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HOA holding the line against MF increases?

Discussion in 'Vistana Signature Experiences (formerly Starwood)' started by celica7101, Aug 22, 2018.

  1. celica7101

    celica7101 TUG Member

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    How successful are the HOAs of properties like WKORV or WKORV/N at holding the line against MF increases?

    I could understand MF increases due to property taxes and other gov't levied charges, but has there been any successful attempt to prevent additional increases to Vistana's pockets? I was reviewing the last budget and it seems like the administration for the property is making plenty in compensation and costs could/should be holding the line there.

    Or are the HOA boards just toothless in this regard?
     
  2. Ken555

    Ken555 Tug Review Crew: Rookie TUG Member

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    Of course the board is toothless. It, along with the other affiliated resorts, has a board controlled by the developer/Vistana.


    Sent from my iPad using Tapatalk
     
  3. DeniseM

    DeniseM Moderator

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    They WKORV-N/S boards are virtually hand picked by Starwood/Vistana and simply rubber stamp whatever Starwood/Vistana asks for.
     
  4. TravelTime

    TravelTime TUG Member

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    Are the Boards composed of timeshare owners at WKORV-N/S? If so, why wouldn’t they want to hold down costs?
     
  5. celica7101

    celica7101 TUG Member

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    That's what I'm not sure of -- I thought that the boards are supposed to be comprised of owners. Is it just that it's difficult to get seated because people are ambivalent?
     
  6. dioxide45

    dioxide45 TUG Review Crew: Veteran TUG Member

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    Our SVV maintenance fees went down for 2018. Better than some other systems we own.
     
    DannyTS likes this.
  7. LisaRex

    LisaRex TUG Member

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    By law, the non-profit HOA must be comprised of owners. However, because Starwood got to hand pick the first HOA board (by virtue of owning a majority of the units), who were of course rubber-stampers, they still control the board today. Why? Because based on the rules that they created, the current board gets control of all un-cast proxies. While that is a good thing from a purely logistical POV (you don't want business to come to a screeching halt while you try to get a quorum of 10,000+ owners), it also means that when a seat is vacated on the board, whomever the current board wants to win, will win.

    It's even more unlikely that an outsider will win a seat because the courts have ruled that HOAs are not legally obligated to release owners' names and addresses to third parties (including HOA candidates), because of privacy laws. How can you organize a coup if you can't communicate with your sympathizers?

    If you answered that question: "Via social media," then you've stumbled across the one way which an outsider can realistically win a seat. It has happened that an "outsider" can infiltrate one of the hotel-branded HOA boards by using social media to organize..but that's historically only happened following a cataclysmic event such as a huge Special Assessment. Case in point: 10+ years ago, Marriott Aruba owners were hit by a huge SA to replace an expensive roof that should have lasted another 30 years, and frustrated owners used FB to organize. 2 Starwood-branded resorts (Virgin Grand section of WSJ and Villas of Cave Creek) have also succeeded in wresting control from Starwood, but both resorts existed prior to Starwood getting into the TS business, and as such had advantages that owners from brand new resorts don't enjoy.)

    But don't take my word for it. If you want to see how effective ANY board is at representing owners' interests, just look at how often they meet and what is discussed. VSE boards meet, what, once or twice a year for 90 minutes? Personally, I was on a pre-school co-op board with a total budget of $150,000 that met twice a month. When I was an owner, I'll admit that the rubber stamping frustrated me to no end, especially when I was seeing my MFs increase 10% each year. But to my and other TUGgers great relief, after 5 years of constant increases, MFs FINALLY leveled off at ~$2300. While I believe their motivation was pure greed, because they realized that they were on the precipice of pissing off owners so badly that they'd organize and get rid of them, if that is what it took to keep my MFs steady, then that was fine with me.

    And that's the thing with these resort HOA boards. Most owners are there to enjoy themselves. They don't really want to involve themselves in the running of it. As long as the resort is nice and MFs are still below rental rates, most owners are fine letting the developer run things.
     
    Chrispee likes this.
  8. CalGalTraveler

    CalGalTraveler TUG Member

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    Aren't owner names publicly available in the county recorder's office with the deeds?
     
  9. LisaRex

    LisaRex TUG Member

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    Even if owners ARE recorded, and that's rarely the case,* think of the logistical nightmare of searching for and collecting up to 52 names and addresses PER UNIT to build a database. For a resort the size of WKORV-N, we're talking ~13,000 records. You'd have to be quite motivated to put in that kind of effort, keeping in mind that many county websites don't include email addresses, either. And without a free and easy way of communicating with voters, a candidate would be forced to send out communication via USPS, which would mean stuffing 13,000 envelopes at an expense of $6000+ per mailing.

