[2008] Southcape Resort

[NEVMSLLC]

Hi w.bob

I agree your question is fair and I think I can answer most of it without getting lawyers after me! The first $50 was a direct contribution to establish a reserve account for the resort. Southcape has never had a reserve account. When repairs were needed, there was no money to pay for them and the repairs kept getting worse and worse and more and more expensive.

The assessment is against all the owners including delinquent owners. NEVS is not required to pay the special assessment or maintenance fees. Instead, what NEVS has done, even though it doesn't have to, is to assign rental rights of all NEVS inventory to the association. The association will keep that rental money and it will be substantial. NEVS has voluntarily given up this income for the benefit of everyone.

NEVS owns about 500 weeks and is in the process of selling those weeks. As those weeks are sold, they will generate maintenance fee income to the association and that is what should have been done over the last 20 years.

In my experience (and I have a lot of it), the repairs to the resort should have the effect of increasing the value of everyone's week. This has been my experience at dozens of resorts that I have worked with and consulted for. Besides, when the roofs are leaking, the siding is rotting and falling off and the septic tanks are failing, we have no choice but to fix them. The special assessment was the result of a competitive bidding process once the necessary repairs and renovations were identified and itemized, a process that took months. To wait and allow the situation to continue to deteriorate would only have resulted in a greater expense so the time to fix it is now. By the way, the work is ongoing and it looks great! We have lots of pictures and will be presenting them at the annual meeting. I know you'll be pleased when you visit.

Again, I must stress that nothing happens without being fully vetted by the attorneys involved.

 

[ecwinch]

While I will try to answer all questions, I do want to keep things somewhat confined to communicating with only Southcape owners and I notice that neither you nor tombo list yourselves as actually being owners. I would appreciate it if you would confirm this for me and I will take you at your word.

Eric, I can't discuss the process by which the current trustees assumed their duties as it calls for legal opinions but I can tell you that the process was conducted under the supervision of several different law firms.

Cliff,

Thanks for quick response. I am a prospective owner at SC, and of course I want to ensure that my rights as an owner are protected before I make a purchase decision.

While I understand that you cannot offer a legal opinion of the process, I hope you can describe to us how the current trustees came to their positions. Were they appointed to fill vacancies in the board, or were they elected?

I think this would be information available to any owner or prospective owner that would be joining the HOA.

Thanks

 

[NEVMSLLC]

Eric

The current trustees were appointed.

Cliff

 

[somerville]

Hi Eric and all...
Eric, I can't discuss the process by which the current trustees assumed their duties as it calls for legal opinions but I can tell you that the process was conducted under the supervision of several different law firms....Cliff

At least now you know they were appointed. I would like to know how the mechanics of becoming a trustee involves you issuing a legal opinion.

 

[ecwinch]

The assessment is against all the owners including delinquent owners. NEVS is not required to pay the special assessment or maintenance fees. Instead, what NEVS has done, even though it doesn't have to, is to assign rental rights of all NEVS inventory to the association. The association will keep that rental money and it will be substantial. NEVS has voluntarily given up this income for the benefit of everyone.

Again, I must stress that nothing happens without being fully vetted by the attorneys involved.

That NEVS is not required to pay for the inventory they control is a little disconcerting. I think you can understand why.

So if the NEVS units are not committed to the Interval Ownership, will funds from the special assessment be used to refurbish units that are in the NEVS inventory?

When you say "the attorneys involved" - do you mean attorneys employed by the HOA?

Also, was material consideration given to NEVS in exchange for the assignment of the rental rights to the HOA?

 

[wmauryd]

occupancy permits, septic repair, welcome to Southcape forum

Cliff,

Thank you for taking time to address this forum. Welcome!

When you and I spoke weeks ago, you related that City of Mashpee wanted to pull Southcape's occupancy permits due to septic tank disrepair, and that you reached an agreement with the city for Southcape to remain open, on condition that septic tank repair would begin early April. How's our relations with town hall now, and what's the status of SC occupancy and septic tank repair at this time? Is the assessment providing sufficient means to make the repairs on schedule?

David M

My name is Cliff Hagberg and I am a trustee at Southcape Resort. I
am concerned about a number of untruths and misrepresentations that
have appeared on this board and i am perfectly willing to address
issues of concern for any owner at Southcape Resort. Please
understand that I cannot discuss legal issues nor will I respond to
any personal attacks. Having set those ground rules, I would
very much appreciate an opportunity to try and answer those questions
that any owner at Southcape might have. I look forward to a fruitful
dialog

 

[Sou13]

We're all in this together!

