them.  While putting together an index to assist in figuring out the current definition of each section after multiple revisions, I discovered a single missing annexation document and missing pages in some others.  I planned to wait to share the index until the missing material was acquired, placed in the dropbox and the index was finished.

In the meantime, any KBV owner wanting access to the governing documents should contact Kate at ksolovyan@gpresorts.com

Regarding the specific example recommendation, changes would be required to language in (among potentially others) Article II section 1 as it appears in second amendment to the Declaration of Covenants, Conditions and Restrictions (CCR) dated 2/14/1996 and Article IV section 2 as it appears in fifth amendment to the CCR dated 3/13/1998.

I suggest that before more folks pounce on this particular tangent, that they request the pdf and read it a couple of times.

Jack


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## ecwinch (Apr 23, 2017)

jacknsara said:


> Aloha,
> 
> Currently nothing in the bylaws.  The controlling language is in the Declaration of Covenants, Conditions and Restrictions. The logic behind the suggestion is contained in the pdf I previously mentioned.  However, that recommendation is an example of a potential solution to a long range risk to the financial stability of the resort.  The real point of the analysis in the pdf is that without changes to the governing documents it may be only a matter of time until KBV faces a financial crisis and that consequently a priority challenge for the KBV board of directors should be to persuade a majority of owners to be sufficiently interested in KBV governance issues to vote.
> 
> ...



Do you have a legal opinion on the legality of all owners being able to vote to modify the Governing Documents to increase assessments only on a minority group of owners while reducing the assessments on themselves?

Typically a majority vote of the disaffected class is required.


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## dioxide45 (Apr 23, 2017)

In many cases, state law mandates how MFs are billed. Often based on square footage only and not also based on season or view.


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## jacknsara (Apr 23, 2017)

ecwinch said:


> Do you have a legal opinion on the legality of all owners being able to vote to modify the Governing Documents to increase assessments only on a minority group of owners while reducing the assessments on themselves?
> 
> Typically a majority vote of the disaffected class is required.





dioxide45 said:


> In many cases, state law mandates how MFs are billed. Often based on square footage only and not also based on season or view.



Aloha,
[edited: at the time I originally wrote this post, I failed to notice a PM in which Eric did request the pdf.  I apologize for that error.]
PAHIO at Kauai Beach Villas (KBV) is a timeshare within a condominium.  Consequently, there are two sets of regulations that are applicable.  To simplify my request that follows, I’ll stipulate that the Timeshare cannot unilaterally change allocations that are defined by the condominium declarations.
As my candidate statement indicates, I spent several (10) years reading government regulations and the law upon which they are based.  No matter how many times I may have looked at a section, I am always willing to accept input and consider information that challenges my previous interpretation.  I last read the relevant sections of Hawaiian law and regulation in January and my memory is less than perfect.  Some relevant links follow.  Please point out the specific sections upon which you base your position so that I may study them.
HRS Chapter 514A – Condominium Property Regimes
HRS Chapter 514B – Condominiums
HRS Chapter 514E – Time Sharing Plans
http://cca.hawaii.gov/hawaii-revised-statutes/
http://cca.hawaii.gov/hawaii-administrative-rules/
http://cca.hawaii.gov/reb/condo_ed/condo_gen/condo_bod/
http://files.hawaii.gov/dcca/reb/condo_ed/condo_gen/condo_bod/fiduciary-duty.pdf
Mahalo,
Jack


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## ecwinch (Apr 24, 2017)

Jack,

Thanks for sending me the referenced pdf. 

I understand the underlying objective here - to ensure the resort is on firm ground financially. Since like most "legacy" resorts the greatest drag on financial stability is bad debt. 

And while I can fully appreciate the strategy of asking those who benefit the most to bear a greater share of the expense load, why do we assume that will be successful beyond the short term?  And what "buy-in" do we have the fully owned condo's in such a strategy?

Likewise - is there another timeshare plan that we can "benchmark" the effectiveness of this strategy against? Another similarly situated mixed use timeshare/fully owned condo resort that has successfully executed this strategy.

-ECW


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## jacknsara (Apr 24, 2017)

Aloha Eric,

The pdf uses an example to illustrate a point.  Unfortunately, I have discovered that almost all its readers have focused on the example rather than the underlying point.

KBV like many timeshares suffers financial challenges that manifest as bad debt.  Rentals of IOA repossessed units do bring in funds in the near term but pose other risks.  Regardless of the impact of rentals during good economic times, reliance on them is very risky during occupancy downturns.  Occupancy downturns can occur due to either general economic conditions or the rate of new accommodation development exceeding the rate of growth of people wanting places to stay.

The proximate cause of high levels of bad debt for many timeshare resorts is the negligible or negative aftermarket value of timeshare units.  If this were an easy problem to fix, many timeshare BODs would apply the fix.  Consequently, it is a reasonable inference that it is not an easy problem to fix.  The percentage of owners returning ballots at most resorts is believed to be barely above the quorum requirement and far below what is required to amend declaration of covenants.  From this observation it can be inferred that most boards seek (i.e. have no choice but to seek) solutions within the existing declaration constraints. 

There is generally unexplored potential for solutions which implement changes to the declaration constraints.  Many folks assume that getting a majority of owners to return ballots is impossible so not much discussion gets posted regarding what might be possible.  The pdf I developed used an illustration that was preceded with the first of the following two paragraphs and concluded with the second:

. . .

