Poipu Point - Walk away from ownership?

[T_R_Oglodyte]

Or better yet, Demolish instead of renovating at $65Mil, and sell the Land...

An obvious question, which has not been addressed by the Board in any of the information that I have seen to date.

 

[dougp26364]

An obvious question, which has not been addressed by the Board in any of the information that I have seen to date.

Could it be that DRI controls enough votes to make this a moot point? That is one of the dangers of trust based ownerships that has been warned about in the past. Owners give up control and become followers vs participating owners.

 

[timeos2]

DRI has rebuilt from scratch but it was a case where there was no choice. The buildling at Powhatan that suffered massive fire damage a couple years ago was torn down and rebuilt. Interestingly they used the opportunity to create yet another style / level of building (they had two general styles - A-Frames & more traditional apartment style square boxes already) that set the new design for other, new construction they had planned for a new phase. How owners got to reserve that newer style vs the two older ones I have no idea.

So they can be persuaded that new construction is warranted. But given the regulations and extreme costs of new construction (as well as reconstruction) in an island environment such as Hawaii it is no surprise that even a major rebuild may be more economical, not saying cheap in any case, than a full tear down and rebuild. Plus they don't have to meet all new codes, etc that invariably add to overall costs by merely replacing damaged with new.

While it hasn't been stated in anything I've read I have to assume they at least looked at a tear down/rebuild and ruled it out.

 

[JudyS]

Is it possible that it might not be possible to get the permits necessary for new construction? If so, maybe "renovating" is the only option.

This has occurred to me, too, but I don't think DRI has said anything about trying to get permits for a complete rebuild. If they tried to get permits for a complete rebuild and failed, I'd expect them to say so.

By the way, another option would be for DRI to tear down the resort and rebuild a smaller number of units, thereby reducing the number of weeks available and allowing some owners to walk away if they chose.



Several people raised the issue of tearing down and then SELLING the land, rather than rebuilding.

Steve replied:

An obvious question, which has not been addressed by the Board in any of the information that I have seen to date.

Doug said, regarding selling the land:

That is going to require, at the very least, a majority vote. Considering that DRI controls nearly 40 to 45% of those votes as presented here or on another Piopu thread, it's going to require that nearly every deeded week owner vote to close the resort. This is assuming that a simple majority can vote for the resort to be closed. It may take more than a simple majority and, depending on how Hawaiian law and the covenents of the resort owners read, it may be a moot point before you begin.

Yes, but the fact that DRI controls so many votes means they probably COULD close the resort and sell the land, if they wanted to. But, instead they are opting to bill the owners almost $6,000 per week.

I'm not a lawyer and I don't know what it takes to close a resort in Hawaii. But, if I were a Poipu Point owner and wanted to sue, the approach I would take is this: I would claim that board was breaching its fiduciary responsibility to owners by spending $65 million on remodeling instead of closing the resort and distributing the proceeds from sale of the land.

Several people here have noted that timeshare owners have the responsibility to maintain their resorts, and they can't just walk away if a resort needs major repairs. While this is true, it does not give management companies the right to just pick arbitrarily high numbers and bill owners that amount, yet exactly that may be happening here.

I don't own DRI, but I think all owners should be concerned about the problem at Poipu Point. We don't want management companies to feel they can just bill any amount they want for repairs. Even if you have an "owner controlled" board, you should still be concerned about this. A few years ago, there was an attempt to throw out the board of MROP after they made some poor decisions and hurt owners financially. MROP has an "owner controlled board," but the current board controls the proxies and they used the proxies to vote themselves back in.

 

[timeos2]

I don't own DRI, but I think all owners should be concerned about the problem at Poipu Point. We don't want management companies to feel they can just bill any amount they want for repairs. Even if you have an "owner controlled" board, you should still be concerned about this. A few years ago, there was an attempt to throw out the board of MROP after they made some poor decisions and hurt owners financially. MROP has an "owner controlled board," but the current board controls the proxies and they used the proxies to vote themselves back in.