    However, in most cases, the county doesn't even record individual week owner names...because the 52 owners don't actually have a legal interest in the real estate itself. Even "deeded" owners don't actually hold a deed. Instead, their interest in strictly limited to "right to use."

    Case in point: Maui County lists "OCEAN RESORT VILLAS VACATION OWNERS ASSC" as the owner of all 250 villas at WKORV-N, which is undoubtedly easier for them, PLUS it's legally correct because ORVVOA ACTUALLY does own the property. While it kind of stinks not to have a legal interest in the property itself because it's a SWEET ocean front parcel, it's actually a good thing for all owners that they don't actually own it: 1) It protects owners from being sued as an individual should someone get hurt on "your" property. 2) It also protects against the possibility of having the county foreclose on a unit should just 1 out of the 52 owners fail to pay his fair share of property taxes. (And if you think that that's a highly unlikely scenario, then you haven't met Maui council! :))

    http://qpublic9.qpublic.net/hi_maui_display.php?KEY=440140030065

    *Some counties DO keep track of all 52 owners so that they can bill them individually for property taxes. WMH and WSJ VG are two such resorts that used to do this, and possibly still do. I believe WMH has already changed their process, but I could be wrong on that. And who knows what WSJ is doing? Last I heard, they were YEARS behind in billing for property taxes.
     
  10. DeniseM

    DeniseM Moderator

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    Also - Vistana has a staff member who manages all of the board elections, and they control the whole election. They solicit the applications for the board, vet them, and select the candidates that they want to run.

    We had a Tugger, an attorney, who ran a few years ago, and when Starwood rejected his application, he brought it to their attention that by law, any owner can run, and forced them to put him on the ballot. He had a phone interview with the sitting board and was treated with hostility and suspicion. As Lisa stated above, they did not get a quorum, the board selected a new board member, and they chose one of Starwood's picks - not the Tugger.

    In general, based on their Bio's, the board members are affluent people who may not be motivated by keeping the maintenance fees low. I think Starwood/Vistana makes them feel special and exclusive that they were selected for the board, and they enjoy the perks, and simply rubberstamp whatever Starwood/Vistana puts in front of them.
     
    Ken555 and jordathyspg like this.
  11. dioxide45

    dioxide45 TUG Review Crew: Veteran TUG Member

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    For our Bella and Key West unit weeks, we received our ballot/proxies last week. You were only able to vote for one person for one of the properties and two for the other. Odd thing was that there was only one person that you could vote for on the one and two on the other. So you didn't have a choice other than to write in. I wrote in "is this a joke" on the one where I could only vote for one board member and write in mine and my wife's name on the other.
     
  12. WahooWah

    WahooWah Guest

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    Fact #1: I know three of the members of the HOA for WKORV. They have collectively purchased five weeks on the resale market at this resort.
    Fact #2: Here are the last three years maintenance fees for WKORV for a regular 2BR:
    2016 - $2,410.80
    2017 - $2,420.95
    2018 - $2,466.76

    That's a 0.4% increase from '16 to '17 and a 1.9% increase from '17 to '18. That is a compound annual growth rate of 1.15% over two years.
     
    Last edited: Aug 30, 2018
  13. dioxide45

    dioxide45 TUG Review Crew: Veteran TUG Member

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    Using a three year sample may not be the best way to look at this. Look at how high those fees are already! What is the increase over the last 10 to 15 years?
     
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  14. RX8

    RX8 TUG Member

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    Duplicate
     
  15. RX8

    RX8 TUG Member

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    It isn’t just taxes and other government fees that can result in MF increases. You are forgetting salaries (front desk, housekeeping, etc...), landscaping, maintenance, utilities, insurance, laundry services, legal fees, and shuttle vehicles.
     
  16. LisaRex

    LisaRex TUG Member

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    Are you familiar with the development directly north of Nanea called Honua Kai?

    https://www.honuakai.com/

    It is a very nice, TripAdvisor 4.5 star rated, 1-3 bedroom condo development, filled with a blend of owner-occupied and rental units, with beautiful pools and an on-site restaurant, Duke's. 2BR/2BA rental rates are $236/night for IV up to $625/night for OV. They have ~600 condos, built in 2009, right around the time when WKORV/N was being built, so a very similar property in terms of look, luxury, and maintenance required.

    Do you know what the MFs are for their 2 bedroom, 2 bath ~1100 square feet condos? $1,858 to $2,425 per month. Add in property taxes of $1000/month and $500/month for utilities, and it should cost $4000/month to own the place. Setting aside another $1000/month for new furniture, new towels, and needed repairs and a landlord-owner should be expected to spend ~$5000 per month.

