Poipu Point - Walk away from ownership?

[dougp26364]

Steve,

I memory serves me correctly, DRI typically has a deal in place whereby they pick up the foreclosed weeks for a set price. It benefits the HOA/BOD and owners in that those weeks have a known value to the HOA/BOD and owners and, those weeks continue to pay their MF's. I have long since forgotten any details I may have read, or thought that I have read, about this in the past. I'm just vaguely aware that something existed either currently or at one time. The reason I even recall this is I've always felt that it was a good thing.

Why have I felt such a deal to be a good thing? Because owners typically don't participate in the HOA/BOD process past ignoring the proxie ballets when they arrive in the mail. I've been guilty of this in the past and, to be honest, I don't know enough about the candidates to cast a knowledgable vote.


Right now I have three resorts in my collection that I almost wish I didn't own due to differences in the opinion with the how the HOA manages those resorts. Interestingly, that would be my two Marriott managed resorts and one managed by Southwind but, went into bankruptcy from the previous developer/management company. It's not been the managing companies so much as the how the HOA/BOD choose to spend owners money or communicate with owners.

At one point in time, when S. Cloobeck had stepped away from Polo Towers, I was definately not happy with the communication or how the resorts were being run. Two SA's due to underfunding cash reserves didn't help my opinion.

When S. Cloobeck decided to get back in and be more involved, things started to go back to the way they had been originally. A few differences have been that the newletter is now electronic, saving money on mailing, which I appreciate. There is communication with owners but, you need to have an updated E-mail address and you actually have to go to their website and read the newsletters. I'm not certain how P@P has been with this but, if there were newsletters published online, they'll likely still be there. I can go back and read past HOA newsletters to see what's been happening.

Online is also my source for reading HOA/BOD letters that come out with MF's each year. In reading last years newsletter, I understood that the HOA/BOD hadn't collected enough in reserves and that there was a deficit that the HOA/BOD had now decided to make up. That deficit reduction is costing The Suite's at Polo Towers owners approx. $83/year for six years.

It hasn't been a difficult thing for me to calculate that I can assume 6 to 7% increases in MF's each year until the deficit is errased, just by reading what DRI has published. The thing is, owners have to take some responsibility to find and read that information. It's not as if it's hidden. It's easily found. What's all to easy is for owners to blissfully ignore what's going on at their resorts until something like this smack you right in the face. That's excactly what happened at Polo Towers when the HOA was underfunding the cash reserves and it came time for a refurbishment. Most owners didn't realize that $30 to $40 per year per 2 bedroom unit wasn't going to cut it. Most didn't care that cash reserve funding was reduced to keep MF's almost even. Most were angry when it required SA's to take care of business that should have been funded by the cash reserves.

Essentially, no one pays any attention until something like this happens, then they want to blame everyone but themselves. Sunterra underfunded a lot of things and went cheap on many items. That's great in that it keeps MF's lower but, in the end it comes back to bite you in the hind end.

DRI only recently took over the management of this resort. They done their work to see if/where money could be collected and have determined that it would be throwing good money after bad to persue those avenues. It would also further delay repairs, possibly to the point where it would become even more cost prohibitive to owners and, depending upon how the contracts are written, could result in a potential contractual obligation with the trust ownership. In short, it's considerably more complicated than most want to believe.

What I regret about everything that's transpired is the preception of rudeness by DRI staff at the meeting in SF. That's like tossing gasoline onto a burning fire. I wasn't there so I can't comment as to if this was preceived by angry owners out for blood of if they really were just matter of fact and didn't care. I do know that after you've been battered so long, given the same answers and know that this is the only course of action, you'll generally reflect the mood of the crowd facing you. But then again that's why management is paid the really big bucks. Not only should they be able to manage but they'll have to do some PR work as well. The world is full of former middle and upper mangement types that didn't understand they have to be as good at PR and management theory.

This is a touchy sitaution for DRI. They're caught between having to repair the resort properly, keeping the cost as low as possible while not being so cheap as to cause future problems and find a way to make owners satisfied with their ownership enough to not only pay the SA but keep their ownerships and be happy with them.