This paragraph says a lot. This is exactly the point I've been trying to impress on those Marriott/Starwood/Hyatt/Hilton, etc owners that seem to think that name is all important - more important than the actual resort. They are, IMO, the most exposed to this issue of all. Not only are they paying the big annual fees - including a hefty overhead simply to ensure that the name makes a good percentage return on its money - but they are also on the hook to maintain the resort at whatever price the management names. If you read the docs thats what it says. You pay what is billed or you are in default! With few exceptions there are no limits, so what they declare as due and payable is the bottom line.

That is why we sold off every ownership we had that didn't have an owner controlled Board. That is the ONLY refuge you have that fees will stay reasonable - it is other individual owners that are monitoring and setting those fees. We also look for an independent, non-developer based management as they have to be good to survive. No automatic percentage overhead for them guaranteeing a profit. They do the job well or someone else is brought in.

Owning where a developer calls the shots, holds the management and runs the Board is giving them a blank check. The documents were written with very strong ways to be sure the (assumed) independent Association had a way to survive. In the hands of a developer it is a way to print money as the fees can in fact go virtually unchecked with little recourse by the minority owners. Look at Wyndham, Marriott, etc and how they thumb their noses at what the owners want and you'll see why this is a very bad spot to be in as an owner. And a big reason why resale timeshares will continue to drop in value - the real cost is ALWAYS the ongoing fees. Purchase price retail or resale means zero.

 

[lv_maui]

It is interesting that the Summer 2011 Newsletter says that the Soffits have been repaired. It adds that the soffits have been stabalized and the impearance is greatly improved.

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BxZ9om19nlNmZDM2OGUxNjYtY2Q4Mi00MmQ2LTlhNjYtNjcyZDQ4MzgwZjgw&hl=en_US

At a similar time as the newsletter, on June 29, 2011, Diamond is filing registration statements with the state of Hawaii stating in section 9 that a Special Assessment of an unknown amount will be issued on 10/1st.

http://hawaii.gov/dcca_condo/reports/2480R.pdf

I am not making any conclusions or accusations as I am only providing copies of documents on the internet, but I think it would have been better if they did not mention the soffits in the newsletter. It made me feel as if the water instrusion issues were concluded.

 

[bogey21]

That is why we sold off every ownership we had that didn't have an owner controlled Board.

I made the same decision about 10 years ago and have never regretted it.

George

 

[T_R_Oglodyte]

I'm pretty certain that a lot of owners at Poipu, whether at the resort or through the trust, are reacting and hypothesizing without having first acquainted (or reacquainted) themselves with what is in the documents that they signed.

Those documents define what your rights and obligations are. That is the point from which everything starts. Even if you think there might be a case for malfeasance, your argument does not start from ground zero; it starts from what you signed off on and agreed to at the time you purchased. Or, if you purchased resale, what the original buyer agreed to and signed off on.

For example you can wail about the conflicts of interest involved in the management of the resort. But since the beginning of sales, every purchaser has received, and has acknowledged receiving, a timeshare disclosure agreement. The document is about 40 to 50 pages long, plus a number of attachments. The first page of the document has bald face, capital letters, in about 60-point font, READ THIS DISCLOSURE STATEMENT BEFORE SIGNING ANYTHING.

Within that disclosure is about one entire page that is devoted to discussions of the conflicts of interest between the developer and the resort management. Each of us who bought either directly accepted those conditions, with our signature, or indirectly by agreeing to whatever it was that the original purchases

Now that's not to say that there could not be liability for conflicts of interests. That's really a legal question. But it certainly weakens your case when you acknowledge having received notice of the inherent conflicts and went ahead and completed the purchase anyway.

*****

So, swallowing my own pill, I went back and reviewed the documents.

