Allan's letter pt 3
8. A motion to seek recovery of the $26,000 expenditure for the site survey from MM our developer.
The document given to the Board was not an accurate survey (the building shape was not even the same).
9. A motion to accept or reject the offer of 48% of costs for the roof replacement from MM as their total resp onsibility as fair and equitable or insufficient.
What is the recommendations of our consultant as to the quality of the old roof, the installation and maintenance of it and if possible explain why it failed? Is the new roof's costs reasonable, the installation correct and 10 year warranty industry standard?
10. A motion that a Board consultant review the proposed scope of work and costs required to re caulk and tighten the entire building as recommended by MM.
After the recent storm 120 rooms were damaged and MM consultant stated that we must re caulk the entire building to make it water tight. =2 0 What have we been doing during the last 10 years in our repair and maintenance program to maintain our building from water intrusion? Were these funds spent appropriately? Who should pay the estimated $750,000 for this? What preventative measures do we have to insure that we have the correct ongoing maintenance?
11. A motion to accept or reject the resolution from MM as to the structural repairs that their consultant noted in his report.
After receiving written comments from the Board/Owners consultant regarding MM consultants original recommendation to sand blast and paint the steel structure, we should take formal action on this. Do we have the steel sand blasted at a cost estimate of $100,000 or do nothing if the damage will not effect us for many years? Since MM consultant stated that the structural steel rusted because "the erected frame stood exposed to weather for approximately five years ... and the roofing membrane is reportedly original construction and there have been numerous leaks and subsequent patches". Who should pay these costs and should we seek recovery for previous repairs and damages?
12. A motion to accept or reject the offer from MM the sum of $500 per month (as a good will gesture) for the future use of the sales and marketing desk located in the Ocean Club lobby as reasonable and fair.
On 4/13/07 MM informed the Board that "income derived from outside venders in AOC lobby space rental ... si nce the inception of outside rental income has been $103,128 and was incorrectly applied to the management company..." It was also stated that this does not include the use of the 2-4 Sales & Marketing desks in the Ocean club lobby. MM stated they had a legal right to continue a sale presence in the lobby area without financial consideration according to MM legal counsel.
Our legal counsel states: "It can be debated whether these contractual "access rights" under article 5.1 of the Construction and Use Agreement (CUA) grant MVCIA the right to "conduct the sales and marketing activities from the sales desk in the AOC-lobby without having to pay rent. In the context of this articles the contractual right to "access" seems to give right to egress, right to enter upon and transit within the premises, but it does not specifically give the right to install sales desks in the lobby. "Access" to the common facilities is of a different order than occupation of the common facilities. I am not sure the CUA would give the right for annexation of portions of the common facilities for the installation of sales desks. .. Furthermore, it can be argued that the access rights, even in the elastic view of MVCIA, are applicable for the sales and marketing with respect to the resort which was the subject of the CUA...."
At a rate of $2000 to $7000 per desk paid by other vendors for lobby space per month - you can see how this would add to our bottom line. MM response is that the lobby sales desks continue to serve ;our owners and and has helped owners resell hundreds of weeks. The Resale's of our villa with Marriott's 40% commission rate has generated Millions of dollars worth of revenue for Marriott and should not be a reason not to pay for current and past use of lobby space to the Association. This is a great deal of lost revenue (could be as high as $1 million) to Owners and the Board should take action now.
13. A Motion to look at other options to MM response to the Boards resolution pertaining to the Management fee structure:
On October 17, 2007 - the Marriott's Aruba Ocean Club Board of Directors passed the following motion.
Moved: That the Marriott's Aruba Ocean Club Board of Director's initiate discussions with MVCI=2 0to amend our management agreement from its current management fee of "10% of all money that we collect pursuant to the annual budget and Maintenance fee schedule for the Ocean Club including all special assessments (not including the management fee)" to a fixed annual fee with a periodic adjustment for inflation. Per our contract this can be implemented with mutual agreement between both parties.
MM response was "MVCI is currently not agreeing to any changes in the management fee structure for AOC. Although we might consider changes in the future, we would only contemplate doing this if we were to amend the management fee structure for all MVCI resorts, not for individual resorts. ... MVCI is not obligated to do so under the terms of the current management agreement, and is not prepared to enter into any discussions and/or negotiations to this extend. Furthermore, I would like to emphasize that no changes have ever been made to the fee structure as it was first communicated to our owners at the time of purchas e. In fact, MVCI has always been very up front about the 10% management fee it charges to AOC owners, as well as to owners of most other MVCI resorts."
Most owners do not realize that our contract call for " the payment of 10% of all money MRHA is required to collect pursuant to the annual Budget and Maintenance fee schedule for the Timeshare plan and the Resort Property and special assessments, excluding for such Budget and maintenance fee schedule for purposes of such calculation the management fee hereunder." This means that for every dollar we spend and thus have to collect for we must pay an additional ten cents as part of our management fee. I do not see how any taxes, renovations, or increases in utilities fees should effect the management fee. The management fee should be based on the reasonable cost to manage the property and not other factors. MM told us that they would be working on changes for all resorts last year. No further action has been announced. We must be prepared before our 15 year contract is automatically renewed.
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I hope that every Owner will support a special meeting of Owners if the Board does not act. I will be seeking action on my motions and By Law changes to insure that you will be given timely and correct information. Thank you.
Sincerely,
Allan
c20854@aol.com
301-299-2118