One other thing I should point out, Sou13, is that I disagree with your interpretation of the object of this discussion group. I believe that the purpose of this group is to discuss issues facing Southcape Resort and not to get Southcape owners to identify themselves. Besides, I already know a number of owners here, including you. In fact, I'm helping you in your goal. We are in the process of sending a notice of the meeting to all Southcape owners with an invitation to attend. Personally, I hope there's a large turn out as we have much to discuss. There really is nothing to hide.

And I've been helping you do yours! The only thing I may need to "hide" is the identities of Soutcape owners who have emailed me privately. I was taken to task by one owner who had a problem with one of my posts.

I, too, want to end speculation and want transparency. We're in an age of that!

Some of my posts are an embarrassment to me, especially the earlier ones when I was learning my way around TUG. If you want to clarify which posts are "untrue" I welcome the truth. If you're here to clarify misunderstandings, you are more than welcome! The only reason for trying to get Southcape owners to "identify themselves" is that you have already pointed out that some of the posts in this discussion were not by Southcape owners.

Sometimes I post thoughts that can be misunderstood. My intent here is to embolden and inspire Southcape owners to post here without fear of reprisal. I expect to be meeting you soon and want our meeting to be pleasant and worth making the extra trip to Southcape.

 

[tombo]

The only reason for trying to get Southcape owners to "identify themselves" is that you have already pointed out that some of the posts in this discussion were not by Southcape owners.

Most of the concerns raised here came about because of discussions of actions Festiva has taken at other resorts in the past (raising MF's, assessments,gaining control of the vote, placing employees on the HOA etc). Some of these alleged actions have caused Festiva to be sued at two different resorts (Festiva settled the one with the MO AG, the one that owners at The Atrium filed is ongoing as far as I know). We were able to address enough issues at the BRV annual meeting (thanks to information from owners at other Festiva resorts )to get a Festiva CEO red in the face and telling us to deed our weeks back to them and leave if we didn't like it. To limit the discussion on this thread to only Southscape members would have excluded the knowledge of things Festiva has done at other resorts like Church Street Inn, The Atrium, and others. Without that information Southscape owners would not currently be able to proactivelly address exisiting and future problems that can come with Festiva involvement (IMO). Once the Southscape owners lose control of their vote and their HOA, the best you can hope for is rescue by some legal entity hired or contacted by an owners group. An ounce of prevention beats a pound of cure!

Just remember the old adages that "A leopard rarely changes their spots" and " The best predictor of one's future actions is one's past actions". I am not an owner at Southscape and will bow out of this discussion, but beware of promises and assurances that aren't in writing.

 

[Sou13]

No, no, we want you here!

Most of the concerns raised here came about because of discussions of actions Festiva has taken at other resorts in the past (raising MF's, assessments,gaining control of the vote, placing employees on the HOA etc). Some of these alleged actions have caused Festiva to be sued at two different resorts (Festiva settled the one with the MO AG, the one that owners at The Atrium filed is ongoing as far as I know). We were able to address enough issues at the BRV annual meeting (thanks to information from owners at other Festiva resorts )to get a Festiva CEO red in the face and telling us to deed our weeks back to them and leave if we didn't like it. To limit the discussion on this thread to only Southscape members would have excluded the knowledge of things Festiva has done at other resorts like Church Street Inn, The Atrium, and others. Without that information Southscape owners would not currently be able to proactivelly address exisiting and future problems that can come with Festiva involvement (IMO). Once the Southscape owners lose control of their vote and their HOA, the best you can hope for is rescue by some legal entity hired or contacted by an owners group. An ounce of prevention beats a pound of cure!

Just remember the old adages that "A leopard rarely changes their spots" and " The best predictor of one's future actions is one's past actions". I am not an owner at Southscape and will bow out of this discussion, but beware of promises and assurances that aren't in writing.

Again I've been misunderstood. I welcome all info from TUG members, especially those who have had experience with Festiva, to post here! This discussion is about Southcape Resort and what's been going on there since the sale of the "developer rights" to NEVS.

Let me just give you an example from my own experience. In October 2008 the mail contained what looked like a maintenance fee bill for 2009. I put it aside because I wasn't expecting it in October and didn't want to spoil Thanksgiving. But then I got that mysterious telephone call while I was watching my favorite prime-time TV show (I don't subscribe to DVR) and I was sent into a tailspin. What's going on at Southcape? What do you mean by "changes"? How could my resort have been sold?

I declined to allow a representative come to my home because I had reserved the 4-day split for Thanksgiving, and told the telemarketer that I would be going to Southcape and there was no need for anyone to come to my house. The telemarketer responded that I was "ahead of the game" and I got back to my TV show but now I was very upset!

