After the dust has settled ( I think)

[rickandcindy23]

VRI would do a far better job of managing than Starwood.

If an owner is delinquent, that owner is denied the use of the week, pure and simple. You cannot show up with check in-hand because that unit may be gone; VRI has a strong rental program and can recover all or most of a maintenance fee for the HOA. This is motive alone for an owner to pay on time. They have a really effective collection process as well. I vote for VRI to manage SDO and SBP!

What makes a board owner so pro-deadbeat, anyway? I am so disgusted with the deadbeats at Twin Rivers, I want to show up at their homes and collect personally. We had a LAWYER way too long, which was how the former board and management company did things. Now we have at least 15% delinquencies and a slew of judgments against many of the owners. We have to pay a lot of cash to foreclose on the weeks, which the resort doesn't have. It's absurd.

 

[ocdb8r]

This is in 5.2.d

"The reservation rules may create one or more reservation periods during which the developer and/or the club operator may reserve any Use Period in a Club Unit that nobody else reserved and that no other person has exclusive rights to reserve (I read this as anything but fixed weeks or the first 60 days in the home resort reservation period -i.e. 12-10 months window - discussed in 5.2.a.i). This means that owners and other club members may have to compete with the developer and/or club operator for a reservation."

First
I don't necessarily have a problem with SVO/SVN having the same reservation rights as we do for VOI's they own or VOI's they gain control of via Starpoint trades or owner rental program. However, I want to know EXACTLY how SVO/SVN goes about reserving their weeks? Do they have to sit and wait until reservations open, call the number, and possibly wait in the que as weeks are assigned? If they are able to just login to their reservations system and star snapping up prime weeks, then they have exercised superior reservation rights in my opinion.

James1975NY, can you give us some more details about the reservations audit you referred to? Who mandates it? What do they check for? Nowhere in the docs is there mention of an audit so I am just wondering where it comes from and if it applies universally to all the resorts or only those in jurisdiction with this mandate.

I'm also curious about this given not all the resorts were initially developed by Starwood and thus they have different reservations obligations/restrictions for some resorts.

Second
I do think SOMEONE needs to get some answers as to how delinquent VOI's are dealt with. It is clear that SVO/SVN can gain access to these and reserve/rent/use them as they please based on the docs. However, the Association also has the right to rent them out under the docs. What we don't know is WHO is doing WHAT. Is the Association attempting to do anything with these weeks or are they throwing their hands up in the air b/c it is too difficult? Is SVO/SVN snapping them up under their rights, or are they also just letting them slide into non-use?


I am not a WKV owner, rather I own at SBP. I am slammed the next week but after that I will attempt to dig up my SBP docs to see how they compare to these. I am not a member of SVN though so I may not have the SVN overlays for SBP.

 

[DanCali]

I accidentally omitted the last statement in 5.d, but the whole paragraph says the following:

"The reservation rules may create one or more reservation periods during which the developer and/or the club operator may reserve any Use Period in a Club Unit that nobody else reserved and that no other person has exclusive rights to reserve. This means that owners and other club members may have to compete with the developer and/or club operator for a reservation. The Reservation period may not start more than 60 days before the check-in day of a use period. If may overlap with other home resorts of club reservation periods."

So this still looks like a 60 day restriction, as jarta pointed out.

Either way, I don't think this refers to units owned by the developer, but rather reservations Starwood can rent out. If they are owner by Starwood I agree they should have the same rules as owners, although they probably reserve without calling in and getting "no availability".

 

[jarta]

DanCali, ... Sure, 5.2(d) ties into the overall Plan description. And it ties into 12.3. where the right is reserved by the developer.

Both relate to the 60 day period. Starwood needs to reserve the week to make deposits in II and to be able to break the week into less than 1 week periods. Thus, during that last 60 day use period, owners and Club members (SVN) could be competing with Starwood for the week.

However, neither 5.2(d) or 12.3 say anything about rental proceeds if Starwood rents the week it reserves. For 12.4 (still owned by Starwood) and 12.5 (week 53) Starwood gets to keep all the rental money despite any other agreement to the contrary. Why is 12.3 not included in the "Starwood keeps it all?"

 

[DanCali]

DanCali, ... "Here is the link to the doc."

The link doesn't work now.

But, take a look at section 12.6. It says that the Developer gets to keep all the rental income from units it owns (section 12.4) and week 53 units (section 12.5).

The specification of those situations having Starwood keep all the rent and the lack of such a statement about the rentals of 60 day reservations (section 12.3) leads me to believe that Starwood would not keep all the money in that situation.

But, can I say it for sure? No I can't.