You'll never make everyone happy. The best you can do is try. In reality, the angry owners group is but a small percentage of owners at P@P. It's good to vent but, reality needs to come into the picture as well. Ousting DRI as management will be nearly impossible, even if they had the owners mailing list.Placing blame feels good but doesn't solve the problem. IMO, right now if I were an owner, I'd be making certain this problem was fixed and that I wouldn't be paying for it again in another 10 or 20 years. I'd be looking at the cash reserve funding and asking questions. I might even be considering selling out or giving the ownership away. But banging my head against the wall isn't something I'd be doing and, looking to place blame or remove DRI as management at this point is a waste of energy. Even if successful, you STILL have the water intrusion project AND, you'll likely be back to square one.

A better angle would be to get a large enough group of owners to negotiate payment terms and search for options other than what has been rather abruptly presented to owners. Personally, I'd have been a little more than shocked at the assessment and, despite being in a good financial position, would have difficulty managing such a large payment that wasn't budgeted for over time. It would be difficult enough to adjust our budget to cover the increased fee's for the next two to five years. Maybe something can be done on this front, either through financing or allowing a delayed payment structure. Possible a monthly payment plan or something of that nature.

 

[dougp26364]

For those who have not been able to find the online DRI site which links to your HOA newsletters, financial information and many other owners documents, here's the link http://www.diamondresortshoa.com/splash.aspx . You will need to register and create a login on ID to access your resorts information.

 

[timeos2]

A better angle would be to get a large enough group of owners to negotiate payment terms and search for options other than what has been rather abruptly presented to owners. Personally, I'd have been a little more than shocked at the assessment and, despite being in a good financial position, would have difficulty managing such a large payment that wasn't budgeted for over time. It would be difficult enough to adjust our budget to cover the increased fee's for the next two to five years. Maybe something can be done on this front, either through financing or allowing a delayed payment structure. Possible a monthly payment plan or something of that nature.

Very good post Doug. You really get into where things are & how they got there. I share your feeling that while DRI is far from a perfect organization they do seem to understand the need for continuous improvements at resorts - simply living off what is there is really supporting a deteriorating situation as nothing gets better with time on its own - and that reserves need to be properly funded to maintain/upgrade resorts.

I still see places where they seem at first glance at least to be holding fees down by shortchanging reserves (either for sales or management reasons it seems) and it will be interesting to see where those resorts are in 5 years and what has happened regarding reserves collected and any special assessments. But overall, for established resorts and those with long term management in place, they seem to be budgeting far better for needed reserves. That in the long run is a very good thing for owners even if they don't see it that way.

 

[tidefan]

For those who have not been able to find the online DRI site which links to your HOA newsletters, financial information and many other owners documents, here's the link http://www.diamondresortshoa.com/splash.aspx . You will need to register and create a login on ID to access your resorts information.

Hey Doug, not to hijack this thread a little bit, but the St Maarten resorts aren't on the list. Do you know why?

 

[dougp26364]

Hey Doug, not to hijack this thread a little bit, but the St Maarten resorts aren't on the list. Do you know why?

Honestly, I have no idea and didn't realize they weren't there. It'd be a good question to ask DRI. I understand that the owners there have had issues but don't know what they've been.

I do know that P@P is on the list. Not being able to see information on any resorts other than those we own at, I can't even say with certainty that their HOA's have kept updated information available to owners. I'm sure if they haven't, it's another complaint that can be added to the list of complaints they already have.

 

[craigrow]

Wow, nice reply TR, thanks.

So, Diamond purchased the maintenance contract. That makes sense. I guess this is what people are talking about when they say "Diamond bought the Point." If I were writing one of these contracts for the HOA, I would give the HOA the option of cancelling the contract in the case of a significant change such as sale to another company. An easier out that a majority vote. These contracts are written by the developer though so that doesn't seem like an easy solution. The most likely solution would be the HOA realizing their management company is in trouble and finding a new manager before the change is made for them. Still, I get that the developer has designed the system to make that very difficult. Of course, we all knew that when we bought in, or should have.

It's interesting that the DRI Hawaii Collection owns such a large share of the deeds. How did they acquire those deeds?