    WKORV is charging owners $10,000 per month.

    So, while it's great the MFs have held steady, IMO they are easily charging double what it should actually cost to run the place.

    Why not ask your HOA members how much time they've spent in the last year meeting, how many hours they've devoted to poring over competitive bids for, say, housekeeping. If they say that they let the management firm do that work and trust their recommendation, then that is precisely why they are called "rubber stampers" for the developer.

    https://www.emauirealestate.com/condo/honua-kai
    http://qpublic9.qpublic.net/hi_maui_display.php?KEY=440140060580
     
  17. WahooWah

    WahooWah Guest

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    I can sympathize with your hurt feelings about Westin's misrepresentation of maintenance fees by subsidizing them in the first five years after development.

    I don't believe your numbers for the Honua Kai are accurate nor does your analysis include everything that is covered in the WKORV HOAs.

    First, your utilities assumption is grossly undervalued. Energy for AC, two W/D units combined with cable and internet wifi brings the utilities amount to well over $1,000/month in Maui.

    Property taxes for a 2BR at Honua Kai are more than $1,400/month.

    $1,000/month implies $60,000 per unit over five years for the full refurnishing, breakage, replacement of linens/towels, carpeting, curtains etc. and the labor involved. Again, grossly understated.

    You also leave out front desk operations and housekeeping, which are major expenses. Do you now what the property management costs of outsourcing this for the Honua Kai run?

    Your $10,000 a month is assuming four Club dues payments of about $150 each. A more accurate figure for comparison would be $9,200 per month.

    You are getting a lot more services and utility with StarOptions, I.I. membership etc. with the Westin than you are with Honua Kai.
     
  18. duke

    duke TUG Member

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    +1 LisaRex
     
  19. CalGalTraveler

    CalGalTraveler TUG Member

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    Very interesting comparison @LisaRex. Sadly Marriott/ILG merger may not make this better. While Marriott/Vistana are approaching $2500 - $3k MF. Hyatt and Hilton remain in the $1200 - 2000 range for most properties proving that you operate an equivalent quality resort experience on a significantly lower budget.
     
    Last edited: Aug 30, 2018
  20. CalGalTraveler

    CalGalTraveler TUG Member

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    BTW...I wonder if Honua Kai is non-warrantable given there are so many rentals and non-owner occupied units.

    https://themortgagereports.com/18658/condo-mortgage-non-warrantable-loan-rates-gina-pogol

    Perhaps most of the buyers are wealthy and paying cash so don't need a mortgage? Wonder if it affects resale value like it has at other vacation condo developments where prices have dropped because people cannot get mortgages. However prices sure look high...

    HT to VacationForever for bringing the non-warrantable issue for vacation condos to my attention.
     
  21. dioxide45

    dioxide45 TUG Review Crew: Veteran TUG Member

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    This property would require loan amounts that would require private investors. Based on the loan limits, it would start out ineligible for any conventional or FHA financing.
     
  22. LisaRex

    LisaRex TUG Member

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    I included a link to a real estate agent's website, where she indicates that the 2 bdrm HOA fees are $1858 to $2425 per month. Not sure why you think that that isn't accurate. Anyway, below is a listing for a 1240 sq. foot 2 bdrm/2 bath for sale at Honua Kai right now. (WKORV-N villas are 1230 sq. feet , so as true an apples to apples comparison as I could find.) The MFs for this unit are listed as $2133.

    https://search.emauirealestate.com/maui/5-376389/130-KAI-MALINA-PKWY-606-Lahaina

    Most of the utilities are covered with the MFs. "...(Honua Kai Maintenance) fee covers the costs for water, rubbish removal, sewer, landscaping, basic cable TV service, maintenance and electricity of all common elements, pest control, security, pool, capital reserves, payroll for the management/admin of the association, and insurance for the property...

    Individual owners are responsible for electricity charges, phone/internet services, property taxes, and insurance."

    https://www.hawaiirealestatesearch.com/blog/honua-kai-hoa-fees.html

    So let's expand utility line to $1000 and it should more than cover phone/internet, homeowner's insurance, and electric:
    • Phone/Internet: Hawaii Telecom's best internet plan is $99.95/month and basic phone is $30/month. https://broadbandnow.com/Hawaiian-Telcom
    • Homeowner's Insurance: Homeowner's insurance in Hawaii is actually pretty low, the average homeowner paying ~$1000 a year so that's $84/month. (Loren Clive, a residential real estate broker indicates in her 2nd posting linked below that she pays $469/year for her 1 bdrm/1 bath rental condo, so $1000 in right in line with that.
    https://www.biggerpockets.com/forum...rt-term-rental-occupancy-rates-electric-bills
    https://www.reviews.com/homeowners-insurance/hawaii/
    • Electric: That leaves $785/month for electric, which seems reasonable as Loren Clive reported in her first post above that her monthly electric bills for a 1 bdrm/1 bath unit with 1 room a/c was $200-300/mo.
    https://www.aimforawesome.com/hawaii/moving-to-hawaii/hawaiis-high-cost-of-living/