And here's a little piece from the Disclosure Agreement for the Hawaii Collection:

The Collection Instruments limit removal of property from the Collection to instances where the property has been taken by eminent domain or condemnation, damaged beyond repair, or destroyed.

…

Collection accommodations may also be removed from the Collection if the component site owners association votes to terminate the component site project. For example, this might happen if a condominium owners association votes to terminate a condominium containing Collection accommodations.

So, if I were the Hawaii plan manager, I would look at the situation and consider that while the buildings have been damaged, as long as there is a plan for repair and the HOA Board is not declared the resort beyond repair my hands are largely tied. Further it would be very tricky for me to try to lobby in favor of closing the resort as long as a plan to make repairs was in place.

Since the Trust controls ~35% of the votes, for anything to happen that runs counter to what the HOA Board wants, it will be necessary to get the Trust to take a position counter to what I have outlined.

Also note that the only direct power the Trust has is its votes for the Board of Directors. So the earliest that the Trust could do anything directly would be the next directors election.

 

[Carolinian]

Could it be that DRI controls enough votes to make this a moot point? That is one of the dangers of trust based ownerships that has been warned about in the past. Owners give up control and become followers vs participating owners.

DRI has three employees sitting in three of the five board seats, a majority. This is an obcene conflict of interest.

DRI controls about 45% of the voting weeks, so the owners, if they can organize, certainly ought to be able to do something about it. Getting proxies in from a diverse 55% to beat a compact 45% is a challenge but this absurdly high special assessment may well wake up the sleeping giant.

The problem then is getting the message out and waging a proxy fight. To do that, you need a membership list. DRI is violating Hawaii law by refusing to provide members with the membership lists they are clearly entitled to under state law. DRI is doing that so that it can continue to use its minority stake in ownership to control a majority of the board. When DRI is knowingly operating illegally in this regard, how much more are they doing illegally? Until an independent board starts digging, no one will know.

 

[Carolinian]

.

I don't own DRI, but I think all owners should be concerned about the problem at Poipu Point. We don't want management companies to feel they can just bill any amount they want for repairs. Even if you have an "owner controlled" board, you should still be concerned about this. A few years ago, there was an attempt to throw out the board of MROP after they made some poor decisions and hurt owners financially. MROP has an "owner controlled board," but the current board controls the proxies and they used the proxies to vote themselves back in.

This is certainly a problem where HOA's use multi-year proxies instead of meeting by meeting proxies. Things change and multi-year proxies are far from a good arrangement for member-democracy.

Even so, overturning a board that has lost member support requires somebody taking the bull by the horns and heading up a proxy battle. I have been involved in those myself at two resorts. You need the membership list, and a group to raise money to do a mailing. If you have a solid message and get it out, you can win proxy fights.

Even if you have multi-year proxy, a later proxy revokes an earlier one, so in the proxy battle you can neutralize that advantage.

 

[Carolinian]

You seem to forget that there is a higher souce of authority than the condo docs and that is state law. DRI seems to forget that, too, as they willfully and wantonly thumb their nose at Hawaii law by knowingly violating it, like in trying to prevent any challenges to DRI control by refusing to obey state law in giving membership lists to members who request them.

State law determines when a resort is damaged to a point that it is destroyed, and that issue has gone before courts twice on the Outer Banks alone when you members disagreed with the HOA board's determination. Both times the court reversed the board's position. When repairs cost twice what similar condos are selling for in the market, as is the case at Point at Poipu, I think there is a good factual basis for the argument that the resort has been destroyed and a vote on whether to wind it up is necessary

Apparently the disclosures do not address the conflict of interest in a management company controlling the HOA board. And of course, the owners themselves can best address that conflict of interest by kicking out the board or management or both.

I'm pretty certain that a lot of owners at Poipu, whether at the resort or through the trust, are reacting and hypothesizing without having first acquainted (or reacquainted) themselves with what is in the documents that they signed.