It's also interesting that the HOA has the ability to "foreclose" for non-payment. I guess those who want a deed-back option already have it. Simply don't pay and let the HOA foreclose. This will likely hurt your credit but it will relieve you of the deed, special assessment fees and future maintenance fees. This doesn't seem right to me as it would not help the HOA or Diamond to foreclose on a deed that owes them thousands of dollars.

Where do I find the "disclosure statement" you're referring to? I don't see that on Diamond's HOA web site.

 

[dougp26364]

Wow, nice reply TR, thanks.

So, Diamond purchased the maintenance contract. That makes sense. I guess this is what people are talking about when they say "Diamond bought the Point." If I were writing one of these contracts for the HOA, I would give the HOA the option of cancelling the contract in the case of a significant change such as sale to another company. An easier out that a majority vote. These contracts are written by the developer though so that doesn't seem like an easy solution. The most likely solution would be the HOA realizing their management company is in trouble and finding a new manager before the change is made for them. Still, I get that the developer has designed the system to make that very difficult. Of course, we all knew that when we bought in, or should have.

It's interesting that the DRI Hawaii Collection owns such a large share of the deeds. How did they acquire those deeds?

It's also interesting that the HOA has the ability to "foreclose" for non-payment. I guess those who want a deed-back option already have it. Simply don't pay and let the HOA foreclose. This will likely hurt your credit but it will relieve you of the deed, special assessment fees and future maintenance fees. This doesn't seem right to me as it would not help the HOA or Diamond to foreclose on a deed that owes them thousands of dollars.

Where do I find the "disclosure statement" you're referring to? I don't see that on Diamond's HOA web site.

I would assume that, when Sunterra hit upon the idea of trust based ownership for their resorts, it was a no brainer to design a program to get owners to give up their deeds for an interest in a trust vs one specific resort.

The give was you have home resort rights at a group of resorts rather than just one resort.

The take is you give up your deed and your vote.

For the developer interested in keeping the management contract, this gives them leverage.

For the owner looking for flexibilty, this gives them options.

Trust style developements can be very attractive to developers because it puts them in the drivers seat. DVC, for instance, provides the product but owners appear to have little say in how the resorts are run. When DVC wanted to switch from RCI to I.I. and then switch back to RCI, they just did it without needing member approval. DVC will always be the mangement company for DVC resorts.

DVC has, as far as I know, always been a trust style ownership using right to use for a specific number of years. Sunterra, and now DRI, is a mixture of trust and deeded weeks ownerships. Sunterra did not start out as a trust based ownership but now, as I understand it, that's all DRI sells.

DRI obtains deeds by converting deeded week owners over to trust ownership, by foreclosure, deed backs or buying units that show up on the resale market.

 

[weisberg]

sensible scheduled payments

Yes Bill, your plan is a lot more palatable than that which has been proposed. My thoughts are still to walk away, but your plan is definitely more doable. I would like to post your thoughts and plan on facebook for the followers that do not log on to this forum. Please contact me at bobweisberg@bellsouth.net if this is ok with you. Please contact we even it is not. We have a list of email addresses going and I would like to add yours to this list. Thank you again for sharing your ideas.
Take care, Joyce Weisberg



:zzz:

I am a newbie to TUG and have read all of the P@P postings on the special assessment. (What a way to spend a Saturday .)
Anyway we own a deeded week and the reality of condos has been forcefully rammed down our throats and I am thankful in the sense that we were considering a condo for retirement and that thought has now vanished.
We are not impressed with the non-business-like approach of DRI when it comes to working and communicating with the owners. However, it is clear that the HOA should be acting in the owner's interest and it is not - at least in this case.
The report on the meeting the other day (thanks for that) showed that the assessment of $5893.32 per unit portion is to be expended over 6 years and the schedule is 1 building in the first year and 2 each other year (if we give the lobby etc the weight of a building which I presume is overweigting it.) So the first phase cost $535.76 of assessment total, and each of the others $1071.52 of the total. If this money came from a bank it would provide the money in phases and so the HOA should have arranged that for the collection. This year we should only pay $535.76 per unit for phase 1, and then we should pay $1071.52 for the next 5 years for the following phases. This would make it bearable for small (coming to retirement) owners like me.
So my First question is: To whom do we collectively speak to have the assessment payments restructured in this way, or in some modified way which spreads the pain over at least 5 years? The Chairman's assertion that some have already paid is not only arrogant it is unfeeling and Dicksonian - shame on him.
My Second question is : How can the HOA not react to the obvious despair of members who love P&P but cannot see how to get out of the bind they are in? The HOA is surely the employer of DRI.
My Third question is : Can the HOA be instrumental in getting the management of our property to be more reasonable when it comes to the issue of buybacks? As someone said the "voice of the people" must surely influence the operation of our resort, and the HOA is supposed to be our voice. Even the selling of property is based on draconian regulations.

