Letter from Polynesian Isles Re: DRI

[tatvan]

Polynesian Isles Proxy(s)

Hi All,
I had hip replacement surgery last week so was not on my computer. Today is my first day back reading the discussions since prior to last week.
Today,I opened mail from DRI which after reading their side of the story made me want to see IF there was any discussion on this matter. Glad to see all the good,interesting and thoughtful information posted.
I do not think the person saying they are Carlos Costa actually is Carlos Costa under the name of Goldman.... I just don't think so.
I live in Massachusetts as does Carlos Costa. When I first received the 'blue proxy' with a letter from the HOA I seached and found him. What first struck me about Carlos when I seached him was he lives and works in Massachusetts... we both are in Southeastern MA.
What made me first want to reach him in the first place was on the 'blue proxy' with a letter, his name was there as having wrote the letter however his name was not 'stamped' nor 'signed'. I thought he should have signed the document sent somehow. So I wanted to make sure the letter was from him before I even started to think about what we were going to do about 'the vote'. I found his number called him ...left a message and he called me back.
We spoke a long time. He is an actual walk around member who has volunteered his time for a long time as a board member. He told me how long but I forget...(when he called me back it was around 9:30PM... that's late nite for me and we talked a long time)I remember him referring to original board members who have since past away leaving him to carry the torch on behalf of the resort owners. Carlos is and has been president for awhile.
Carlos talks very specific clear and direct. This person saying he is Carlos does not answer questions and does not seem to speak the way Carlos talks. I could be wrong prehaps writing on computer IS quite different than talking over the phone.. but it just doesn't feel like Carlos to me. I have never met Carlos have spoken to him that one time.
When we spoke about how they were going to reach all the owners in time for the vote, I did HIGHLY encouage him to become a TUG member and to get on the forum and talk about the matter. He was not familair with TUG ...they were basically relying on the letter sent out and hoping for the best. (I told him he can hope while I pray the information gets out)He said he was going to look into TUG but I don't think goldman is him.
Since I recieved the 'yellowproxy' I have placed another call to Carlos. I am waiting to hear back from him.
I think when you don't know these people on either side its hard to make decisions. On a number of the post I read posters stated it may be best to go with the walk around owner Board of Directors. When I do speak with him again I will have more very specific questions for him, after all these post I've read. I will encouage him or have him encourage someone else on the board to address the questions TUG members have presented.
When talking to Carlos he told me he's a financial planner so he is in a busy season at the moment so this may be why he may not have posted ....

Oh and something else Carlos had mentioned to me on that phone conversation.... he had to fly down to Florida at his own expense to appear in court on behalf of HOA. I think he said it was in February. Having something do to with whether or not DRI had been given ' proper notice' regarding some matter... he had to testify they had not but he had some GOOD reason they had not and told me the judge didn't want to hear his reason. I asked him why didn't the lawyers speak on his behalf to the judge and says the judge had 'tunnel vision'.. all that to say BOD may have expenses to go the meetings but not to special things like this example... he paid out of pocket.

Thelma

P.S.Some of the posters to this discussion mentioned 'newbies'...I don't I'm a newbie since I've been a TUG member for maybe over 10 years however I could be a newbie because over the years I don't remember ever posting to a forum.
Looking over some of the forums it sound like Roger may have retired and maybe a son Brien is taking over... I could be wrong but I haven't been looking around the site in awhile....but happen to notice the names.

 

[pgnewarkboy]

Even if I called the people on the emails from both DRI and the HOA, I wouldn't know who to believe!!! They are all so convincing and sincere in their beliefs that I'm befuddled...

I try to live by the following motto that I saw hanging in a shopkeepers store years ago:

"In god we trust, all others pay cash."

As sergeant Friday so famously said on Dragnet " Please ma'm just the facts."

 

[bruwery]

I smell a rat

I smell a rat. Well, maybe I smell rotten seafood. I don't what I smell, but it certainly is fishy...

Like some of the other posters here, I have no dog in this fight.

You know what? I think I'll try to stop using animal cliches, now...

In reading this thread, lv_maui is making a lot of sense. Show me the numbers.

The only number I've seen here is the alleged 15% increase in management fees. That is a huge figure. Not even college tuition increases that rapidly. 15% is huge enough that nobody should take it at face value. There has to be something more behind it.

Diamond's objective, first and foremost, is too make money for Diamond. I don't say that in order to make them sound greedy; rather, I'm just stating a fact that is true of ALL businesses. It's the reason they're in business.

How does Diamond make money? Ignoring the CLUB, timeshare development, and whatever else they might be into - because their other enterprises aren't germane to this topic - Diamond makes money by managing resorts. The more resorts they manage, the more money they make.

Therefore, it's counter-intuitive for Diamond to blindly throw a 15% increase at somebody, then effectively state "if you don't like it, find somebody else". Diamond has been around long enough to know that they aren't the only game in town, and if they throw a 15% hike at a BOD, that BOD is going to consider other options.

If this 15% hike is true, something else is at play here. If this 15% hike is true, that means either Diamond doesn't want anything to do with this resort for some reason, or that this resort has become impossibly expensive to operate.

In either case, my first reaction, as an owner, would be to ask the board to explain to me - using real numbers - just what the #$%@ is going on. Random 15% hikes don't make sense for either side.

If the 15% hike is NOT true, then you have somebody intentionally posting false information and acting as if it's on the "owners" behalf. It also appears that the person making these claims may be impersonating somebody else. I'd be really curious to know who this person really is, and just what his exact motives are.

Nor do I believe the information that was posted early in this thread that allegedly came from Diamond, either. It was too emotional to have come from a corporate office.

Bottom line: This is an ugly situation that is not going to be resolved via an internet forum. In all honesty, this thread may have inadvertently made the situation worse. It started with an honest question, then the axe grinders and special interests showed up with what appears to be some rather confusing misinformation.

I think the BOD at this resort has some explaining to do. I'm not saying they're in the wrong, but I am saying that if I was an owner, I'd need much more concrete information in order to calm the waves of doubt - because what I'm reading doesn't pass the sniff test.