Those documents define what your rights and obligations are. That is the point from which everything starts. Even if you think there might be a case for malfeasance, your argument does not start from ground zero; it starts from what you signed off on and agreed to at the time you purchased. Or, if you purchased resale, what the original buyer agreed to and signed off on.

For example you can wail about the conflicts of interest involved in the management of the resort. But since the beginning of sales, every purchaser has received, and has acknowledged receiving, a timeshare disclosure agreement. The document is about 40 to 50 pages long, plus a number of attachments. The first page of the document has bald face, capital letters, in about 60-point font, READ THIS DISCLOSURE STATEMENT BEFORE SIGNING ANYTHING.

Within that disclosure is about one entire page that is devoted to discussions of the conflicts of interest between the developer and the resort management. Each of us who bought either directly accepted those conditions, with our signature, or indirectly by agreeing to whatever it was that the original purchases

Now that's not to say that there could not be liability for conflicts of interests. That's really a legal question. But it certainly weakens your case when you acknowledge having received notice of the inherent conflicts and went ahead and completed the purchase anyway.

*****

So, swallowing my own pill, I went back and reviewed the documents.

And here's a little piece from the Disclosure Agreement for the Hawaii Collection:



So, if I were the Hawaii plan manager, I would look at the situation and consider that while the buildings have been damaged, as long as there is a plan for repair and the HOA Board is not declared the resort beyond repair my hands are largely tied. Further it would be very tricky for me to try to lobby in favor of closing the resort as long as a plan to make repairs was in place.

Since the Trust controls ~35% of the votes, for anything to happen that runs counter to what the HOA Board wants, it will be necessary to get the Trust to take a position counter to what I have outlined.

Also note that the only direct power the Trust has is its votes for the Board of Directors. So the earliest that the Trust could do anything directly would be the next directors election.

 

[Carolinian]

It is indeed a real question when a member on another timeshare board consulted Hawaii MLS listings of completed sales and discovered that similar whole ownership condos on the same island in the past year have sold for an average of slightly less than half the renovation figure. That is a huge red flag that something may be amiss.

One thing that struck me as well was when someone posted the minutes of a board meeting where the renovation was discussed, and most of it was in executive session, or in layman's language, secret. To me, this is a huge red flag that something might not be kosher. Did they get real competing bids? Were the bids accepted the lowest ones? Were there any insider dealings? Owners need transparency, not cover ups on such things. I served on an HOA board during a major hurricane rebuild, a board that included two lawyers, and we never went into executive session on any issue dealing with the rebuild. The management puppet HOA board's handling of this just does not pass the smell test.

While it is certainly true that many resorts are aging and need substantial work, I still think there is a real question here about the cost. Why is it $65 million dollars to renovate a property with about 212 units? $300,000 per condo seems very, very steep, especially since it isn't a complete tear-down and rebuild.

Can anyone give me some info about the size of these units? I'm curious as to how much the cost works out to per square foot. Here in the Midwest, quality construction costs maybe $80-$100 per square foot on an improved lot. I would expect costs in Hawaii to be somewhat higher, plus DRI probably adds on a 15% management fee, plus there would demolition costs if they did a tear-down. Still, unless these are very large units, I'd think a complete tear-down and rebuild would be less than $300,000 per condo.

 

[djblancett]

brand new to this site and the realm of time shares. My wife and I bought the Hawaii Collection, thinking that we were being sold Ka'anapali Beach Club. Didn't realize that were were now owners of an interest in a group of properties, and that one of those properties had some SERIOUS structural problems. (that would be P@P) All of a sudden, we are faced with the cost of maintaining a property we didn't even buy...at least we weren't aware that we bought it. Sure, we were lame, and missed the implications of a title such as "Hawaii Collection". Also, there is that pesky document that sez "DON'T SIGN ANYTHING..." (you know the rest) I just discovered it in my paperwork. I guess the only possible recourse would be to go after DRI for failure to disclose the problems @ P@P. Hell, there wasn't any mention of the three other properties @ the sales pitch. Yeah, I read that bit about the verbal stuff (or lackof) not carrying any validity.
Bottom line is, we got screwed, and DRI knew they were screwing us when it happened. So, what do we do about it?