The organization is like a Gorgon, there is no one place to go with concerns, choose a (snake)head and it is the wrong one. I for one need constructive direction on where to direct my desires and wishes for both management issues and for help and relief (with this particular schedule of payments.)
Anyone with the constructive answers to my questions please post or email me directly billrobertson@eastlink.ca. I, like many owners, need a solution to this onerous, and apparently unnecessary, payment schedule issue. Surely an email campaign to the correct person could assist us.
As an aside I am glad I joined TUG and read these posts.

 

[weisberg]

telephone solicitation

I just recently started following comments on facebook. I also posted a comment myself. Not sure which contact sparked a telephone solicitation for the sale of my timeshare. I have even less faith or trust in these promotion offers than I have with our HOA & DRI. It boggles me that we can not come up with a list of owners, yet, these companies can get our telephones numbers so easily. I know that this has been addressed on this forum previously. Has anyone been contacted recently to try to sell their timeshare?

 

[artringwald]

A trust based ownership is also a way for a developer to oversell a desirable resort. That's how a Las Vegas and Sedona resort ended up in the Hawaii Collection.

 

[T_R_Oglodyte]

So, Diamond purchased the maintenance contract.

I repeat, DRI did not purchase the contract. DRI purchased Sunterra. Sunterra did not put out a notice in the trade venues saying "Here's this lovely contract which generates huge profrits. What am I offered by someone who wants to take our place as manager of Point at Poipu?" Those types of sales or rights do occur in the commercial world; that's why many contracts (including those in my business) specifically prohibit that unless the other party to the contract agrees to the transfer. I would be surprised if the management contract between Sunterra and the HOA at Po'ipu didn't include such a provision barring the sale or transfer of rights under the contract.

 

[timeos2]

I repeat, DRI did not purchase the contract. DRI purchased Sunterra. Sunterra did not put out a notice in the trade venues saying "Here's this lovely contract which generates huge profrits. What am I offered by someone who wants to take our place as manager of Point at Poipu?" Those types of sales or rights do occur in the commercial world; that's why many contracts (including those in my business) specifically prohibit that unless the other party to the contract agrees to the transfer. I would be surprised if the management contract between Sunterra and the HOA at Po'ipu didn't include such a provision barring the sale or transfer of rights under the contract.

Assuming that the "standard? Sunterra / RPM management agreement was used (it most likely was as they always tried to use it if possible) then there was a onerous to break automatic renewal and no prohibition of transfer to a susequent to a succeeding management group.

When we were able to break our old Sunterra management agreement we made sure the new contract had the following provisions:

• Management contract can be terminated with 90 days notice for any reason (this scared away a few bidders - but we demand it)
• Contact awarded by the Board and does not require owner vote (although that always remains as an option)
• No automatic renewals
• No automatic transfers to subsequent buyers of the management company without Board approval

We also went out for open bidding and interviewed the top 3 contenders. Our savings in 2001 was nearly $750,000!! Imagine what it would have been today if the "standard" increases had been allowed. We renegotiated the contact in 2008 with additional savings obtained and will revisit it again in the near future.

It isn't easy or usually inexpensive to get owner control of any Association unless you have the rare case where the Developer does the right thing and voluntarily turns it over. Once in Owner control there is no reason management shouldn't be opened to bid just as any other service is - and there is usually a savings to be realized especially with a non-developer based management firm. That isn't always the case but over the long term the history of timeshares says a non-developer management will be more responsive and cost less than the typical developer based group.

It is up to the Association / Board to write a good and cost effective agreement for management services. You do not have to accept the "standard" contract offered by any group but if you rewrite it make sure it accomplishes what you want. A good attorney is priceless in the process.