 

[goldman]

Letter from Board of Directors

March 27, 2009


Dear Fellow Polynesian Isles Owners:

The Board feels it is necessary to respond to Diamond’s letter regarding the change in management.

First, this was not a decision that was made quickly or without significant effort and research by the Board over an extended period of time.

The Board has made significant effort to work with Diamond for the good of the Association and felt after two years of constant effort and frustration that our Association was and is not getting the support we need. The issues of concern include the maintenance and operation of the resort and in receiving reasonable explanations of charges made in the financial statements, including and specifically those made by Diamond.

The reference by Diamond that a management change could cost you more than $600.00 this year and put you at risk of a special assessment has no justification or validity. It is simply a scare tactic.

The management fee with SPM is based on what they are able to collect and any additional income they can bring to us through increased collections, increasing rentals, creating new programs that will provide additional income to the Association which will offset and lower the fees collectable from all of us as owners. The SPM fees are not a flat figure which is paid regardless of the effectiveness of Managements collection efforts.

Diamonds information on the collection program is missing several important facts. First, in return for paying the maintenance fees, they have use of all the units for their club, and rental and marketing programs. This makes us whole on maintenance fees and Diamond is free to make a profit from rentals and through its club and to reduce its marketing costs.

Diamond also pays for all the collection costs. In return, Diamond gets to keep all the collection costs, late fees and interest recovered from any owner they are successful in collecting from.

If Diamond goes through foreclosure the unit, they keep the unit and can sell it and keep all the proceeds when they sell it. We are also aware that ownership of delinquent units can be obtained through a Deed in Lieu (DIL) of foreclosure which costs only a few hundred dollars and that this option is available to our Association as it is Diamond.

The Board recognizes that Diamond has no real incentive to collect on the delinquent owners as they have use of the units for their purposes for just the cost of the maintenance fees. As referenced above, the new management company has a significant incentive to collect maintenance fees which is one of the many reasons the new agreement was entered into.

It is the Boards belief that it is in the best interest of the Association to handle the collection and foreclosure process with the Association being able to rent delinquent units and sell all the units our Association obtains title to. In response to requests from Polynesian owners, it is the Board’s decision that Association owned units be offered to existing owners at very economical amounts which are well below what Diamond offers them for.

One very significant issue related to Diamonds comments on paying for the delinquent owners is that the 2007 audit showed that the Association was due $574,429 from the Developer and by December 31, 2008 this figure grew to $691,474.29.
.
The funds we have received from Diamond have only been received after repeated demands and threats.

In spite of what Diamond leads their letter with; the change in management is not a cause for having increased maintenance fees or a special assessment. Not receiving funds in a timely manner from owners including Diamond, which has not paid late fees or interest, well could be.

There is little question that there have been delays with the renovation projects and making improvements to the resort. The Board has been adamant on ensuring the quality and cost of supplies and materials is correct and appropriate. The Board has repeatedly refused to accept materials and contractors recommended by Diamond. This was most often the case when bulk purchases were recommended through Diamond suppliers in Las Vegas when the same items could be purchased for less locally and/or the quality did not match that of the items being replaced. We recognize that this has delayed planned projects but the Board has refused to be pushed or bullied into making bad decisions.

We also find it unprofessional for Diamond to blame their problems on their former manager who was under their direct supervision up to the point she resigned.

We recognize that the transition of management at our sister resort, Polynesian IV has not been as smooth as they nor the new management company would like but this is more due to Diamond’s refusal to turn over records and information in a timely manner and refusal to operate in a manner that would benefit both our Association and Polynesian IV. In spite of the current issues, Polynesian IV’s Board strongly believes they have made the right decision in changing management and so do we.

Please return your proxy to us as quickly as possible via fax to 407-849-1119 and appoint Carlos Costa, President of the Association.


Sincerely


Your owner controlled Board of Directors

 

[youmehs]

Hello Poly Friends......

I just got this in my email. Yes like you I have been busy making them earn their salaries. I also called my sister and niece as they both have timeshares that are managed by SPM. The management fee is based on "What they are able to collect". I don't know about you but that is not making me think that our Resort is going to be run as it always has.
What if they cannot collect? SPECIAL ASSESSMENT TIME....Maybe that's the $600.00 Diamond refers to?
Why should you vote against terminating your management agreement with Diamond Resorts Management, Inc.? Here are a few very important reasons:

• Your Board of Directors has not provided you with the information you need to make an informed decision.
• You have not been told what the new management company will charge you in management fees in 2009.
• You have not been told how much the management fees will increase over the next several years.
• You have not been told how you will pay for your delinquency in the future without Diamond’s assistance.
• You have not been told how much collections and foreclosures will cost you in the future without Diamond’s assistance.
• You have not seen a copy of the new management agreement.
• Your Board of Directors has not provided you with an analysis detailing cost savings and/or increases. We do not believe they have even performed this vital analysis.
• Diamond can tell you what it will charge for management fees – The same amount we have charged you for the past 7 years!
• Diamond can tell you how much we will increase management fees for the next 3 years – We will not increase our management fee for the next 3 years!
• Diamond can tell you how you will pay for your delinquency in the future – Diamond will pay your delinquency, it will cost you nothing!
• Diamond can tell you how much collections and foreclosures will cost you in the future – Diamond will pay all of these costs, it will cost you nothing!

Your Board is not making a decision in your best interest. Member’s of your Board have been involved with secret meetings, trying to make decisions outside of legal board meetings and have been to court on this matter. The Judge ruled that this was inappropriate behavior on the part of these Board members, this is a very serious matter. You must stop your Board from taking action that is not in your best interest.

If your Board is allowed to continue down this path, your maintenance fees will increase and the financial health of your Association will suffer. Vote “NO” on the termination of your current management agreement. Vote “NO” and stop your Board from taking action that could cause you financial harm. Vote “NO” and stop your Board from making a hasty decision without performing their due diligence to ensure that they are protecting your interests. Vote “NO” and make your Board provide you with more information.