I didn't document the date and time of the call but if it was my favorite prime time TV show it had to be after 9 p.m.

Now it was time for me to fish out that MF bill and open it. That's when I learned that I was supposed to be expecting a telephone call from a representative of Outfield Marketing.

About two weeks later I received another call, again while I was watching one of my favorite prime time TV shows. Again I gave my reason for declining to make an appointment for an in-home visit in December, and that was the last time I answered a call from Outfield Marketing in 2008.

But in the meantime I was very concerned that my reservation for the 4-day split might be worthless, and called Southcape to confirm that I could stay there in the unit I had reserved at the time I had reserved.

A friend looked up "Southcape Resort" and found the TUG discussion which was started by someone looking for info about the resort, which I read, but I was unfamiliar with TUG then, and it wasn't until I read tombo's "Festiva has taken over my resort" discussion that I realized how bad it could get for Southcape owners. That's when I became a "guest" forum contributer and revived the "Southcape Resort" discussion.

There must be Southcape owners who are TUG members but haven't posted here, and there might be Southcape owners who are reading this discussion but haven't joined TUG. These are the owners we are trying to reach. We are marketing info here and no salesperson will call!

 

[NEVMSLLC]

OK, a lot to try and cover here. First, I'll try to answer somerville and then eric. The process by where trustees are appointed and elected is a legal process that involves the interpretation of legal documents. I'm not qualified to do that. The process was conducted in accordance with the legal advice of several law firms.

I agree that NEVS not paying maintenance fees should be disconcerting. My question is why is it disconcerting to you now when that's the way it's been for thirty years? NEVS is the first "developer" in over twenty years that is actually going to try and sell it's inventory. Why isn't that a tremendous benefit to all of the owners and the entire resort? Isn't NEVS recognizing the situation by assigning it's rental rights to the association for all of the inventory it owns? Name me one other developer in the entire country that has done that for an association. I know most everyone in the industry and this is the first time I've ever heard of it. Personally, I think NEVS should be congratulated for keeping the best interests of the resort as a whole in the forefront of their thinking.

The funds will be used to make necessary repairs regardless of who owns in a particular unit. In fact, most of the funds will be used to repair units where NEVS owns little or no inventory.

With respect to attorneys, yes, the HOA, NEVS and the former developers.

There was no consideration of any kind given to NEVS for the assignment of rental rights.

I hope I've been able to answer your questions and, if I have time with Uconn beating Missouri (I picked Missouri), I'll try to answer some more!!

Cliff

 

[NEVMSLLC]

Thanks for the welcome wmauryd!

The discussions with the town are ongoing but I believe I've been able to reach an agreement with the selectman at least in principle.

The Board of Health suggested that we might have to install a sewage treatment plant. When I balked, they referred the case to the MA Dept. of Environmental Protection. We have had new septic plans drawn and I plan to meet with DEP within the next week or so in order that I can give all the owners an update in May.

At the moment, it appears that they've softened on the idea of a treatment plan (the estimates to build one were in the area of $1,000,000). We also have no land on which to build a plant which would be a major problem for us if this became a requirement.

I'm hoping that DEP will allow us to make needed repairs if I sign an Order of Conditions agreeing to hook into the sewer if it should come within reach of the resort. I believe this would be an acceptable solution and will report to the owners on the status in May so wish me well with the negotiations.

Cliff

 

[NEVMSLLC]

tombo, please don't misunderstand my remarks to mean that I do not want you to participate, I do. Your comments about Festiva are helpful and I hope you'll continue.

Fesitva was chosen as an additional exchange opportunity because of the quality of their resort, the success of their exchange program and their affilition with Interval International.

Festiva has no involvement at all in the management or control of the resort. In fact, prior to the agreement to affiliate with Festiva, we negotiated an agreement whereby Festiva will not be involved with resort management. The owners and the resort are well protected and Festiva was completely agreeable and cooperative in addressing all of our concerns. We are very comfortable with our affiliation with Festiva and have found them to be very professional in all of our interactions. Besides, I love their resorts!!

Cliff

 

[NEVMSLLC]

Hi Sou13

I must confess to not understanding the concern about developer rights. Those rights have always been in force at the resort since the 1970s. The difference is that now there is a "developer" that is making desperately needed repairs, repairing failing septic systems, negotiating with the town for shared use of the parking area that we don't own anymore, balancing the budget, establishing a reserve account, pursuing delinquent owners for back maintenance fees, selling their inventory to finally generate much needed income for the assocation, assigning it's inventory for rental income to the association, installing a computer system that actually works, renovating the fitness area, installing wireless internet throughout the resort, repainting the indoor pool, refurbishing units that haven't been updated in over twenty years, etc., etc.