The legal principal involved is:

http://legal-dictionary.thefreedictionary.com/Expressio+unius+est+exclusio+alterius

11.4 only applies to rentals of delinquent units. ... eom

jarta,

I understand what you are saying with respect to Chapter 12, but when I read chapter 13 (Club Operator Rights) it still reads to me like they keep all the rent from 60 day reservations...

13.1.a Reservation Rights: (says they can reserve anything they want, for any reason, within 60 days, in addition to units they own)

13.1.b Use Rights: (says they can use their Vacatin Periods for any legal purpose and regarless of what the Vacation Plan Documents say. If they rent the Use Periods they alone get to keep the rent).

I don't even see the ambiguity anymore when reading these two paragraphs... If they make a reservation within 60 days they have that Use Period, which they can then rent and keep 100% on the revenue.

 

[Troopers]

Dan and Jarta,

Can you give me the dummies version when you sort this out?

Thanks.

 

[James1975NY]

First
James1975NY, can you give us some more details about the reservations audit you referred to? Who mandates it? What do they check for? Nowhere in the docs is there mention of an audit so I am just wondering where it comes from and if it applies universally to all the resorts or only those in jurisdiction with this mandate.

I understand that it is mandated by the state. I was never involved with the audit only aware of it.

My understanding as to the purpose of the audit was to ensure that SVO was managing the inventory in a way that promotes owner usage and supported the "club" where applicable.

 

[James1975NY]

Managing Inventory

The rules that are being dissected here are in place to allow SVO the manage the complexities of the club. Are there opportunities within these rules to make money - yes; however, the main purpose in the flexibility of those rules is to allow them to manage effectively.

 

[DavidnRobin]

DanCali, ... What bothers me is that some people are saying Starwood definitely gets all of the rental income based on something that you refer to as vague (but is not so under the legal principle). It appears to me that those declarations are spurred on by suspicion and mind-set, not facts.

All I have been requesting is transparency to know what is happening to these deliquent VOIs in regards to HOA reimbursment - since it is not transparent (even with people combing thru the CCRs) - of course there is concern on what happens to this money since the Owners have the burden.

It seems if I read correctly - SVO gets usage and the HOA gets the burden - sweet set-up. If this is the case - I believe from my simpleton POV - that this borders on something that can be used in legal action. Perhaps or perhaps not... bottom-line is it is not transparent - and it should be.

Another related issue is that we are hearing that while these deliquences (right now) are not that high of percentage - and therefore responsible for only a small increment in the MFs - THEN what is the cause of the escalating MFs year-after-year (e.g. WKORV/N, WPORV, WSJ - I can only speak for these)???

There is an accumulation of many things - but and average of >10% per year for 5 years (WKORV, WSJ) - is certainly more than Cost-of-Living, Inflation, energy costs, taxes, staffing costs, etc...

So... my point is - in SVO/SPG usage of these VOIs via rentals, exchanges, SPG program - is the HOA (therefore us) being fairly compensated for this usage? From a pragmatic POV - if not, then is this the cause of the escalating MFs? And if so - is it defendable by SVO?

food for thought...

 

[jarta]

DanCali, ... I believe 13.1(b) again ties back to 12.4 and 12.5.

Thus the "may use its Vacation Periods" and the "these Use Periods" refers to the Starwood owned (12.4) and week 53 (12.5) Vacation Periods. A Vacation Period is defined as 7 days. A Split Vacation Period is less than 7 day period. Both come under the definition of Use Period.

The last sentence of 13.1(b) is merely 12.6 restated for the SVN Club Operator (Starwood) as opposed to the Developer (Starwood). 12.6 and 13.1(b) are mirror images.

You construe a document so that all the sections make sense and together make a unified whole. You do not look at merely one clause or phrase or sentence.

Dan, I am not saying for sure that you are wrong and I am right. I'm just saying that from a legal construction position, IMO I have construed the document correctly.

The best indicator of rental revenue to the HOA is a rental income category in the yearly financials or, barring that, a comparision of total assessments budgeted to the total amount of revenue for the year. I think I will ask WKV for a copy of the latest financial report when I am back home next week. As an owner there, I am legally entitled to get a copy if I offer to pay. I could put it in .pdf format and it could be included as or in a TUG sticky. ... eom

 

[nodge]

WKV and SDO 2010 Operating Budgets

It sounds like everyone could use some good old fashioned data to help sort things out.

Fortunately, I’ve got a big ol’ bag of crap I’ve been collecting just in case I ever end up on “Let’s Make A Deal.” Anyone else remember that show? It was awesome. Monty Hall would say “I’ll give $100 to anyone who has a tennis ball with them.” And someone in the audience, who is usually dressed up like a clown, fishes one out of their big ol’ bag of crap to become the next contestant, while the others in the audience look forlorn because they had thought Monty would have focused on kitchenware or personal items instead of sporting goods so they’d been lugging a complete set of silverware, an old beer can, and support hose around with them all day. Pure genius, but I digress. So, fishing around in my big ol’ bag of crap . . . . . we’re in luck!