If you have already voted, you may complete the attached proxy and replace your previous proxy. The law is clear that the last proxy received is the one that is counted, it is not too late to change your vote. If Diamond continues managing your property for the next three years, you know that your management fees will not increase. You know that you will not have to pay bad debt. You know that you will not have to pay collection and foreclosure fees. If you allow your Board to hire this new management company, you will not know anything about what the future holds for your vacation investment.

If you have questions, require additional information, or would like to speak with someone at Diamond, please contact Marilyn Windsor at 702.823.7340 or at Marilyn.Windsor@diamondresorts.com, or Leanne Morrill at 702.823.7309 or at Leanne.Morrill@diamondresorts.com.



It makes sense to hold diamond to the fire, then throw water on them!!!

Here is what I got from them; THINK FELLOW OWNERS....we might be able to work this to our benefit!

 

[DianeNYS]

I *am* a fellow Owner...

and I really don't know how "to hold diamond to the fire, then throw water on them!!!" I've already filled out and sent my proxy for the HOA at Poly to use to bump Diamond out, after reading the first several comments in this thread that I felt led me (on my own, after reading) to trust the HOA to do what is best for the Owners.

Now, after 4 pages of back and forth on this, and dueling emails and snail mail from DRI and the HOA, I'm just as confused as I was when I first started this thread, and worse: Now I fear for my Polynesian Isles investment and future vacations there. All this acrimony between DRI and the HOA feels scary, and I really am wondering what the future will hold. I'm unhappy with my ownership there, and worried for the resort as a whole...

 

[bruwery]

This is the strangest thread I've ever seen

Clearly, some folks are bitter about something, but what they stand to gain by their ranting is not clear to me.

This whole thread feels like some big April Fool's joke. I don't mean to sound like I'm putting it off as a laughing matter, but nothing I've read here really adds up.

 

[lv_maui]

Clearly, some folks are bitter about something, but what they stand to gain by their ranting is not clear to me.

This whole thread feels like some big April Fool's joke. I don't mean to sound like I'm putting it off as a laughing matter, but nothing I've read here really adds up.

After reading your reply, I laughed as I have no idea why I spent so much time on this thread since I am not a Poly owner.

 

[tatvan]

PI Proxies and

After reading your reply, I laughed as I have no idea why I spent so much time on this thread since I am not a Poly owner.

Hi,
You've spent so much time on this because sharing your knowledge and giving owners like me your opinion is valuable and appreciated.
Sometimes when your in the mist of mess you need someone else to help you to think thru matters.

As owners we care because we have an investment in PI.

I just got off the phone with Carlos Costa the President of The Board.
His business is in the financial industry and this is a very busy time for him.I had called him over the weekend when I received the proxy from DRI. Carlos just returned home from traveling for his work.
He has told me that 'goldman' is the VP of the board.
Carlos is going to get in the forum as soon as he can figure out 'how to'. He was trying with me but could only see what was being said. He wanted to post but waas having a hard time registering. I agreed with him when I registered for the BBS I had a hard time..anyway...
He had some tech person send out an email blast for the board regarding the proxy voting matter and the tech person put Carlos's personal email address on the blast so now he is getting hundreds of emails each day from owners. He said because he does not know 'how to' use email well he has had to try to answer each one by one.
Seeing this forum adds to what he needs to do.
He gave me lots of information but its to much. I told him he really needs to get on the forum and inform people of whats been happening and how the Board is really working on the owners behalf.
After speaking with Carlos , I'm glad I voted to have the Board cast my (our) vote.
I'm hoping he can find time soon to answer everyone questions and erase some doubt about the Board and the work they are doing.

Thelma

 

[tatvan]

Our Investment

Clearly, some folks are bitter about something, but what they stand to gain by their ranting is not clear to me.

This whole thread feels like some big April Fool's joke. I don't mean to sound like I'm putting it off as a laughing matter, but nothing I've read here really adds up.

I'm not ranting and I'm not bitter. And this is not about an April Fool's joke.
As owners we have a financial investment with the Resort.
In these days and times I have to look how my finances and investments are being managed.
I think only a fool would ignore the matter. So no, its not a laughing matter.

Thelma

 

[tatvan]

I spoke with The Board Pres

and I really don't know how "to hold diamond to the fire, then throw water on them!!!" I've already filled out and sent my proxy for the HOA at Poly to use to bump Diamond out, after reading the first several comments in this thread that I felt led me (on my own, after reading) to trust the HOA to do what is best for the Owners.

Now, after 4 pages of back and forth on this, and dueling emails and snail mail from DRI and the HOA, I'm just as confused as I was when I first started this thread, and worse: Now I fear for my Polynesian Isles investment and future vacations there. All this acrimony between DRI and the HOA feels scary, and I really am wondering what the future will hold. I'm unhappy with my ownership there, and worried for the resort as a whole...

Hi,
I'm an owner as well. The board president, Carlos Costa, lives in MA as I do. Don't know him never actually met him.
I just wrote something about my talk with Carlos in reponse to someone else writing soemthing in this thread.
I had called him over the weekend when I received the yellow proxy from DRI. He's been traveling and so he just called me back this evening.
I think we did the right thing casting our vote to have him vote on our behalf to rid our resort of DRI.

Thelma

 

[DianeNYS]

Thank you, Thelma

For replying to my concern, and also for talking to Carlos Costa and learning more about this issue. I did just receive a private message (through TUG) from Goldman (who is, indeed, the VP of the Board/HOA). He was very sincere in his desire to help the Owners get untangled from DRI and produce a better situation at Polynesian Isles, and wanted to assure me that they will do a good job at the meeting on April 7th. He did say something about me hearing the meeting; is it a conference call or something? If it is, I'd dial in and listen...I really WANT to be happy as an Owner again (like I was before all of this brouhaha), and hear for myself the issues as they relate to dollars and cents, and the wellbeing of the Resort. Godspeed to the Board, and I'm hoping and praying for a good result...