Please tell me what your concern is, because I honestly don't understand.

Cliff

 

[tombo]

tombo, please don't misunderstand my remarks to mean that I do not want you to participate, I do. Your comments about Festiva are helpful and I hope you'll continue.

Fesitva was chosen as an additional exchange opportunity because of the quality of their resort, the success of their exchange program and their affilition with Interval International.

Festiva has no involvement at all in the management or control of the resort. In fact, prior to the agreement to affiliate with Festiva, we negotiated an agreement whereby Festiva will not be involved with resort management. The owners and the resort are well protected and Festiva was completely agreeable and cooperative in addressing all of our concerns. We are very comfortable with our affiliation with Festiva and have found them to be very professional in all of our interactions. Besides, I love their resorts!!

Cliff

Cliff, I appreciate your invitation to rejoin the discussion. It is nice of you to come here and answer questions. I love Festiva's resorts myself. However I am not a fan of Festiva the company. I do not like what happens to the owners when Festiva takes control of their resort.

The way I understand it, every time a week at Southscape is sold into Festiva Adventure club points, then Festiva will own that week FOREVER, and own the vote FOREVER. Unless your resort has a different agreement with Festiva than all other resorts have, they will have 500 Festiva controlled votes as soon as they sell the inventory you have made available to them. This is not counting the current dues paying owners Outfield is calling to convince them to give their weeks up for FAC points. Every current dues paying owner who converts will give Festiva another weeks worth of ownership at the resort, and another vote. It is not just the unsold inventory they are becoming owners of, it is every week they sell or convert that will become a Festiva owned week. How long before they control enough votes to put their employees on the board and how long before they can vote themselves the management company as they have done at every resort they control.

If Festiva will not gain control of the board, the resort, and never become the management company at the resort, you might have made a good deal for your resort. However I think Southscape has probably made a deal with a wolf in sheep's clothing. The trojan horse is inside the Southscape walls and Festiva is waiting for the right time to spring from the belly of it's cleverly constructed plan to capture the resort and become the owners of Southscape.

Unless you negotiated a deal in writing that specifically prevents Festiva from ever being allowed to put employees on the board or make themselves the management company, they will do both in the near future when they own enough weeks.

 

[tombo]

I agree that NEVS not paying maintenance fees should be disconcerting. My question is why is it disconcerting to you now when that's the way it's been for thirty years? NEVS is the first "developer" in over twenty years that is actually going to try and sell it's inventory. Why isn't that a tremendous benefit to all of the owners and the entire resort?
Cliff

The other developers weren't selling the weeks to a whole different organization (Festiva) changing the makeup of ownership at the resort. Festiva will OWN larger and larger percentages of the resort every time one of those 500 weeks sell, and every time a current owner converts to FAC. Previously the ownership stayed with the resort as did the vote. Now the vote and ownership will be forever changed to the benefit of Festiva and to the detriment of the owners. Festiva will eventually own controlling interest in this resort which will change everything for the long time owners who have kept the resort operating for decades.

Was a vote ever taken to see if the owners wanted to sell or give the 500 weeks to NEVS? Why would it not have been better for the owners to keep the non dues paying weeks and run ads on TUG and other internet sites selling them for any price, even a dollar? Will having NEVS at Southscape decrease the owner's MF's, or lower the amount of the assessments? No because NEVS is not paying any MF's or assessments on the 500 weeks they own. The 500 weeks aren't generating any money either way, so having NEVS own them rather than the board is no advantage to the owners. Having NEVS let them sit there generating no income does help NEVS. If the resort had kept the weeks rather than giving them to NEVS, 100% of the income from the sales would go to the resort, and more importantly the votes and ownership would remain at the resort rather than being transfered to Festiva. The resort always had the option to rent those 500 weeks and keep all the rental income so that is not a new benefit for the owners.

How much did NEVS pay for the 500 weeks and the developer owned areas? NEVS gets 500 weeks to sell and they cost NEVS nothing in annual MF's or assessments even if it takes them 3, 5, or 10 years to sell them all. Is there any time limit the 500 weeks have to be sold by? If no time limit was negotiated in writing, Outfield (or Festiva) will be on site as long as the resort exists selling what is left of the 500 weeks, selling newly acquired deed backs and repo's, and converting Southscape owner to FAC members with no votes and no rights.