Here are the 2010 Operating Budgets for the Westin Kierland Villas (a/k/a “Scottsdale Sonoran Villas”) and the Sheraton Desert Oasis (a/k/a “Scottsdale Pinnacle”). Each budget includes a line item for rental revenue which offsets the total expenses. It’s so much fun looking at tables of numbers, I’ll let everyone find these items before offering any comments on them. (I’ve placed a little hint where you should look in case anyone is having trouble).

Westin Kierland Villas 2010 Operating Budget

Sheraton Desert Oasis 2010 Operating Budget

From my reading of this data, SDO owners are expected to get $188,263 in rental revenue to offset expenses, and WKV owner’s (who also own at a larger and nicer resort that usually charges higher nightly rates than SDO) are expected to get a whopping $42,795 in rental revenue. In other words, the owner of a 2 bedroom lock-off at WKV saves $5.52 a year in maintenance fees by SVO renting the units to third parties. I don't know about you, but I'd gladly pay $6 more a year if SVO kept its grubby mitts off that inventory.

What is even more remarkable is that the WKV owners’ association appears to be making more money from that $20 “biennial service fee” charged to bi-annual owners than it makes from renting units.

Zonk!

-nodge

 

[DanCali]

Dan, I am not saying for sure that you are wrong and I am right. I'm just saying that from a legal construction position, IMO I have construed the document correctly.

I am not a lawyer, so I can only read it from the perspective of someone with a couple of other graduate degrees. To me, it is ambiguous at best. I would think that these types of issues, especailly with a lot of money involved, need to be unequivocal as to where the money goes.

As I said earlier, I actually don't even see a reason to fill vacant units. As long as asessments are paid, it doesn't hurt owners if the units stay empty. The budget is still balanced and, if anything, the HOA can save on actual vs. budgeted housekeeping and other maintenance costs. Renting them out at sixty days (or, inventory management, as james1975ny called it) just creates excess wear and tear. And especially if Starwood collects all that revenue, there is no reason for this to happen - other than that it was imposed on owners who don't know better when they created the resort)

The best indicator of rental revenue to the HOA is a rental income category in the yearly financials or, barring that, a comparision of total assessments budgeted to the total amount of revenue for the year. I think I will ask WKV for a copy of the latest financial report when I am back home next week. As an owner there, I am legally entitled to get a copy if I offer to pay. I could put it in .pdf format and it could be included as or in a TUG sticky. ... eom

It would be great if you share with us what you find. The big issue is that rental income you may see may be from delinquent owners (which the HOA does get) rather than the 60 day window rentals. How do you distinguish between those?

 

[jarta]

nodge, ... Thank you for posting the WKV & SDO 2010 budgets. But, only the SDO budget appears?

If Starwood kept a more significant block of units at WKV than Sheraton did at SDO, and Starwood can rent them in advance of the 60 day restriction and keep all the rent from those units, why is a low amount of rental income for the WKV HOA from the rather last minute 60 day units so surprising?

What DanCali posted is an interpretation that would result in no rental income at all for the WKV association from 60 day rentals.

 

[DanCali]

nodge, ... Thank you for posting the WKV & SDO 2010 budgets. But, only the SDO budget appears?

If Starwood kept a more significant block of units at WKV than Sheraton did at SDO, and Starwood can rent them in advance of the 60 day restriction and keep all the rent from those units, why is a low amount of rental income for the WKV HOA from the rather last minute 60 day units so surprising?

What DanCali posted is an interpretation that would result in no rental income at all for the WKV association from 60 day rentals.

I can see both budgets but basically the numbers nodge mentions are what is listed as rental income. Given the lack of rental income at WKV it does look like the inerpretation that Starwood keeps all that rental income is more likely.

Arguably, since the housekeeping for these units is paid for in Mfs, then I'm not even sure if Starwood reimburses HOA for housekeeping on these stays, not to mention that you can have multiple stays in a single week and excess wear and tear. The docs do say they keep all the rental income.

 

[DeniseM]

I can see both of them too, but the names are not what we usually recognize them by.

 

[jarta]

DeniseM, ... The names of the resorts used for marketing purposes are not the legal names of the associations.

nodge has posted the right information. They are the right places. ... eom

 

[DeniseM]

DeniseM, ... The names of the resorts used for marketing purposes are not the legal names of the associations.

nodge has posted the right information. They are the right places. ... eom

Correct - I was responding to your post about only seeing the SDO budget.