 

[tomgou]

Info received from DRI

The information you have received is correct. The Poly IV Board did terminate the management contract with Diamond. This termination occurred at a board meeting on 2/13/09 and SPM was to assume full management responsibilities of the Poly IV Association on 3/16/09. Diamond feels very strongly that the three (3) Poly IV Board members did not make a decision that was in the best interest of the owners and in fact believes that this decision will cause the owners of Poly IV a severe financial hardship.

Many owners are not aware of the financial benefits received through management by Diamond. Poly IV is an older resort, and has a long term delinquency issue. The delinquency at this resort is more than 30%. In the past, the Board refused to budget adequately for the Association delinquency and budgeted virtually no funds for collections/foreclosures. As you are aware, it is vitally important to the health of an Association to keep delinquencies at a minimum and to foreclose on delinquent accounts in a timely manner. Due to many years of collection neglect, due to inaction by the Board, this Association has ended up with many clouded title issues. These clouded title issues make it even more expensive to process foreclosures.

In 2007 Diamond stepped in to help the owners of Poly IV. We were concerned that the owners were suffering due to the lack of action by the three Board members. Diamond implemented its “bad debt contribution program”. Under this program, Diamond actually pays the Association’s bad debt each year, leaving the Association 100% collected. Diamond also pays all fees and costs associated with collections and foreclosures. In essence this means that the owners no longer pay these amounts. The bad debt at Poly IV is in excess of $600,000 each year.

When the Board terminated the management contract, the bad debt contribution program was also terminated. This is very unfortunate for the owners of Poly IV. The 2009 budget did not include bad debt as the assumption was that Diamond would be paying it. This is going to cause a substantial deficit in the 2009 budget and issues with the budgets going forward. Also at the time of the termination, Diamond was in the process of foreclosing on more than 450 delinquent accounts at no cost to the owners. A foreclosure costs a minimum of $1,000 per week, so Diamond was willing to pay more than $450,000 in legal fees that the owners will not be able to pay. The 2009 budget does not include funds to continue these foreclosures. When you combine these two amounts you are looking at well over $1 million dollars that the owners will now be required to pay.

Diamond asked the Poly IV board to communicate with the owners prior to making a decision of this magnitude, but they refused. Instead, they made a rash decision that will affect thousands of owners. We think this is wrong.

The Poly IV Board hired SPM, Resorts Inc. as the new management company. We have seen the contract that the board signed. It is a 5 year contract and allows SPM to charge management fees from 6.5% to 10% of all money deposited into the Association accounts. An agreement like this is unheard of as it does not allow the Association to budget an actual amount for management fees, you will never know what your management fees will be until the end of each fiscal year. It also allows SPM to collect management fees on pre-paid maintenance fees, we think this is wrong. The contract also clearly states that SPM is not responsible for collections, but that the Board will be required to retain the services of a law firm to perform these functions. Again, this is a service currently offered for free by Diamond. The Board also retained a law firm and the cost to the owners to foreclose on a week will be in excess of $2,000. How will the owners be able to afford this? We don’t know, but we are very concerned. Diamond is an owner at Poly IV, just like you. Diamond’s affiliate developer affiliate, MMG Development, Corp., owns about 17% of the inventory at Poly IV, so for every dollar the board spends, it is costing Diamond 17 cents. Diamond is as concerned as all of the other owners about the financial health of this Association and the very real potential for a special assessment(s).

SPM was to take over the management of Poly IV on 3/16/09; however, they were totally unprepared. They did not set up bank accounts until that day, they did not order a merchant account (to process credit cards), they did not order a T-1 line (computer line for data), they did not have staff for maintenance or to clean the rooms. In fact, they were so unprepared that Diamond continued to provide these services to ensure the guests at Poly IV were well cared for. To this day, SPM is still unable to check-in guests without direct assistance from Diamond. They are still unable to make a key for a guest. They are still unable to legally process a credit card payment and continue to write down credit card information and are not even securing the information; thereby, exposing all Poly IV guests to identity theft. SPM has yet to provide proof of property insurance coverage, so we are left to assume that the Poly IV property is without coverage. The above is not only bad business practice and unprofessional, but also puts the owner’s assets at risk. We think this is wrong.

Diamond is the management company for the Master Association at Poly. The Master Association governs all of the common areas of the resort including the check-in building. Diamond offered, on multiple occasions, to continue the check-in services for the Poly IV guests; however, SPM and the Board rejected this offer. This makes no sense to Diamond and is surely not in the best interest of the Poly IV owners. Rather than allow the Poly IV owners to continue checking in where they always have, SPM and the Board felt it would be best to use a Poly IV unit for this purpose. SPM and the Board have actually taken two units out if service to use as check-in facilities and offices. We think this is wrong. These units do not belong to SPM or the Board, they belong to owners. This means that there are now two less units available for owners. The resort is in peak-time and now you are two units short. How is this in the best interest of the Poly IV owners?

To this date, the Board has not communicated vital information to the owners of Poly IV. They have not shared the details of the new management contract, they have not told the owners how much the new management fees are going to cost, they have not told the owners how they plan to deal with the delinquencies without assistance from Diamond, they have not told the owners anything.

Diamond charged a flat management fee that could be budgeted. Diamond had not increased its management fee in 7 years and in fact agreed to not increase the fee for another 3 ½ years. The Board rejected this. During these tough financial times, it is imperative that you have a management company that can assist you financially. SPM is not this company.

The Poly I Board is attempting to terminate the management contract as well and is conducting a vote of the owners; however, they too failed to provide the vital information that owners need to make an informed decisions. Diamond has been communicating with these owners even though the Poly I Board is trying to prevent Diamond from sharing this information.

We encourage all owners to contact the Board members and share their displeasure and concern over the decisions they are making. These Board members have a legal fiduciary responsibility to the owners and are required to act in the best interest of the owners. These Board members are clearly not upholding their duty.

