To those interested parties, Joel Bourassa has answered my e-mail and responded to the questions that were posted by others. Hopefully the formatting comes through as his answers are in
RED. I will say, I am as confused as ever....Perhaps Eric can assist with making sense of this HOA structure. It appears he is saying since 80% of the units were never sold (how could they be when the kept building from day one) so they didn't ever really need to put a HOA into play. The RSAs speak to control by declarant but I am not sure if that is what they are trying to use as their support for this....it indicates 3/4 of the units which is 75%.....Happy Reading!
My initial e-mail sent to him (twice to get a response) -
I have compared all the legal documents I was given when we purchased this unit and the "structure" of the company (ies) has clearly changed considerably. How do we as owners stay on top of this and isn't there a legal requirement to advise us of these changes? My documents start out with the Village at Loon Mountain then it becomes Mountain Lodge Development. Nothing was ever sent indicating that these documents should now reflect or indicate InnSeasons Resort is actually Mountain Lodge as appears to be the case. Yet, I find Mountain Lodge still listed as a company in business with revenues etc. The letter was the first reference to Southern Peaks at Pollard Brook, LLC. and I am still not sure the difference in it versus Southern Peaks Resort Development. And of course, we have Inn Seasons Management, Inc. It's a very concerning chain to be honest considering the following.
I agree with you that the documents certainly are in need of an update. The confusion in the documents partly stems from the fact that the resort was originally “whole ownership” prior to it becoming a timeshare resort under subsequent ownership(s). As for notification to the owners, quite frankly I am unsure if there are any legal requirements. Unless significant changes are made that directly affect ownership interests, it is my understanding that there was no need for a re-write. There have been six amendments along the way centered on the addition of new development (buildings).
By way of a quick history, the Village of Loon was the original owner and developer from 1989-91. They ran into financial trouble and the resort was pretty dormant from 1991-93 until Mountain Lodge Development purchased it at a bank auction in September 1993. Sales resumed in 1994. Mountain Lodge (Dennis Ducharme and Keith Carlson) operated, developed and sold intervals up until 2004. At that time Southern Peaks resorts (Dennis Ducharme and Billy Curran) purchased the developing rights from Mountain Lodge. InnSeason Resorts is the brand umbrella of the 7 NE resorts which are managed by InnSeason Management (a separate entity).
The constant names in all of these various "companies" are Dennis Ducharme and Billy Curran. How can we as owners be assured that development and management are being facilitated in the best interest of us as PB owners as opposed to them and their various companies? Further, how can we be assured the financial lines are as clear and separate as you would like for us to believe.
During the development and first 80% of the subsequent sales, a Board really doesn’t come into play. But, it is still in the developer’s interest to run an efficient operation as Sales and the Developer are dependent on one another. Only once about 80% of the inventory is sold does the representative HOA Board comes into play. Right now, as you know, there is an interim Board of Advisors which will be followed this fall by a full-fledged Board of Directors made up of owners elected by owners. Having said that, the developer can also be part of the Board as, in our case, he has some 1,100 intervals of interest of his own.
The letter references the developer, the developer you indicated is Southern Peaks and yet Dennis Ducharme is the owner and president of both, Southern Peaks and PB. And he is also listed on the cc as the "Treasurer". So is he not speaking
of himself and essentially
to himself in this statement “Southern Peaks has told the Board”...
Yes, in essence that is what he is doing but a developer can do this up until the 80% sell out rate is reached as I explained above. Once the Board of Directors comes into play, the resort truly falls under the HOA who are essentially controlling their own destiny as the interval sales are nearing maturation.
You stated "The last building built here was our Jackman Building in 2005 when the economic indicators were very strong and existing sales were booming." So the 1200 unsold are units are predominately from that expansion project? And for 4 years, nothing has been said of the undue financial burden this might create?
No, there are unsold intervals in all phases of the property. There are some great peak weeks for sale and also many less-desirable weeks that are more difficult to sell as peak inventory dwindles.
Based on our maintenance fees, I am concerned that very little has been set aside for these types major renovations. I have all the balance sheets from 1994 to present. Last year $70.00 was put into the maintenance fund. At that rate, you are not even raising a half a million if all 6000 owners paid it. I know others pay more and probably some pay less but regardless, you aren't getting to the 1.2. The projects listed are projects that "suddenly" need done in 12-24 months, there would be/should have been some planning. So how did this exactly happen in these last few months? The pool needing refaced is a perfect example and something that very well should have been accounted for. I own one thus I know the maintenance/costs involved. This is simply then, fiscal mismanagement. I for one, would have accepted that reasoning far better than the poorly written letter blaming all sorts of confounding issues as it does. No one is taking responsibility here, yet we have to come up with the bail out. Who's to say it doesn't happen again and again.