 

[bkahoona1]

About this poipu point mess

[Text of this post has been removed at the request of the poster, as a condition of a legal agreement with Diamond Resorts. - Makai Guy, BBS Administrator]

 

[Carolinian]

I repeat, DRI did not purchase the contract. DRI purchased Sunterra. Sunterra did not put out a notice in the trade venues saying "Here's this lovely contract which generates huge profrits. What am I offered by someone who wants to take our place as manager of Point at Poipu?" Those types of sales or rights do occur in the commercial world; that's why many contracts (including those in my business) specifically prohibit that unless the other party to the contract agrees to the transfer. I would be surprised if the management contract between Sunterra and the HOA at Po'ipu didn't include such a provision barring the sale or transfer of rights under the contract.

The problem is that when the developer has a puppet HOA board, then they simply rubberstamp the deal. That is one reason why timesharers should always beware of developer-controlled HOA boards. If there is no member democracy at the resort, it is better to buy somewhere else.

 

[craigrow]

Just curious, when exactly did Diamond purchase Sunterra and take over management of the Point?

 

[Apelila]

Suntera/Diamond 2007

Just curious, when exactly did Diamond purchase Sunterra and take over management of the Point?

My last Suntera Maintenance Fee invoice was dated for 1/12007.
My First Diamond Maintence Fee invoice was dated for 10/17/2007 Due: 1/1/2008.

 

[MadOwner]

[Deleted at request of poster]

 

[timeos2]

UPDATE: The owners group www.poipuowners.org WILL be taking up the fight against DRI. Please give them time to update their contact list and to get organized. This group is open to ALL individuals impacted by the recent assessment (deeded owners and points). They are currently working on communication for all those who have registered with the site.

CDOPP Home Page
www.poipuowners.org

While it is a great idea to get the owners together in a coordinated action the lack of simple news updates/posts on that web site (it appears the newest item is over a year old and has actually been addressed) doesn't lead to willing owner participation.

Owners look for UPDATES and proposed action. If they are serious about this they need to get updates and new information NOW! Otherwise those that take a quick visit / look will quickly dismiss it as a dead organization. I hope they make changes to the site quickly or they will lose whatever momentum they may have.

 

[lv_maui]

We have heard nothing but bad news from that group as far as their handling of money contributions and keeping the site up to date. John is right, you need to get the site up to date and do it every day to make a difference.

While it is a great idea to get the owners together in a coordinated action the lack of simple news updates/posts on that web site (it appears the newest item is over a year old and has actually been addressed) doesn't lead to willing owner participation.

Owners look for UPDATES and proposed action. If they are serious about this they need to get updates and new information NOW! Otherwise those that take a quick visit / look will quickly dismiss it as a dead organization. I hope they make changes to the site quickly or they will lose whatever momentum they may have.

 

[lv_maui]

I have to ask

I said that I would no longer post and I am violating my rule.

I am really confused as to what the owners want from Diamond at this point. There is so much misinformation out there and when you get down to the "nitty gritty", I am not sure what we want from DRI.

The only thing that I think some owners should be upset about and demand rescision and money refunds is for owners who have purchased in the recent past such as 2 years since it seems like the disclosure was not adequate.

But what is it that we want:
1. I think we want better payment terms.
2. I think we want more disclosure and transparency.
3. I think we should ask for DRI to eliminate the clause in the management agreement that specifies that we need 50% of all owners to change managers.

Past that, I am not sure what you all want. Do you want a vote of all owners to decide if they want the repairs or not? What else?

UPDATE: The owners group www.poipuowners.org WILL be taking up the fight against DRI. Please give them time to update their contact list and to get organized. This group is open to ALL individuals impacted by the recent assessment (deeded owners and points). They are currently working on communication for all those who have registered with the site.

CDOPP Home Page
www.poipuowners.org

 

[billstellar]

Payment of Special Assessment

Here are some of my major concerns:



4. I do not think that pursuing lawsuits will amount to anything but the resort's ultimate demise. I am willing to pay (preferably with a more reasonable payment plan) the fees necessary to fix the resort but I do not want to put money into a "sinking ship" and unfortunately I think that is where this is headed with the current plan. If too many owners default and/or sue and fight the progression this will never work.