If you would like more information or if you would like to speak directly to someone at Diamond, please do not hesitate to contact Linda Riddle via telephone at 702-823-7330 or email at Linda.Riddle@DiamondResorts.com

Sincerely,

Shawn Ericson

Senior Vice President, Resort Operations

 

[lv_maui]

The information you have received is correct.....

If you would like more information or if you would like to speak directly to someone at Diamond, please do not hesitate to contact Linda Riddle via telephone at 702-823-7330 or email at Linda.Riddle@DiamondResorts.com

Sincerely,

Shawn Ericson

Senior Vice President, Resort Operations

All I can say is that DRI made some very specific allegations. If they are false, I would assume DRI would have negative feedback against them. On the other hand, this is specific and has some qualitative attributes that have been lacking.

 

[tatvan]

Dear Fellow Owners:

This letter is to update you on the current status of the management situation at Polynesian Isles IV. As members of the Board of Directors, who are elected by you, the owners, we feel it is extremely important that you stay informed and updated on the situation at the Resort.

This Board feels that our primary focus should be to see the Resort maintained at the highest possible level, while expenditures are kept at the lowest possible level. One of the most important elements of the Resort is its management company. We want a management company that is going to put the owners first, work together with the Board and the owners in a friendly and supportive manner, place a real emphasis on Polynesian Isles IV, and be accountable to the Board and to the owners for its actions. The Board and many of the owners were not satisfied with the situation at our Resort. The main problem was what we believed the management contract to be one-sided and not in the best interest of the owners. We also had a sense that Polynesian Isles IV was just not important and that the owners did not matter.

Because of this situation, the Board of Directors made a decision to terminate the management agreement with Diamond Resorts International in accordance with the termination provisions of the contract. Following interviews with other management company candidates, your Board unanimously decided to sign a management contract with SPM Resorts, Inc. to take over the management of Polynesian Isles IV on March 16, 2009. SPM Resorts, Inc., with its main office located in Myrtle Beach, SC, manages 28 different associations totaling over 87,000 owners. In the termination notice to Diamond Resorts International, the Board asked that they cooperate with SPM Resorts prior to March 16, 2009. It was our hope to have a smooth and orderly transition from one management company to the other, so as to avoid any unnecessary problems or expenses for the owners.

Unfortunately, Diamond Resorts International and MMG Development, Inc. have chosen to not allow SPM Resorts use of the front desk or maintenance facility, even though Polynesian IV contributes to 60% of the cost for the maintenance of these buildings. However, please be assured that we have arranged for one of the units within Polynesian IV to be used for the front desk and maintenance is located off site until these issues are resolved. This Board will not allow Diamond to impose its will over what is best for this association and what is best for you, the owners.

If you are calling Diamond Resorts International, MMG, or the Resort regarding maintenance fees or reservations, please call (843) 238-5000 temporarily and your call will be directed to the person responsible for handling your situation.

We look forward to a long and mutually beneficial relationship with the new management company, SPM Resorts. The Board is excited by some of the ideas SPM Resorts has, and we hope that this management change will provide the owners with better service and make Polynesian Isles IV a better Resort. We want to thank you for your continued support of your elected Board of Directors, and we promise to continue to do the best job we can for you and for the Resort.

Sincerely,


Terry Byrd
Phyllis Skora
Rick Johnson

To All BOD,
I just read the post of what Shawn Ericson, Sr. VP wrote yesterday evening.
If what he has stated is correct, then, I'm gald to have read his detailed account of what SPM and your Board have done.
Now I want my Board at PI-1 not make your same costly mistakes.

Thelma

 

[tatvan]

Shawn Ericson Statement Posted

March 27, 2009


Dear Fellow Polynesian Isles Owners:

The Board feels it is necessary to respond to Diamond’s letter regarding the change in management.

First, this was not a decision that was made quickly or without significant effort and research by the Board over an extended period of time.

The Board has made significant effort to work with Diamond for the good of the Association and felt after two years of constant effort and frustration that our Association was and is not getting the support we need. The issues of concern include the maintenance and operation of the resort and in receiving reasonable explanations of charges made in the financial statements, including and specifically those made by Diamond.

The reference by Diamond that a management change could cost you more than $600.00 this year and put you at risk of a special assessment has no justification or validity. It is simply a scare tactic.

The management fee with SPM is based on what they are able to collect and any additional income they can bring to us through increased collections, increasing rentals, creating new programs that will provide additional income to the Association which will offset and lower the fees collectable from all of us as owners. The SPM fees are not a flat figure which is paid regardless of the effectiveness of Managements collection efforts.

Diamonds information on the collection program is missing several important facts. First, in return for paying the maintenance fees, they have use of all the units for their club, and rental and marketing programs. This makes us whole on maintenance fees and Diamond is free to make a profit from rentals and through its club and to reduce its marketing costs.

Diamond also pays for all the collection costs. In return, Diamond gets to keep all the collection costs, late fees and interest recovered from any owner they are successful in collecting from.

If Diamond goes through foreclosure the unit, they keep the unit and can sell it and keep all the proceeds when they sell it. We are also aware that ownership of delinquent units can be obtained through a Deed in Lieu (DIL) of foreclosure which costs only a few hundred dollars and that this option is available to our Association as it is Diamond.

The Board recognizes that Diamond has no real incentive to collect on the delinquent owners as they have use of the units for their purposes for just the cost of the maintenance fees. As referenced above, the new management company has a significant incentive to collect maintenance fees which is one of the many reasons the new agreement was entered into.

It is the Boards belief that it is in the best interest of the Association to handle the collection and foreclosure process with the Association being able to rent delinquent units and sell all the units our Association obtains title to. In response to requests from Polynesian owners, it is the Board’s decision that Association owned units be offered to existing owners at very economical amounts which are well below what Diamond offers them for.

One very significant issue related to Diamonds comments on paying for the delinquent owners is that the 2007 audit showed that the Association was due $574,429 from the Developer and by December 31, 2008 this figure grew to $691,474.29.
.
The funds we have received from Diamond have only been received after repeated demands and threats.