 

[jarta]

DanCali, ... If Starwood keeps all the rental income, wouldn't the rental income be $0?

If the rental is of a delinquent week, wouldn't any net rent over the delinquent MF and late fees be the property of the delinquent owner? ... eom

 

[James1975NY]

Second
I do think SOMEONE needs to get some answers as to how delinquent VOI's are dealt with. It is clear that SVO/SVN can gain access to these and reserve/rent/use them as they please based on the docs. However, the Association also has the right to rent them out under the docs. What we don't know is WHO is doing WHAT. Is the Association attempting to do anything with these weeks or are they throwing their hands up in the air b/c it is too difficult? Is SVO/SVN snapping them up under their rights, or are they also just letting them slide into non-use?

Delinquint owner's weeks can and will be rented by the HOA to recover the costs. Not 100% sure how the monies are disbursed but I am sure SVO gets a cut for the marketing of the unit(s).

Not all owner's weeks are rentable. Lets say dues are to be paid by 01/01. The owner does not pay, they go into lock-out in about February. By February of the current use year, much of the inventory is going to be consumed that is "rentable" or with any demand.

With that, lets say a week is assigned to the owner and placed in the lock-out rental pool. It is likely that the week is going to be off-peak time (assuming float owner) and everyone here knows that the best way to get a cheap week during off peak times is to get a getaway for about $350 dollars or so. It would be kind of tough for an HOA to recover via rental if they are up against those cheap weeks elsewhere.

 

[nodge]

DanCali, ... If Starwood keeps all the rental income, wouldn't the rental income be $0?

If the rental is of a delinquent week, wouldn't any net rent over the delinquent MF and late fees be the property of the delinquent owner? ... eom

I was fishing around in my big ol' bag and found an old can of "Cheez Whiz" and a glossy flier titled "annual summary and 2010 forecast" from "Scott Caldwell General Manager" of "THE Westin Kierland Villas" (How come SVO is pushing the "THE" thing so much lately?).

It says, and I quote:

"Club Rental Revenue"

"Associations which are part of the Starwood Vacation Network(sm) program receive a share of the rental for weeks not reserved by Owners. The budget is based on projected occupancy and inventory levels. Due to lower market demands, the revenue in the 2010 budget is projected to be $22.87 less per average ownership week compared to the 2009 budget." (emphasis added).

Sooooo, in light of this data, I think one could reasonably interpret that THE recorded docs give SVO THE right to keep every cent of rental income within THE defined parameters, but a separate, and probably not recorded, SVN program document gives some (and I'm guessing a very, very small sum at that) back to THE HOA. That some/sum is expected to amount to THE $42,795 in THE 2010 budget.

-nodge
my web site
(What is that strange looking box thing she wins? They scare me. Good thing we don't have 'em at THE Westin timeshares).

 

[DeniseM]

Fixing the quotes - AGAIN!

Jim - Just so you know - to hand edit your quotes using html, you need to put this at the end of the quote - [/ quote] (take out the extra space!)

 

[jarta]

nodge, ... If the 2010 estimated rental revenue income is $22.87 less per unit than 2009 and the range of income per unit for 2010 is $5.52 (2-br) to $2.13 (deluxe 1-br) with the average being about $3.68 per unit, wouldn't the 2010 budget estimate for rental revenue have been slashed to about 12.5% what it was for 2009?

If you multiply the 2010 budget figure of $43K by 8, the 2009 budget figure would have been about $344K, wouldn't it?

Even if the "unit" is a 2-br unit and the $5.52 is $22.87 less for 2010, the average for 2009 would have been $28.39 per unit - about 5 times $43K - or about $215K.

Maybe the WKV board was just being conservative about rental income for 2010 based on the economy? It's their job to be conservative in estimating revenue and liberal in estimating expenses in the budget. Otherwise, the resort could suffer a cash deficit for the year.

I'm still going to ask for a copy of the latest annual financials for WKV when I get back home. ... eom

 

[James1975NY]

Jim - Just so you know - to hand edit your quotes using html, you need to put this at the end of the quote - [/ quote] (take out the extra space!)

Thanks Denise! Sorry for the trouble!!!

 

[DeniseM]

No trouble at all, I just wanted to make sure you know how to do it.

It's actually VBulletin Code and here is link to a list of the more common tags if anyone is interested in jazzing up their posts.

 

[nodge]

Maybe the WKV board was just being conservative about rental income for 2010 based on the economy?

Possibly.

I guess that as with most things, it comes down to faith and trust. With no one at SVO saying squat about anything to any of us these days and us uncovering a bunch of screw you clauses it buried deep within piles of recorded legal documents, it's not really doing itself any favors in either of those departments now is it?

-nodge