 

[ampaholic]

brand new to this site and the realm of time shares. My wife and I bought the Hawaii Collection, thinking that we were being sold Ka'anapali Beach Club. Didn't realize that were were now owners of an interest in a group of properties, and that one of those properties had some SERIOUS structural problems. (that would be P@P) All of a sudden, we are faced with the cost of maintaining a property we didn't even buy...at least we weren't aware that we bought it. Sure, we were lame, and missed the implications of a title such as "Hawaii Collection". Also, there is that pesky document that sez "DON'T SIGN ANYTHING..." (you know the rest) I just discovered it in my paperwork. I guess the only possible recourse would be to go after DRI for failure to disclose the problems @ P@P. Hell, there wasn't any mention of the three other properties @ the sales pitch. Yeah, I read that bit about the verbal stuff (or lackof) not carrying any validity.
Bottom line is, we got screwed, and DRI knew they were screwing us when it happened. So, what do we do about it?

At this point - just be glad they didn't sell you to another developer after they were done screwing you.

Oh, wait - they aren't done ...

 

[artringwald]

brand new to this site and the realm of time shares. My wife and I bought the Hawaii Collection, thinking that we were being sold Ka'anapali Beach Club. Didn't realize that were were now owners of an interest in a group of properties, and that one of those properties had some SERIOUS structural problems. (that would be P@P) All of a sudden, we are faced with the cost of maintaining a property we didn't even buy...at least we weren't aware that we bought it. Sure, we were lame, and missed the implications of a title such as "Hawaii Collection". Also, there is that pesky document that sez "DON'T SIGN ANYTHING..." (you know the rest) I just discovered it in my paperwork. I guess the only possible recourse would be to go after DRI for failure to disclose the problems @ P@P. Hell, there wasn't any mention of the three other properties @ the sales pitch. Yeah, I read that bit about the verbal stuff (or lackof) not carrying any validity.
Bottom line is, we got screwed, and DRI knew they were screwing us when it happened. So, what do we do about it?

How bad did the P@P special assessment affect the maintenance fees for the Hawaii Collection Trust?

 

[T_R_Oglodyte]

You seem to forget that there is a higher souce of authority than the condo docs and that is state law.

Didn't forget it, since that's stating the obvious. I'm giving the readers of the board credit for some measure of intelligence.

State law determines when a resort is damaged to a point that it is destroyed, and that issue has gone before courts twice on the Outer Banks alone when you members disagreed with the HOA board's determination.

Good point. I don't know what the status of this is in Hawaii law.

Apparently the disclosures do not address the conflict of interest in a management company controlling the HOA board. And of course, the owners themselves can best address that conflict of interest by kicking out the board or management or both.

Actually the disclosures do address conflicts of interest inherent in having the Developer voting for members of the Board of Directors. Of course the "constraint" on that is voting out the Board of Directors.

However - and you're going to love this one, Steve - 35% of the votes are in the hands of the Hawaii Collection, and the program manager for the Hawaii happens to be .... guess who???? So to change that 35% of the vote would first involve the members of the trust electing a new Board of Directors for the Collection, who then would then dictate to the Manager how the Collection is to vote its holdings.

I have long expressed here - and on DRI's member forums - that the one of the key purposes of creating the trusts was to help ensure that Sunterra (originally) and now DRI would be able to maintain control of the resorts long after sales were completed.

I think you and I (and many others who often contend) are in total agreement that the decision to be in a points and trust system is a decision to get in bed with whomever is the operator. In timeshare as in life, one should always know the history of the one with whom one is bedding.

 

[Chinmusic9]

How bad did the P@P special assessment affect the maintenance fees for the Hawaii Collection Trust?