In spite of what Diamond leads their letter with; the change in management is not a cause for having increased maintenance fees or a special assessment. Not receiving funds in a timely manner from owners including Diamond, which has not paid late fees or interest, well could be.

There is little question that there have been delays with the renovation projects and making improvements to the resort. The Board has been adamant on ensuring the quality and cost of supplies and materials is correct and appropriate. The Board has repeatedly refused to accept materials and contractors recommended by Diamond. This was most often the case when bulk purchases were recommended through Diamond suppliers in Las Vegas when the same items could be purchased for less locally and/or the quality did not match that of the items being replaced. We recognize that this has delayed planned projects but the Board has refused to be pushed or bullied into making bad decisions.

We also find it unprofessional for Diamond to blame their problems on their former manager who was under their direct supervision up to the point she resigned.

We recognize that the transition of management at our sister resort, Polynesian IV has not been as smooth as they nor the new management company would like but this is more due to Diamond’s refusal to turn over records and information in a timely manner and refusal to operate in a manner that would benefit both our Association and Polynesian IV. In spite of the current issues, Polynesian IV’s Board strongly believes they have made the right decision in changing management and so do we.

Please return your proxy to us as quickly as possible via fax to 407-849-1119 and appoint Carlos Costa, President of the Association.


Sincerely


Your owner controlled Board of Directors

Hi,

I just read Shawn Ericson statement. So now after reading the details of what has been happening at PI-IV I don't want those costly mistakes to take place at PI-1.
Maybe you need to consider anyother management company if not DRI because SPM does not seem like their business practice will work in the long run without owners having to pay for a costly mistake made by this BOD.
If what Shawn has written in detail is incorrect I would hope someone on the Board at PI-1 would tell us different.
The vote is next week so time is of the essence.

Thelma

 

[tatvan]

Poly 1 Owner

The information you have received is correct. The Poly IV Board did terminate the management contract with Diamond. This termination occurred at a board meeting on 2/13/09 and SPM was to assume full management responsibilities of the Poly IV Association on 3/16/09. Diamond feels very strongly that the three (3) Poly IV Board members did not make a decision that was in the best interest of the owners and in fact believes that this decision will cause the owners of Poly IV a severe financial hardship.

Many owners are not aware of the financial benefits received through management by Diamond. Poly IV is an older resort, and has a long term delinquency issue. The delinquency at this resort is more than 30%. In the past, the Board refused to budget adequately for the Association delinquency and budgeted virtually no funds for collections/foreclosures. As you are aware, it is vitally important to the health of an Association to keep delinquencies at a minimum and to foreclose on delinquent accounts in a timely manner. Due to many years of collection neglect, due to inaction by the Board, this Association has ended up with many clouded title issues. These clouded title issues make it even more expensive to process foreclosures.

In 2007 Diamond stepped in to help the owners of Poly IV. We were concerned that the owners were suffering due to the lack of action by the three Board members. Diamond implemented its “bad debt contribution program”. Under this program, Diamond actually pays the Association’s bad debt each year, leaving the Association 100% collected. Diamond also pays all fees and costs associated with collections and foreclosures. In essence this means that the owners no longer pay these amounts. The bad debt at Poly IV is in excess of $600,000 each year.

When the Board terminated the management contract, the bad debt contribution program was also terminated. This is very unfortunate for the owners of Poly IV. The 2009 budget did not include bad debt as the assumption was that Diamond would be paying it. This is going to cause a substantial deficit in the 2009 budget and issues with the budgets going forward. Also at the time of the termination, Diamond was in the process of foreclosing on more than 450 delinquent accounts at no cost to the owners. A foreclosure costs a minimum of $1,000 per week, so Diamond was willing to pay more than $450,000 in legal fees that the owners will not be able to pay. The 2009 budget does not include funds to continue these foreclosures. When you combine these two amounts you are looking at well over $1 million dollars that the owners will now be required to pay.

Diamond asked the Poly IV board to communicate with the owners prior to making a decision of this magnitude, but they refused. Instead, they made a rash decision that will affect thousands of owners. We think this is wrong.

The Poly IV Board hired SPM, Resorts Inc. as the new management company. We have seen the contract that the board signed. It is a 5 year contract and allows SPM to charge management fees from 6.5% to 10% of all money deposited into the Association accounts. An agreement like this is unheard of as it does not allow the Association to budget an actual amount for management fees, you will never know what your management fees will be until the end of each fiscal year. It also allows SPM to collect management fees on pre-paid maintenance fees, we think this is wrong. The contract also clearly states that SPM is not responsible for collections, but that the Board will be required to retain the services of a law firm to perform these functions. Again, this is a service currently offered for free by Diamond. The Board also retained a law firm and the cost to the owners to foreclose on a week will be in excess of $2,000. How will the owners be able to afford this? We don’t know, but we are very concerned. Diamond is an owner at Poly IV, just like you. Diamond’s affiliate developer affiliate, MMG Development, Corp., owns about 17% of the inventory at Poly IV, so for every dollar the board spends, it is costing Diamond 17 cents. Diamond is as concerned as all of the other owners about the financial health of this Association and the very real potential for a special assessment(s).

SPM was to take over the management of Poly IV on 3/16/09; however, they were totally unprepared. They did not set up bank accounts until that day, they did not order a merchant account (to process credit cards), they did not order a T-1 line (computer line for data), they did not have staff for maintenance or to clean the rooms. In fact, they were so unprepared that Diamond continued to provide these services to ensure the guests at Poly IV were well cared for. To this day, SPM is still unable to check-in guests without direct assistance from Diamond. They are still unable to make a key for a guest. They are still unable to legally process a credit card payment and continue to write down credit card information and are not even securing the information; thereby, exposing all Poly IV guests to identity theft. SPM has yet to provide proof of property insurance coverage, so we are left to assume that the Poly IV property is without coverage. The above is not only bad business practice and unprofessional, but also puts the owner’s assets at risk. We think this is wrong.