I do see this as a great deal for NEVS. NEVS gets to have the owners assessed to pay for upgrades and refurbishments making their 500 weeks more valuable and easier to sell while contributing no money themselves. 500 weeks paying $400 a week would have cost NEVS $200,000 on the assessments alone. Add in the MF's and you have probably saved close to $500,000 this year alone. That is a great deal that most developers don't get. Marriott and most other developers pay the MF's and assessments on any weeks they own and are selling. I am eagerly waiting to hear how having NEVS not paying anything for MF's and assessments on weeks they own could be a fair situation for the dues paying owners who are keeping the NEVS, Outfield, and Festiva cash cow in operation by paying all of the resorts expenses. That will be a world class spin on the facts.

Southscape will continue to operate for many years to come on the MF's of owners while NEVS sits on weeks which aren't costing them a penny while they look for buyers. Festiva makes money on the sales of Southscape weeks and becomes the majority owner of a resort they owned zero per cent of last year. The owners lose control and the value of their weeks drop as the MF's rise.

There is a lot to be disconcerted about if you are an owner at Southscape IMO.

 

[Sanford]

Cliff Welcome

Cliff your involvement is most welcome. I believe much of this could be more pallatable and more easily understandable to many if your explanation were to include how and why Outfield Marketing is working so hard to get deeded owners to transfer their deeded weeks to Festiva?

That portrays a situation with past sales techniques etc which has been undesireable, scary and reportedly for the gain of a select few at the expense of others.

What is in it for Outfield why are they trying so hard?
Are you and other Trustees part of that effort as well?

I really do believe that all the deeded owners want is to insure longevity in their rights as owners with the security that they wont be bullied into a " hostile takeover" of sorts as has been reported on here.

The improvements if made and handled may indeed be beneficial, however it is the unknown and the lack of understanding as to who is to really gain by this all out attemot by Outfield to market and pressure existing deeded owners to buy into Festiva's points program...

Your reassurance and comments are most welcome.
Thank You

 

[Fig]

Some info

Cliff, your particpation has been of top quality...as a consequence I have been able to sell my torch and pitchfork for a nice profit on Ebay to an AIG protester.

For the record I was looking into buying at Sandcastle...I called the number got the Outfiled recorded response which started me on a reverse lookup of phone numbers and research into Outfield and Festiva and halted my purchase.

As Sanford has touched upon, the relationship among Outfield, NEVS and Festiva is of concern. I don't expect you to address this post because I don't own and it touches upon a legal issue, but I pass it along for those concerned.

If two principles of Outfield, and yourself are making decisions for Southcape as meeting minutes show you can probably understand how that brings up concerns regarding conflict of interest. Here is something to consider...I am not a lawyer, but even I can understand this...

"Where an exempt organization engages in a transaction with an
insider and there is a purpose to benefit the insider rather than
the organization, inurement occurs even though the transaction
ultimately proves profitable for the exempt organization. The test
is not ultimate profit or loss but whether, at every stage of the
transaction, those controlling the organization guarded its
interests and dealt with related parties at arm's-length. See Leon
A. Beeghly Fund v. Commissioner, 35 T.C. 490 (1960). (Inurement
occurred when organization entered a transaction to benefit the
stockholders of a particular business corporation, not to benefit
the charity, even though corporation suffered no financial loss.)"

Here is the link I got it from http://en.allexperts.com/q/Nonprofit-Law-2266/2008/12/501c3-accept-donations-distribute-1.htm

There are numerous references to the ruling on other legal sites as well that provide advice to nonprofits for anyone who wants to do a little reading, just Google: Leon A. Beeghly Fund v. Commissioner, 35 T.C. 490 (1960)

I don't know how it came about that Outfield got access to Southcape's membership list to solict for Festiva, but it does not appear on the surface that this could nor have come about with Southcape's best interest in mind at every stage or with NEVS dealing at arm's length with any board at Southcape.

 

[Fig]

Footnote

I don't know how it came about that Outfield got access to Southcape's membership list to solict for Festiva, but it does not appear on the surface that this could nor have come about with Southcape's best interest in mind at every stage or with NEVS dealing at arm's length with any board at Southcape.

As a footnote, the point that these meetings by Outfield are held educate Southcape members makes one wonder. Members can be educated in a newsletter at no additional cost to the HOA...and no loss of voting rights or personal cost to the member. If, as reported, Outfield can make over $3,000 from an inhouse meeting that results in the member paying thousands to retain their vacation experince and losing his or her voting right one has to wonder what is really motivating such meetings.