We "own" 26,000 points and got assessed the full 5800+ dollars just as the owners of a week at Poipu did. I asume that at some point level, everyone in the Hawaiian Collection will be hit for a full week's assessment. My inlaws got hit for 1000+ dollars and they have only enough points to go to one of the resorts every two years! They were shocked and dismayed, to say the least!

 

[Carolinian]

One fine point that I think you missed. Yes, it is a conflict of interest for the developer to vote on and control the HOA BOD, but that is not the big conflict of interest here. DRI is also the manager. The BOD is supposed to oversee the management, but how can they really do that when the BOD is controlled by the management? That is the massive conflict of interest here, the inmates are running the assylum. It is management control of the BOD that is by far the biggest problem. Management is demonstrating that conflict of interest by willfully violating Hawaii law that requires them to turn over the membership list to members who request it. The BOD is not going to order them to obey the law, because the scofflaw management controlls the BOD. It is hard to tell how much more hanky-panky is going on from this unconscionable relationship, but that clearly is.

Maybe they have pissed off enough members of the trust as a whole to be able to take control of the trust away from them, too, with these massive special assessments, but I bet they will violate Hawaii law by refusing a membership list in that, too, making them impossible to challenge until somebody nails them in court for violating the law.

Actually the disclosures do address conflicts of interest inherent in having the Developer voting for members of the Board of Directors. Of course the "constraint" on that is voting out the Board of Directors.

However - and you're going to love this one, Steve - 35% of the votes are in the hands of the Hawaii Collection, and the program manager for the Hawaii happens to be .... guess who???? So to change that 35% of the vote would first involve the members of the trust electing a new Board of Directors for the Collection, who then would then dictate to the Manager how the Collection is to vote its holdings.

 

[lv_maui]

Good luck with the argument that it is a conflict of interest. This has been discussed as to its unfairness at length, and the bottom line is that it will NOT change. The only states that I know that seem to help the consumer in Timeshare is Florida and California.

One would think that since these states are not Hawaii, there is nothing that can be done, but that is FALSE. In order to send any timeshare marketing material to California residents, Poipu Point must be registered in the state of California just like they are in Hawaii. The requirement comes when you make the mini vacation contingent upon you taking a tour. If it is strictly a hotel stay, there is no registration needed.

So there may be some reason to contact the California DRE if someone would like to voice a complaint. Just a thought and opinion here.

One fine point that I think you missed. Yes, it is a conflict of interest for the developer to vote on and control the HOA BOD, but that is not the big conflict of interest here. DRI is also the manager. The BOD is supposed to oversee the management, but how can they really do that when the BOD is controlled by the management? That is the massive conflict of interest here, the inmates are running the assylum. It is management control of the BOD that is by far the biggest problem. Management is demonstrating that conflict of interest by willfully violating Hawaii law that requires them to turn over the membership list to members who request it. The BOD is not going to order them to obey the law, because the scofflaw management controlls the BOD. It is hard to tell how much more hanky-panky is going on from this unconscionable relationship, but that clearly is.

Maybe they have pissed off enough members of the trust as a whole to be able to take control of the trust away from them, too, with these massive special assessments, but I bet they will violate Hawaii law by refusing a membership list in that, too, making them impossible to challenge until somebody nails them in court for violating the law.

 

[timeos2]

Management is demonstrating that conflict of interest by willfully violating Hawaii law that requires them to turn over the membership list to members who request it. The BOD is not going to order them to obey the law, because the scofflaw management controlls the BOD. It is hard to tell how much more hanky-panky is going on from this unconscionable relationship, but that clearly is.

It appears that the right to the list isn't clear cut either. Another post points out that the group that existed & tried to organize these owners in the past discovered the crazy patchwork of Hawaii laws has added a rule that in order to get an owners list you must have permission of the owners to have the information released. So how do you reach them to ask for permission if you don't have the list which you can't get because they haven't been asked/given permission!