Diamond is the management company for the Master Association at Poly. The Master Association governs all of the common areas of the resort including the check-in building. Diamond offered, on multiple occasions, to continue the check-in services for the Poly IV guests; however, SPM and the Board rejected this offer. This makes no sense to Diamond and is surely not in the best interest of the Poly IV owners. Rather than allow the Poly IV owners to continue checking in where they always have, SPM and the Board felt it would be best to use a Poly IV unit for this purpose. SPM and the Board have actually taken two units out if service to use as check-in facilities and offices. We think this is wrong. These units do not belong to SPM or the Board, they belong to owners. This means that there are now two less units available for owners. The resort is in peak-time and now you are two units short. How is this in the best interest of the Poly IV owners?

To this date, the Board has not communicated vital information to the owners of Poly IV. They have not shared the details of the new management contract, they have not told the owners how much the new management fees are going to cost, they have not told the owners how they plan to deal with the delinquencies without assistance from Diamond, they have not told the owners anything.

Diamond charged a flat management fee that could be budgeted. Diamond had not increased its management fee in 7 years and in fact agreed to not increase the fee for another 3 ½ years. The Board rejected this. During these tough financial times, it is imperative that you have a management company that can assist you financially. SPM is not this company.

The Poly I Board is attempting to terminate the management contract as well and is conducting a vote of the owners; however, they too failed to provide the vital information that owners need to make an informed decisions. Diamond has been communicating with these owners even though the Poly I Board is trying to prevent Diamond from sharing this information.

We encourage all owners to contact the Board members and share their displeasure and concern over the decisions they are making. These Board members have a legal fiduciary responsibility to the owners and are required to act in the best interest of the owners. These Board members are clearly not upholding their duty.

If you would like more information or if you would like to speak directly to someone at Diamond, please do not hesitate to contact Linda Riddle via telephone at 702-823-7330 or email at Linda.Riddle@DiamondResorts.com

Sincerely,

Shawn Ericson

Senior Vice President, Resort Operations

Shawn,
I'm a Poly 1 owner and I really hope someone on the Board at Poly 1 will prove you wrong.
I've spoken with Carlos directly. Boy .... what you and him say are completely different.
I would think there ought to be a way to video conference the meeting on Tuesday so owners could take part in the discussion. I would think its an important enough meeting for those arragement to be made.

Thelma

 

[lv_maui]

I cannot believe that I am going to spend more time on this, but after reading this letter from the BOD, I am worried about their mindset. Maybe it is just me, but I certainly question their business judgement as this letter gives a good example.

The issues of concern include the maintenance and operation of the resort and in receiving reasonable explanations of charges made in the financial statements, including and specifically those made by Diamond. Financials are financials. Does anyone have any business experience. I find it hard to believe as I have never seen this in an HOA. Also, I repeat that you concern about the operation of the resort is based on the fact that you were in love wiht the former resort manager, Dottie Arnold.

The reference by Diamond that a management change could cost you more than $600.00 this year and put you at risk of a special assessment has no justification or validity. It is simply a scare tactic. It is a scare tactic, but based on what they are saying, it would be real.


Diamonds information on the collection program is missing several important facts. First, in return for paying the maintenance fees, they have use of all the units for their club, and rental and marketing programs. MY GOSH. WHAT WOULD YOU THINK THEY SHOULD GET IN RETURN. It makes the all the sense in the world that if they pay the fee, they get use of the week. I am floored that you think this is not reasonable.

This makes us whole on maintenance fees and Diamond is free to make a profit from rentals and through its club and to reduce its marketing costs. Again, why shouldn't they have this right.

Diamond also pays for all the collection costs. In return, Diamond gets to keep all the collection costs, late fees and interest recovered from any owner they are successful in collecting from. That is pretty standard in the collection industry.

If Diamond goes through foreclosure the unit, they keep the unit and can sell it and keep all the proceeds when they sell it. We are also aware that ownership of delinquent units can be obtained through a Deed in Lieu (DIL) of foreclosure which costs only a few hundred dollars and that this option is available to our Association as it is Diamond. HERE WE GO AGAIN. YOu have to be kidding me that this is not a good option. First, many timeshare owners cannot be located. So, foreclosure is the only option. Second, my experience is that DRI would have to entice an owner to give a DIL wiht some money. It is very common to pay someone $200 for their "cooperation". Recovering intervals is a very very difficult process that is not easily done.

The Board recognizes that Diamond has no real incentive to collect on the delinquent owners as they have use of the units for their purposes for just the cost of the maintenance fees. And the owners do not have to worry about this deliquency. This is a good deal for the HOA

It is the Boards belief that it is in the best interest of the Association to handle the collection and foreclosure process with the Association being able to rent delinquent units and sell all the units our Association obtains title to. In response to requests from Polynesian owners, it is the Board’s decision that Association owned units be offered to existing owners at very economical amounts which are well below what Diamond offers them for.

One very significant issue related to Diamonds comments on paying for the delinquent owners is that the 2007 audit showed that the Association was due $574,429 from the Developer and by December 31, 2008 this figure grew to $691,474.29. That would trouble me too. But at least DRI did the right thing in the end.

 

[Chanook729]

Latest Diamond Letter

The saga continues... It sound like Diamond might be getting desperate. Won by 11 votes, but how many votes in total? TGIF:whoopie:



Dear Polynesian I Resort Owner,

You still have time to join your fellow owners to stop your Board from terminating your management contract at Polynesian Isles. Many owners who voted to terminate have considered the facts and have changed their minds and their vote. You can, too.

We believe owners at Poly I are very upset with the Board. They know that the Board has failed to provide vital information to the owners. They are angry because their elected Board members have not provided their phone numbers so owners can ask questions and receive more information. The majority of the owners also realize that the change in management companies will raise maintenance fees, but they cannot speak to a Board member to ask why the Board finds this acceptable.