 

[NEVMSLLC]

Cliff, I appreciate your invitation to rejoin the discussion. It is nice of you to come here and answer questions. I love Festiva's resorts myself. However I am not a fan of Festiva the company. I do not like what happens to the owners when Festiva takes control of their resort.

The way I understand it, every time a week at Southscape is sold into Festiva Adventure club points, then Festiva will own that week FOREVER, and own the vote FOREVER. Unless your resort has a different agreement with Festiva than all other resorts have, they will have 500 Festiva controlled votes as soon as they sell the inventory you have made available to them. This is not counting the current dues paying owners Outfield is calling to convince them to give their weeks up for FAC points. Every current dues paying owner who converts will give Festiva another weeks worth of ownership at the resort, and another vote. It is not just the unsold inventory they are becoming owners of, it is every week they sell or convert that will become a Festiva owned week. How long before they control enough votes to put their employees on the board and how long before they can vote themselves the management company as they have done at every resort they control.

If Festiva will not gain control of the board, the resort, and never become the management company at the resort, you might have made a good deal for your resort. However I think Southscape has probably made a deal with a wolf in sheep's clothing. The trojan horse is inside the Southscape walls and Festiva is waiting for the right time to spring from the belly of it's cleverly constructed plan to capture the resort and become the owners of Southscape.

Unless you negotiated a deal in writing that specifically prevents Festiva from ever being allowed to put employees on the board or make themselves the management company, they will do both in the near future when they own enough weeks.

Hi Tombo

It is true that when an owner deeds their week to Festiva, Festiva will own the week. It does not necessarily follow that Festiva will vote that week. That can be moderated by written agreement and sometimes is. One doesn't have to follow the other.

We have not made any inventory available to Festiva and Festiva is not purchasing the NEVS inventory. The only inventory Festiva will have is if an owner decides to join their points program and deeds their week to Festiva. This is not an uncommon practice at all in the industry.

I myself have agreements with resorts that want me to sell their association owned inventory. I actually own that inventory but I have assigned my voting rights back to the Board of Directors. This happens all the time. That it didn't happen at other resorts has nothing to do with Southcape.

Your conclusion is based on an assumption that's faulty. Festiva has different relationships with different resorts. Festiva did not buy the inventory at Southcape, NEVS did. NEVS has no relationship with Festiva. As I've said, when Southcape affiliated with Festiva, it was because of the quality of Festiva resorts, the strength of the Festiva exchange program and to offer our owners an opportunity to access a points program. That's it. If other resorts did not negotiate a situation with Festiva that would prevent Festiva from "taking over" a resort, that's not Southcape's problem. Perhaps those resorts should hire me to manage them!!!

 

[NEVMSLLC]

The other developers weren't selling the weeks to a whole different organization (Festiva) changing the makeup of ownership at the resort. Festiva will OWN larger and larger percentages of the resort every time one of those 500 weeks sell, and every time a current owner converts to FAC. Previously the ownership stayed with the resort as did the vote. Now the vote and ownership will be forever changed to the benefit of Festiva and to the detriment of the owners. Festiva will eventually own controlling interest in this resort which will change everything for the long time owners who have kept the resort operating for decades.

Was a vote ever taken to see if the owners wanted to sell or give the 500 weeks to NEVS? Why would it not have been better for the owners to keep the non dues paying weeks and run ads on TUG and other internet sites selling them for any price, even a dollar? Will having NEVS at Southscape decrease the owner's MF's, or lower the amount of the assessments? No because NEVS is not paying any MF's or assessments on the 500 weeks they own. The 500 weeks aren't generating any money either way, so having NEVS own them rather than the board is no advantage to the owners. Having NEVS let them sit there generating no income does help NEVS. If the resort had kept the weeks rather than giving them to NEVS, 100% of the income from the sales would go to the resort, and more importantly the votes and ownership would remain at the resort rather than being transfered to Festiva. The resort always had the option to rent those 500 weeks and keep all the rental income so that is not a new benefit for the owners.

How much did NEVS pay for the 500 weeks and the developer owned areas? NEVS gets 500 weeks to sell and they cost NEVS nothing in annual MF's or assessments even if it takes them 3, 5, or 10 years to sell them all. Is there any time limit the 500 weeks have to be sold by? If no time limit was negotiated in writing, Outfield (or Festiva) will be on site as long as the resort exists selling what is left of the 500 weeks, selling newly acquired deed backs and repo's, and converting Southscape owner to FAC members with no votes and no rights.