Years of maintenance deferrals from Mountain Lodge Development have left the present management company catching up since 2004-05. I believe there was around $800,000 in deferred maintenance from the previous regime. One thing we are going to do, going forward, is to pay for a complete reserve study to determine just how much we should put away annually for future capital expenditures (a capital reserve fund). This will also spell out to the owners what is coming in future years by way of improvements and the cost commitment for the improvements. No surprises this way aside from unforeseen acts of nature or catastrophic equipment failure (blown engine in the plow truck etc).
Here is a look at the reserves allocated since InnSeason Management took over:
Year
Reserves
Change
2005
$ 62,437
0%
2006
$ 150,930
41%
2007
$ 206,744
73%
2008
$ 536,744
39%
Change from 2005 to 2008
88%
The Board is comprised with three members of "InnSeasons" and two owner representatives. And this is really a concern. We as owners do not have fair representation and no line of communication as I stated earlier. I've yet to receive the minutes I requested. By the way, our Bylaws state, we are to receive copies each year from the annual meeting sent with the maintenance fee billing.
There were no minutes as there weren’t any annual meetings as we were in the aforementioned development/sales stages.
And who is capecodder who posts comments on the website?
(Joyce Vechione, our blog manager at the Corporate Offices). They have only indicated one comment was made, I made a comment/question and posted it to the site, accepted the Wordpress e-mail, and yet never received a reply nor was the question posted.
Below are questions others have and I stated I would share them with you:
Comment: The directors are not showing any fiduciary responsibility to the timeshare owners. Period.
I think the key questions that need answers are:
1) What is the total dollar amount expected to be raised by the special assessment?
1.6 million, after bad debt, is anticipated, $1,000,000 to 1.2 million for capital and the rest for operational cash flow
2) How many interval owners are delinquent?
11% typically in a normal economy but 19% default at this point - What is the amount of delinquency for 2009, for 2008 and previous years? When will foreclosure action begin so that this money can be recovered?
Rental income, interest income, bad debt recovery are ultimately written off but still often collected going forward – we don’t stop. Delinquency is up and previous year’s collections are down a bit. Our two collection agencies average about a 60% collection rate which is pretty strong.3) Are all interval owners, both weeks and points, being assessed the special assessment? Are any interval owners excepted from the assessment and what is that number of owners?
Persons who purchased in 2008 or this year to date are excluded as they probably have not even had a chance to use their purchases yet. We wanted to be fair to that small group. I am unsure how many people that represents but the number is pretty small.
4) How much is the Developer delinquent in 2009 maintenance fees on how many intervals? How much for 2008 and previous years?
I believe the total number is in the vicinity of $400,000 representing around 1,100 intevals.
5) Is the Developer being assessed the same amounts on each interval owned for this special assessment? He is being assessed the same as all owners based on the unit size. How many intervals? When is the Developer paying the special assessment?
At some point, the developer will, in all likelihood, sign a Promissory Note making any future sales payable back to the HOA for money due.
6) What section in what document permits the Board of Advisors to implement special assessments? What document permits the Board of Advisors to assess some owners and not others.
Title II, By-Laws of the Pollard Brook Unit Owners' Association, Part VI Accounting, Section 5 Special Assessments, states:
a. Each owner is liable for those expenses directly related to his period of occupancy of a condominium unit assigned to him, which shall be billed to him as special assessments.
b. Expenses billable as special assessments include, but are not limited to, the costs of repairing damage done to the condominium unit, equipment, and furnishings during the use period, other than ordinary wear and tear: telephone charges over and above the basic charges; and such other services rendered during the use period at the request of the owner or guest not included as an item in the budget.
Title III, Timeshare Management, Part III Management, Section 5 Special Assessments, states:
Each owner is liable for those expenses directly related to his period of occupancy of a condominium unit assigned to him. These expenses include, but are not limited to, the expense of repairing damage done to the condominium unit, equipment, and furnishings during the use period assigned to him, other than ordinary wear and tear: telephone charges over and above the basic charges; and such other services rendered during the use period at the request of the owner or a guest not included as an item in the budget.
7) With the Developer not paying annual maintenance fees, and possibly not paying the special assessment, what actions are being taken by the Board of Advisors to protect owners from default by the Developer on either or both the unpaid maintenance fee amount or the unpaid special assessment.
Good question and we trust that won’t happen. Perhaps some type of secured collateral not related to this property would be in order but it is premature to speculate at this point. The Board of Directors would have to address this if it seemed like it was a possibility going forward. Incidentally, if the Developer did go bankrupt, the bank would take his unsold Pollard intervals and find a company to try to sell them. In the meantime, that bank would be on hook for the maintenance fees etc.
8) Where and when is the next Board of Advisors meeting?
November 7 from 11-1 here in Lincoln, specific location to be determined.