5. How do we know that if we pay the total assessment that the repairs will be done correctly and who will monitor this? I don't have much faith in the current management team and we need mote transparency and communication as this process proceeds.

6. Why should Diamond get any type of gain out of the current problem? If any part of the assessment is lining diamond's pockets in any form then that is a huge problem and I believe I saw some amounts that they will get from the current budgeted amount. Wound be nice to see at least 95 % of our the funds going directly to the repairs and not management fees!!

7. If the current owners do not unite and progress down a logical and thought-out plan to rescue this resort then anyone playing into the assessments may just as well burn or flush the money down the toilet because that is what the ultimate outcome will be. The foreclosures. defaults, lawsuits and poor management and planning of where the assessment fees go will be the recipe for disaster.



BC

I have to agree here. How we got here is now of less interest to me that finding out how to spread the SA over the project duration to lessen the annual cost. A trust should surely be in place to safeguard our funds. The threat of lawsuits from either side are simply unproductive. Can CDOPP (Home Page www.poipuowners.org) perhaps lead us to a better agreement (or are they too combatativefor that role?)

 

[bogey21]

From the prospective of an outsider looking at the situation I see a hugh problem with the number of Owners who decide that paying the amounts assessed (regular and special) will be a hardship and will choose to default. IMO this could bring the whole thing down. Sure, DRI can chase the defaulters and ultimately collect a decent portion of the money but at a large cost. Again IMO, even if they eventually collect a significant portion of the regular and special assessments getting enough cash in a timely manner is going to be a big time problem.

George

 

[billstellar]

I said that I would no longer post and I am violating my rule.

I am really confused as to what the owners want from Diamond at this point. There is so much misinformation out there and when you get down to the "nitty gritty", I am not sure what we want from DRI.

The only thing that I think some owners should be upset about and demand rescision and money refunds is for owners who have purchased in the recent past such as 2 years since it seems like the disclosure was not adequate.

But what is it that we want:
1. I think we want better payment terms.
2. I think we want more disclosure and transparency.
3. I think we should ask for DRI to eliminate the clause in the management agreement that specifies that we need 50% of all owners to change managers.

Past that, I am not sure what you all want. Do you want a vote of all owners to decide if they want the repairs or not? What else?

I cannot speak for others Iv_Maui, however for your 1. payments over the project duration would help as would payment into a trust (too many unknowns to risk my money on others' defaults), 2. yes to this one with better PR from DRI and HOA and 3. I was not aware of; it is undemocratic and unfair to the individual owners and favours the block votes, however it is perhaps irrelevant to the present situation (given that DRI does not seem to have caused the water problem as they inherited it, and they, albeit in a heavy handed manner, have accepted their responsibility as managers to fix the problem (from what I have seen in these posts.) I would however like to see proportional representation on the HOA. 63% of owners do not seem to have a voice in anything.

 

[billstellar]

We have heard nothing but bad news from that group as far as their handling of money contributions and keeping the site up to date. John is right, you need to get the site up to date and do it every day to make a difference.

If the owners group is proving to be ineffective is there an alternative group that is ready and able and willing to unite the owners? I have the feeling that we are venting a great deal, however we are unfocussed and lack direction so the owners group did seem to be the best (only) option for coordinated action. The membership of 500 is clearly insufficient if the 63% is made up of around 7000 people.
ps I coopted your disclaimer Iv_Maui - hope you don't mind.
__________________
Whatever I post is my personal opinion and is in no way intended to be, or should be construed to be, an indictment of any company or individual.

 

[billstellar]

For those who have not been able to find the online DRI site which links to your HOA newsletters, financial information and many other owners documents, here's the link http://www.diamondresortshoa.com/splash.aspx . You will need to register and create a login on ID to access your resorts information.

I looked here Doug and there is an email address for questions. Perhaps if owners all ask for a more reasonable period to pay we may get a positive response. http://www.diamondresortshoa.com/specialassessment.aspx. Also we can maybe ask why a Trust is not available for the funds.

__________________
Whatever I post is my personal opinion and is in no way intended to be, or should be construed to be, an indictment of any company or individual.