    Nope. I actually included a link to the Maui County property tax website, where I linked to an actual 2 bdrm 1230 sq foot condo at Honua Kai. The half year taxes on this property are $6052.88x2 = $12,105.76. That is $1008.81 per month.

    http://qpublic9.qpublic.net/hi_maui_display.php?KEY=440140060580

    Please expand on this. Here's what I can come up with for a budget for a 5-year cycle. And keep in mind that these are retail prices. WKORV should receive significant volume discounts on just about everything I've listed, including mattresses, furniture, appliances, carpet, tile, curtains, and linens.

    600 sq feet of carpet: $5000 - replaced every 5 years $5000
    600 sq feet of tile: replaced every 10 years - $13,500 every 10 years or $6750
    Painting: Materials and labor: $7300 - every 2.5 years - $14600
    Mattress: $3000 x 2 beds - replaced every 5 years = $6000
    Couch: $3500 couch and $2000 love seat replaced every 7 years = $5500
    Dining table: $2000 replaced every 5 years - $2000
    TVs: 42 inch: $600 x 2 - replaced every 5 years - $1200
    Sheets, Pillows, comforters = $500 x 2 bdrms replaced every year = $5000
    Towels: $200 x 2 bedrooms replaced every year = $400
    Curtains: $1000 x 3 exterior windows replaced every 5 years = $3000
    Fridge $1000: replaced every 10 years = $500
    Fridge (compact): $520 - replaced every 5 years = $520
    Stove: $650 - replaced every 10 years = $325
    2 burner cooktop: $585 - replaced every 10 years = $292
    Dishwasher: $850 - replaced every 5 years = $850
    Compact dishwasher: $820 - replaced every 5 years = $820
    Microwave $650 - replaced every 5 years = $650 x 2 = $1300
    Washer/Dryer combo - $1500 - replaced every 10 years = $750 x 2 = $1500
    Misc kitchen ware, irons, blow dryers: $300 - replaced every year = $1500
    New granite: $7500 - replaced every 15 years = $2500
    Lanai furniture: $500 - replaced every 5 years x 2 = $1000

    Grand total.................$60,557

    Am I missing anything major here?

    Carpet cost: https://www.manta.com/cost-carpet-replacement-kihei-hi
    Tile cost: https://www.manta.com/cost-tile-installation-kahului-hi
    Painting cost: https://www.manta.com/cost-house-painting-kahului-hi

    Furniture was replaced based on this guide: https://www.factotum.co.uk/2017/07/04/furniture-life-span/

    Appliance replacement was assisted using this guide: https://www.mrappliance.com/expert-tips/appliance-life-guide/

    Appliance costs are based on a middle of the road stainless steel model at Costco plus 30% Hawaii mark-up because I couldn't get my location to switch to Maui.

    Front desk operations and security are covered in the $2133/month MFs. Housekeeping is a fair point. I'd add in $800/month for that. And, once again, keep in mind that I wouldn't enjoy the benefit of owning 600 units, which would bring the housekeeping cost down significantly.

    It really doesn't matter what you call it because an owner is still on the hook for paying it. We're discussing the REAL cost of ownership vs. what y'all are paying for ownership. But if you insist, I'll revise it to $9200.

    Here are my revised figures:

    $2133 MFs
    $1008 property taxes
    $1000 utilities & homeowner's insurance
    $1000 Capital Improvements
    $800 Housekeeping
    -------
    $5941 WITHOUT any volume discounts
    v. $9200, which is what WKORV is charging you.

    What services are you talking about? Spa? Well, I can walk to the one at the Westin! There is an on-site restaurant, Duke's. II membership can be bought for $100/year.

    P.S. I've probably have spent more time composing these posts than your friends have spent running the HOA. :)
     
    Last edited: Aug 31, 2018
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  23. LisaRex

    LisaRex TUG Member

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  24. DavidnRobin

    DavidnRobin TUG Member

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    Someone apparently is not looking at the entire history of MFs at WKORV.

    Knows 3 (of 5) board members at WKORV?
    <BS Alert!>
    Name them.


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  25. WahooWah

    WahooWah Guest

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    Are you calling me a liar?
     

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