Don’t let your Board make this decision for you. Do you know that your Board President was barely re-elected this year? Mr. Costa won the election by 11 votes, and nine of those votes were cast by another board member. This means that a large percentage of the owners did not approve of Mr. Costa’s performance as Board President. Why would you leave this decision in the hands of Mr. Costa and his buddies on the Board?

This is probably the most important issue you will vote on as a Poly I owner. It is not too late to vote against terminating your current management agreement. Simply complete the attached proxy, date it and return it via the instructions listed below. Please make sure your voice is heard. Please return the attached proxy today. See instructions below for returning your proxy. Your proxy must be received prior to the meeting on April 7, 2009.

Please carefully review the attached proxy immediately. We are asking you to appoint Linda Riddle to vote your proxy. Your signed, dated proxy must be received prior to the meeting on April 7, 2009. If you do not want to wait to receive your materials in the mail, you may return this proxy 1) by email of a scanned or pdf copy of this proxy to polyproxy@smartinfo.us; or 2) by facsimile to (610) 683-5616. Or you can complete this proxy online at: https://smartinfo.us/polyproxy. In order to return your proxy online, you will need to enter the following information:

If you have any questions, or would like to speak with someone at Diamond about this situation or this solicitation, please feel free to contact Marilyn Windsor at 702.823.7340 or at Marilyn.Windsor@diamondresorts.com, or Leanne Morrill at 702.823.7309 or at Leanne.Morrill@diamondresorts.com.

Thank you,

Diamond Resorts Management, Inc.

 

[tatvan]

call in info PI-1

For replying to my concern, and also for talking to Carlos Costa and learning more about this issue. I did just receive a private message (through TUG) from Goldman (who is, indeed, the VP of the Board/HOA). He was very sincere in his desire to help the Owners get untangled from DRI and produce a better situation at Polynesian Isles, and wanted to assure me that they will do a good job at the meeting on April 7th. He did say something about me hearing the meeting; is it a conference call or something? If it is, I'd dial in and listen...I really WANT to be happy as an Owner again (like I was before all of this brouhaha), and hear for myself the issues as they relate to dollars and cents, and the wellbeing of the Resort. Godspeed to the Board, and I'm hoping and praying for a good result...

I read the post today from another Diamond person. I did not know Carlos barely was re-elected. Did Eddie (Goldman) give you the call in number? I'm not on their email list so if a number was sent I would not have received it. I don't want to call Carlos again, I know he's busy. Carlos gave me the email address from an email blast sent but I can not find what I did with it. Yea, so if you have any number or address please forward to me. I think its important to take part in the meeting Tuesday if at all possible.

Thelma

 

[tatvan]

So today you come out the closet to say your with DRI

Sue,

What phase are you in? I got my proxy about a week ago. I am glad to see discussion on the subject here, as I was out of the loop on events at PI. Does anyone know of a HOA group for Poly? If not that might be an idea to float past the board so that information can be shared with the owners.

From reading what you write on March 23, I would have not known you are actually with Diamond Resorts. You did not have a signature on this post. On your later posting to this thread you simpy sign as John. Now today your signature is Diamond Resorts... today its like your coming out the closet!!
On the Board of Diamond Resorts or an employee but you have a relationship with them.
And that's not the problem .... it's how you have gone about revealing the fact or not.
After you say all you had to say today ,April 4 someone would be led to believe you know everything about the HOA at PI. How can you state on March 23......."Does anyone know of a HOA group for Poly"..... or state that "I was out of the loop on events at PI" and you disclose today April 4, in your post, you are with DRI. You sound like a deceiver.

Thelma

 

[AwayWeGo]

Better Late Than Never, Eh ?

So today you come out the closet to say your with DRI

This entire discussion topic would have had more clarity & would have been easier to follow if more of the participants had made clear who they are, whom they represent, & where they're coming from, etc., at the outset.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[lv_maui]

Chanook is not DRI

Now today your signature is Diamond Resorts... today its like your coming out the closet!!
On the Board of Diamond Resorts or an employee but you have a relationship with them.
And that's not the problem .... it's how you have gone about revealing the fact or not.

I see no indication from that post that the person is implying he is with DRI. He is just copying a letter/email that DRI sent out. I really am not sure how you could interpret the posting that way, Thelma. Maybe you shoudl re-read the post!!

 

[DianeNYS]

For Thelma

Hi, Thelma...All I got was a "private message" through my TUG BBS account, and nothing that came in my email from the VP. So, no return email, and he included no phone number...Here it is copied/pasted below:
(I sincerely hope that I am not breaching any TUG protocol by posting this publicly; I just really want to help in getting to the bottom of this crazy mess)



"Board of Director working Hard

--------------------------------------------------------------------------------

I just had the first opportunity a few minutes ago to set down and read the recent posting. Let me assurance you and the other owners the Board is did it best to protect the interest of all the home owners.
It would tak too long to discuss the problem there are with Diamond, but trust me when I tell you a chhange is necessary.
I am delight to hear that a lots of people have put their trust in us as the board and hopeful after April 7th we can get on with the business of help to secure the resort for the owners.
Poly 4 has already made all the necessary moves and it would be good if we can also get everything changed over.
If at all possibly it might be good if you can listen in on the meeting from Florida on the 7th of April, everything is not as Diamond has so skillfully presented it. They are a large company with hundreds of employees, but even that doesn't assure the owner of the best possibly management.
Let's just keep work together, we have been owner ever since the orginial buildings were in construction.
We have seen bad time and good time, but we want more good times.
Eddie Lofton
Vice President"

 

[Chanook729]

Me? On the Darkside?

As per Alan...

I am an owner of a week at Poly in no way affilited with Diamond or a member of the HOA Board.

I was simply posting the latest email from Diamond to keep those who do not own at Poly, but have been following as these events unfold (then fold themselves up again, change color and texture and unfold again) to follow along. I mentioned that Diamond seemed desperate with the wording of the last letter, bringing the winning by 11 votes in and I simply asked wondered how many total votes... 11 votes could be 1% or 99% of the total votes...

-John