As usual, the minute Government is involved nothing is simple or in any way clear cut. I'm sure DRI can (and would) use that issue to drag out any release far beyond the time when it would be of any value. We've seen that in these cases in the past. (see the LONG Marriott thread of last year for example)

 

[FanFiltration]

There will be a meeting regarding this special assessment in the San Francisco area on Thursday October, 20th. I plan to be there with a fellow owner. I'll take notes, and will be sure to post back here.

DRI The Point at Poipu (water intrusion)
Meeting time / Location:

7:00 P.M. October 20th
Embassy Suites
150 Anza Blvd.
San Francisco Airport Waterfront
RSVP 855-624-4390

FF

 

[Geckowest]

There will be a meeting regarding this special assessment in the San Francisco area on Thursday October, 20th. I plan to be there with a fellow owner. I'll take notes, and will be sure to post back here.

DRI The Point at Poipu (water intrusion)
Meeting time / Location:

7:00 P.M. October 20th
Embassy Suites
150 Anza Blvd.
San Francisco Airport Waterfront
RSVP 855-624-4390

FF

That would be Awesome. I'm helping my Parents out here, so any help, information that we can gain woould be awesome. Any word on how things went on the meeting today?

 

[jacknsara]

There will be a meeting regarding this special assessment in the San Francisco area on Thursday October, 20th. I plan to be there with a fellow owner. I'll take notes, and will be sure to post back here....
FF

Hello,
I've been following this story even though I am not an owner at P@P. Here's a suggestion to help P@P owners connect with each other. Copy and type this into a table (Word or Excel) of for example 11 rows and three columns, print a few sheets, and cut them into ~ business card size. Leave little piles of them all around and have extras to hand out at the end of the row (take one and pass the rest)
Good Luck

P@P Owners connect for free
on forums at Timeshare Users Group
http://www.tug2.net/

 

[JudyS]

Earlier on this thread, there was a discussion of whether it would be cheaper to tear down and rebuild rather than remodel, and whether DRI management would have already looked into this question.

One should not assume that management already looked into the issue of rebuilding versus remodeling. I own at an older resort, managed by Bluegreen, that could use a major remodeling. (Although there are no urgent issues that I know of.) Bluegreen did a minor special assessment in early 2010, which they used to remodel one unit to show how nice the new units would be. They then announced a special assessment to remodel all the units--until the owners realized that the budget worked out to around $120 per square foot. (This is in a part of the country where construction costs are low.) Owners complained to the HOA Board, and the Board admitted they had never considered a tear-down and rebuild instead. Luckily, Bluegreen is fairly responsive to owners and has gone back to the drawing board. No word yet on whether a full tear-down & rebuild would be cheaper than remodeling. Bluegreen is supposed to get back to owners on that issue in spring of 2012, a full two years after they first announced the remodeling.

 

[waimea'smom]

That would be Awesome. I'm helping my Parents out here, so any help, information that we can gain woould be awesome. Any word on how things went on the meeting today?

Hi, I am a newbie here but attended today's meetings. For those out of Ca who cannot attend, here are some notes.