Are we powerless to develop strategies now to prepare for such eventualities?  One premise of my KBV board candidacy is that there are potential strategies to survive such eventualities.  To the extent that I have thought about them, at least some would require substantial change to the governance of the resort.  Such changes would be inadvisable if not illegal without the buy-in of a substantial majority of owners.  Further, some of these changes would need to be enacted a few years prior to the threat/risk occurring.    Here’s an example. The numbers were arbitrarily selected to illustrate the concept. . . .

. . .

I do not intend to suggest that changing the MF assigned to the various combined size and view categories is sufficient by itself to address the perception of KBV value in the resale market.  This proposal is just one example of changes that would require a majority of owners to approve.  In order to implement the hypothetical solution, the majority of owners would have to understand and agree with it.  This leads back to the goal and promise of my candidacy: to get an owners’ online community or communication network started.

Mahalo,

Jack


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## ecwinch (Apr 24, 2017)

Jack,

I am an owner of 2.5 weeks of at KBV - Ocean Front/2 BR units. I purchased those weeks from owners for virtually nothing, because the owners simply wanted to get out from under the maintenance fees. 

At this point I would suggest that the BoD explore converting one or more units/buildings to fully owned condo's. Using the generated funds to address the inherent problem. 

I appreciate your willingness to spend time on this issue. 

Thanks


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## linsj (Apr 24, 2017)

I haven't received any information about the election, either in the mail or email. Is there a link to vote online?


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## jacknsara (Apr 24, 2017)

linsj said:


> I haven't received any information about the election, either in the mail or email. Is there a link to vote online?


Yes, but it requires a personalized password.  I suggest contacting Kate Solovyan at 808-241-1007 or  ksolovyan@gpresorts.com


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## linsj (Apr 24, 2017)

Thanks, Jack. I'll email her.


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## DeniseM (May 3, 2017)

Another letter -

*



			Concerned Owners at Kauai Beach Villas
		
Click to expand...

*


> *NEWSLETTER*
> *May 2, 2017*
> 
> Aloha To My Fellow Owners at Kauai Beach Villas:
> ...


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## Dan Hedman (May 3, 2017)

DeniseM said:


> Another letter -


We have owned at KBV for almost 15 years and we've never bothered to vote. I am not clear on the "proxy" part of the card I received. Do I simply select one of the candidates on the ballot to be a proxy? I am trying to vote online and it won't let me proceed without checking one of the boxes. I called the Grand Pacific Vacation Services but they didn't know the answer.


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## DeniseM (May 3, 2017)

I don't know either, but the letter above has specific details for designating a proxy.


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## Dan Hedman (May 3, 2017)

Dan Hedman said:


> We have owned at KBV for almost 15 years and we've never bothered to vote. I am not clear on the "proxy" part of the card I received. Do I simply select one of the candidates on the ballot to be a proxy? I am trying to vote online and it won't let me proceed without checking one of the boxes. I called the Grand Pacific Vacation Services but they didn't know the answer.



OK. I think I figured it out now. I got an email from Jeff Bellin. I can select him as proxy and he can vote on our behalf. That sounds like a good way for us to go.

Done.


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## DeniseM (May 3, 2017)

Yes - that is the letter I posted just above your post.


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## Jeff From Salem (May 3, 2017)

Dan Hedman said:


> We have owned at KBV for almost 15 years and we've never bothered to vote. I am not clear on the "proxy" part of the card I received. Do I simply select one of the candidates on the ballot to be a proxy? I am trying to vote online and it won't let me proceed without checking one of the boxes. I called the Grand Pacific Vacation Services but they didn't know the answer.



Hi - I am THE Jeff Bellin, Dan. Yes, you got my letter and thank you for responding. So for anyone who is curious, let me put out a few things which I hope will be helpful.

I had to get some clarification on voting procedures. I didn't have it quite right the first time around. Mes apologies. Unless you are planning to be there an vote on June 1st, you need to send in that Proxy ballot. Regardless of whether you personally select the candidates to vote for with your voting power or have a Proxyholder vote for you, you need to assign a Proxyholder. 

By selecting candidates personally, the Proxyholder will merely assign and cast your votes as you selected at the June 1st meeting. If you leave the candidates area blank, the Proxyholder will select the candidates with your voting power. Your voting power consists of either 3 votes for every annual week unit, or 1.5 votes for every semi-annual (every other week) unit. As I am flying from Salem, MA, to the resort that week to make sure everything is on the up and up, I will be there to cast votes, not only for myself, but for anyone who wants me to be their Proxyholder. Regardless of whether you select your own candidates or want the Proxyholder to do it for you, you need to select a Proxyholder. Check the 4th box with the blank space, put in my name, Jeff Bellin, and I'll cast your votes for the candidates you indicated on the Proxy ballot, or if you have left that blank, I'll use your voting power to help maintain the interests of actual, individual owners. 

If you need to get a new ballot, or didn't get one to begin with, call Grand Pacific Vacation Services (they close at 6pm PDT). Particularly if you didn't get your ballot to begin with, it may mean that they don't have your updated contact information. In any event, you need to make sure you have your account information, which is on your original ballot. You can get that info from GPVS. Their number, by the way, is 888-477-6967.

I have uploaded a blank ballot package here, but it won't have your personal account info on it (naturally). But you can get your info from GPVS and put it onto the form in the appropriate place (upper left side).

Aloha!

Jeff Bellin


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