I do see this as a great deal for NEVS. NEVS gets to have the owners assessed to pay for upgrades and refurbishments making their 500 weeks more valuable and easier to sell while contributing no money themselves. 500 weeks paying $400 a week would have cost NEVS $200,000 on the assessments alone. Add in the MF's and you have probably saved close to $500,000 this year alone. That is a great deal that most developers don't get. Marriott and most other developers pay the MF's and assessments on any weeks they own and are selling. I am eagerly waiting to hear how having NEVS not paying anything for MF's and assessments on weeks they own could be a fair situation for the dues paying owners who are keeping the NEVS, Outfield, and Festiva cash cow in operation by paying all of the resorts expenses. That will be a world class spin on the facts.

Southscape will continue to operate for many years to come on the MF's of owners while NEVS sits on weeks which aren't costing them a penny while they look for buyers. Festiva makes money on the sales of Southscape weeks and becomes the majority owner of a resort they owned zero per cent of last year. The owners lose control and the value of their weeks drop as the MF's rise.

There is a lot to be disconcerted about if you are an owner at Southscape IMO.

Gee Tombo, even though you're not an owner at Southcape, I'm going to answer your question anyway because there's a lot of misunderstanding in your question.

You're assuming that Festiva will be voting the weeks that they own and you do not know that for a fact. You are assuming that Festiva will vote NEVS inventory and you do not know that for a fact. You are assuming that previously the votes stayed with the resort when they, in fact, resided with the former developer. These are the assumptions you use to conclude that Festiva will eventually own and control the resort. This sort of argument is so full of holes that I don't even know how to comment on it without a course in logic.

No vote was taken of the owners because the owners didn't own the inventory that was sold to NEVS. When NEVS sells its inventory, those weeks will be paying maintenance fees. Those weeks have not paid maintenance fees in over 25 years! In the meantime, remember the assignment of rental income to the association? Can you still possibly believe that NEVS is not acting in the best interests of the resort as a whole? Look at it this way, the better the resort is financially, from a renovation standpoint and from a management perspective, the more valuable NEVS inventory becomes and the better the resort becomes overall for everyone. There is a symbiotic relationship here. What's good for NEVS is good for the resort and vice versa. You're criticizing NEVS for what the former developers did and I don't think that's fair.

What you say about other developers is simply not true either. I know. I've been a developer!! Again and finally, your errors in both assumptions and conclusions are almost too numerous to mention.

 

[tombo]

Hi Tombo

It is true that when an owner deeds their week to Festiva, Festiva will own the week. It does not necessarily follow that Festiva will vote that week. That can be moderated by written agreement and sometimes is. One doesn't have to follow the other.

We have not made any inventory available to Festiva and Festiva is not purchasing the NEVS inventory. The only inventory Festiva will have is if an owner decides to join their points program and deeds their week to Festiva. This is not an uncommon practice at all in the industry.

I myself have agreements with resorts that want me to sell their association owned inventory. I actually own that inventory but I have assigned my voting rights back to the Board of Directors. This happens all the time. That it didn't happen at other resorts has nothing to do with Southcape.

Your conclusion is based on an assumption that's faulty. Festiva has different relationships with different resorts. Festiva did not buy the inventory at Southcape, NEVS did. NEVS has no relationship with Festiva. As I've said, when Southcape affiliated with Festiva, it was because of the quality of Festiva resorts, the strength of the Festiva exchange program and to offer our owners an opportunity to access a points program. That's it. If other resorts did not negotiate a situation with Festiva that would prevent Festiva from "taking over" a resort, that's not Southcape's problem. Perhaps those resorts should hire me to manage them!!!

Why would Festiva own weeks and not vote? At Blue Ridge Village the CEO stood at the annual meeting and said that Festiva controlled the majority of votes in Phase 2 and could do whatever they want. Do you really expect them to operate differently at Southscape than they do at every other resort? You say that not allowing Festiva to vote could be negotiated, you just fail to mention if that was done at Southscape, and if so what was specifically agreed upon in writing. My bet is that Festiva owns and controls every deeded week and vote with no strings attached. Simple question, simple answer. Did Festiva sign an agreement stating that they will not receive any voting rights associated with the weeks they get deeded at Southscape?

You dodge many issues very skillfully. You say that NEVS has no relationship to Festiva, yet your marketing company (Outfield) is selling your 500 weeks exclusivelly as FAC points memberships. The same marketing group (outfield) is trying to convert any existing owner they can to Festiva and FAC points. Cliff, that is a stretch to say that your entire marketing efforts are to convert weeks to Festiva but that NEVS has no relationship with Festiva. You hired Outfield and you yourself said you chose Festiva. That is a business relationship using a middleman (outfield) between NEVS and Festiva. Is Outfield offering to sell any of the 500 NEVS weeks as a fixed week that is not a Festiva points week?
Simple question, simple answer. Is NEVS or Outfield Marketing selling anything at Southscape other than FAC points for Festiva resorts?