I attended the meeting today and just a couple of quick notes I have.
1) The insurance claim was supposedly denied for three exclusions (construction defect/faulty workmanship exclusion, gradual deterioration/wear and tear exclusion, and dry rot exclusion).
2) The Board decided it was not worth it to sue, and claimed that no competent plaintiffs attorney would do so on a contingency basis.
3) They claimed it would cost 2x this amount to demolish and rebuild the units.
4) They claimed that it was a chemical reaction from the pressure treated wood, salt in the air/sea water, and non stainless steel materials that has led to the corrosion of the nails/connectors.
5) Our reserve fund paid out about 1.8 million dollars to analysts/attorneys in assessing the situation and we currently have only about 2 million in the reserve fund.
6) The schedule of work is as follows: 2012 - building 4; 2013 - building 6, then 2; 2014 - building 3, then 8; 2015 - building 9, then 5; 2016 - building 7, then 1; 2017 - building 10, then Lobby, then shop = only one building will be out of service at a time. If you own a fixed/fixed week (as we do) you will be put in another unit if yours is being serviced, they will "attempt" to put you in a similar view category
7) 9 general contractors were invited to bid, 7 elected to attend a mandatory pre-bid meeting in April of 2011, 4 elected to submit bids and Layton Construction (a Kauai based firm) was chosen for their bid -- which was also the lowest bid
8) Deeded owners make up 63% of inventory, the Collective makes up about 35% of inventory, and Developer is about 2% of inventory and have been assessed their portion of the 65Million accordingly ($41,456,853 to deeded owners, $22,972,175 to trust points owners, and $1,393,771 to developer).
9) The breakdown of the $65 million is as follows:
56.8 million (about 51.5 in actual costs, plus a reserve of 5 million for overages)
2.3 million in consultant fees
3.8 million (assuming a delinquency rate of 10%)
989,000 in credit card surcharges (we are all paying this despite whether or not we are charging our fees or paying by check)
1.7 million in administrative costs (this really irked me -- it is the cost of Diamond's running of the project - don't they already get paid a salary?)
Total: $65,822,529 = $5893.32/interval
10) I asked what if if they have more defaults then 10% will we be assessed a further surcharge - they said yes. What if there are less than 10% will their be a refund he said yes.
11) Total cost to Diamond = $7,313,113 ($1,393,771 in unsold inventory deeds and $5,919,342 in unsold inventory points)
12) If you bought after discovery was made, they claimed you were told of it in section 4.1 of your disclosure agreement!
13) They claimed we were notified in meeting minutes, on the website and other ways prior to this bill going out - a claim many of us dispute.
14) They were actually rather rude during the meeting. Frank Goeckel (not sure of the spelling) said he was talking to us with respect - he wasn't he was rude and condescending. When someone said no he wasn't, he replied "Then I don't have to talk to you any longer."
15) When someone asked if they could surrender their deed to Diamond, and Frank said no, they asked if they could sell it to someone else, he said, "You can try." I can't really put into words here the tone he used, but it was sarcastic.
16) When people tried to explain it was difficult for some to pay this bill, he stated, "Some people have already paid it."
17) They claimed Hawaii law precludes them from releasing a list of owners (I'm pretty sure that is not correct). I don't doubt their lawyers told them not to, but deeds are recorded in the county of Kauai and a matter of public record. When a man said that the state REQUIRES the release but the Dept. of Real Estate said they could not enforce it (it had to be done by civil suit) they replied "Do what you think you need to do."
18) They stated that of the 5 member board, only 2 are Diamond employees.
19) They said that the two year statute of limitations on warranty of construction would run from time of occupancy - so building 4 and 2 would expire before the project is even done. But they said that they are trying to get warranties on the supplies for 20 years.
20) They are taking the payment plan under advisement and may possibly reconsider it -- but with the caveat that even if changes are made, you would have to be paid in full to occupy or make a reservation for that year.
All in all, I was actually glad to see owners turn out, but unhappy with the condescending and rude nature of Frank and Elizabeth Brennan -- who both made snide remarks. Admittedly they were in a hostile crowd with a lot of angry people but they were both pretty rude. Linda Riddle did the bulk of the presentation but maintained her composure and was polite, if a bit overwhelmed.

My regret was when they insisted it was illegal to provide the owner list, I should have challenged that because deeds are recorded with the county as public record. Even if they don't disclose the info of points owners, they should with deed owners, perhaps even with an opportunity for an opt out provision. Also, they are changing the exterior structure of the buildings. I took some photos of the new plan (with a yellow top floor, and brown bottom floor) and of some of the corroded materials on display. I put them on the new Facebook page.