You say that the only weeks Festiva will own is weeks that owners deed to Festiva to join their program. The biggest owner at Southscape is NEVS and they are deeding their 500 weeks to Festiva every time Outfield sells another FAC membership. That is giving Festiva access to ALL Southscape inventory. Outfield has the list of Southscape owners to sell Festiva to, and Outfield has 500 NEVS weeks to sell Festiva points to non Southscape owners. There is no situation that could exist where Festiva would have more access to the weeks at Southscape other than Festiva already owning the 500 weeks.

You said that all of your voting rights were assigned to the board at other resort, but you managed to never state that the same situation was in place at Southscape. Unless you specifically say that you have give all voting rights on the 500 weeks you own to the board we can only assume that you have retained the voting rights for those 500 weeks. Simple question with a simple answer. Did you assign your voting rights back to the board at Southscape?

You said if other resorts didn't negotiate a situation where Festiva wouldn't take over the resort that is their problem. Well if Southscape and NEVS didn't negotiate a situation where Festiva won't take over their resort, then it is soon going to be the problem of the owners of Southscape. Simple question, simple answer. Were there terms negotiated with Festiva to prevent them from taking over Southscape?

I find that simple questions requiring simple answers get rid of a lot of vague answers and spin. I look forward to your simple answers to my simple questions.

Tom

 

[e.bram]

With only 8 weeks having any real value on Cape Cod, why all the fuss over a TS which is not even on the beach? Hardly seems worth the effort. Even whole ownership of inland Cape property is not very valuable. I could see interest if the property was oceanfront(includes bayfront)

 

[wmauryd]

mx fees on unsold units...southcape developer status

Correct me if I'm wrong, but mx fees are normally NOT paid by anyone, on developer's unsold units.

Suppose I was a developer, and conceived and recently constructed a resort. I would be anxious to get the units sold quickly, so that I could recoup my investment. I would also be anxious to move the resort into its' "life" phase of being occupied and operational. Suppose I had 5000 unit-weeks to sell, had just gotten started with only the first 1% (50 units) sold. Would it make sense for me, as developer, to pay myself maintenance fees on the other 4950 units?

Jumping forward to where I've sold 90% and there's 500 units remaining, mx fees are breaking even with resort operation. There's not much wear and tear yet, so mx fees remain low. Would it still make sense for me to pay those mx fees? Pay them to myself? I still have sales costs trying to move these units, sales returns are diminishing, so I reduce sales staff. The 'unsold' units-- perhaps some are mid-February, or less desirable float times, are by inherent nature less salable and less rentable. When possible, a few are sold or rented, but sales efforts dwindle down and the north side of the unsold inventory list begins to grow moss.

So the business plan moves forward leaving the 500 units unsold. So the questions at this stage are: Retain the units in hopes of sales or rental revenues, or transfer ownership to the resort? And are the resort and developer separate entities at this stage? Will if it's transferring to the resort, then why would the resort want to pay itself mx fees? To keep an accountant busy? And if it's the developer, what sense would it make to pay mx fees on there units that are less salable and less rentable.

In theory, the resort 'grows up' and parts ways with the developer-- they become separate business ventures. But in reality, the 10% unsold inventory seems to create conditions where this parting of ways isn't going to happen so fast. It seems that's where we are today, and is the underlying condition for many of the posts being debated.

A) Cliff, maybe you could bring us up to speed as to how Southcape relates, or doesn't relate, to the above scenarios and questions. Provide us with a SC history lesson if you can.

B) If you're willing, tell us your vision of how Festiva and Outfield Marketing are positive for the Southcape ownership community as a whole--

C) As unit owners, we can't expect NEVM to operate as a non-profit organization, and we can't expect you to operate as an unpaid volunteer. Explain how you and NEVM benefit financially if all goes well-- Revealing more of your business plan and compensation will help the ownership community, (including 400 anti-Festiva rebels camped in the surrounding pine barrens), to be more supportive.

 

[tombo]

I am not an owner at Southscape which I told you when I was previously agreeing to leave this discussion to the owners. You responded with the following which is why I am back.

tombo, please don't misunderstand my remarks to mean that I do not want you to participate, I do. Your comments about Festiva are helpful and I hope you'll continue.

Cliff

 

[e.bram]

I am sure all the summer units are owned, and the rest are wortless. So who is going to try to sell what? It sounds like an Abbot and Costello routine. "Chopping water" my father used to say.