Todays board meeting, big news.

[tango]

So at today's IOA board meeting. This was revealed.
A new special assessment is expected at the beginning of 2025. This special assessment is to the tune of $68,000,000, which is the anticipated cost of the entire remediation. It looks like the issue of whether or not we get to vote on whether or not to remediate has been taken off the table. We will have to vote with our feet. As for the recent smaller assessment to fix buildings G & H, they were only able to collect 80%, and there will be another special assessment to collect the remaining 20%. It sounds like the lawsuit by the whole owners will not proceed again until November of 2025, which means that the lawsuit drags on into 2026 probably. Those were the exciting things.

 

[JD Martinez]

So at today's IOA board meeting. This was revealed.
A new special assessment is expected at the beginning of 2025. This special assessment is to the tune of $68,000,000, which is the anticipated cost of the entire remediation. It looks like the issue of whether or not we get to vote on whether or not to remediate has been taken off the table. We will have to vote with our feet. As for the recent smaller assessment to fix buildings G & H, they were only able to collect 80%, and there will be another special assessment to collect the remaining 20%. I sounds like the lawsuit by the whole owners will not proceed again until November of 2025, which means that the lawsuit drags on into 2026 probably. Those were the exciting things.

Did you happen to capture the Case #. I've gone the the Kauai County webpage and was not able to find anything. Thanks in advance.

 

[bnoble]

I wonder if this is a gambit to force the whole owners’ hand.

Edited to add: This is going to be about $450K per condo, more or less. There is basically no way most of the whole owners will be able to float that, and getting a loan for it will be next to impossible. Given enough time, this will put the whole owners in default and allow foreclosure, and at that point the partition action can move forward. In the meantime, the collected special assessment will be held in escrow, and work won't be started because they won't have collected enough, returning it back to the owners who remain standing.

Given how the Board has essentially tipped their hand that they want the partition vote to succeed, and the whole owners have managed to use the courts to delay it---now until the end of 2025---this is at least a plausible explanation. It's also maybe a little optimistic, but hey why not? If it is the underlying motivation, it's pretty smart, but so was the original attempt to partition.

The Case # is 5CCV-22-0000029. There is still a motion for summary judgement on the schedule for next month. It looks like the IOA is no longer a party--they have a final judgement that they are not involved.

 

[jacknsara]

Aloha,
I’ll add a bit to Tango’s report.
Occupancy and financial performance are better than budgeted.
The MF delinquency is ~14.9%
The KBRA (the association of the KBV AOAO, the hotel and the owner of the land formally known as the Walters trust) budget will increase ~ 17% (initial bid was higher than expected at $1M; more bids being pursued) to refurbish the waste treatment facility electrical.
The KBV timeshare MFs will increase only about 3% average since they will include no contribution to reserves (currently well funded at >$10M): 3.3% for 2b2b; 2.7% for 1b2b; 2.5% for 1b1b1
Owner reservations are being accepted for 2026.
While the petition to remove the IOA from the whole owners lawsuit was granted, they still have about a month to file an appeal.

I responded to the ~$6X,000,000 SA during the Q&A open to owners after the conclusion of the official board meeting that it was my opinion that if the IOA BOD requires being current on that larger SA in order to use our weeks, that most owners might opt to not pay MFs. Based on body language / facial expressions that was not news to them.
Jack

 

[bnoble]

Jack/Tango: Was there any discussion as to whether the partition vote might be resurrected?

 

[jacknsara]

It was mentioned that the scheduled vote was withdrawn by the AOAO at the advice of AOAO counsel. There is no new schedule.

 

[CO skier]

Jack/Tango: Was there any discussion as to whether the partition vote might be resurrected?

It was mentioned that the scheduled vote was withdrawn by the AOAO at the advice of AOAO counsel. There is no new schedule.

So to summarize to this point in time, the partition vote of May 12, 2023 (that, likely passing, would have completely avoided the upcoming $6X,xxx,xxx special assessment) was postponed indefinitely due to a lawsuit by the KBV whole owners against the AOAO.

As lawsuits go, more and more defendants get sucked into the lawsuit. Maybe the IOA is no longer a defendant.

While the petition to remove the IOA from the whole owners lawsuit was granted, they still have about a month to file an appeal.

Conclusion: KBV will die at some point. That point could have been the vote of May 12, 2023. For IOA owners, the whole owners' lawsuit just drags out the inevitable, possibly for more and more years.

Lacking the vote to partition and terminate the timeshare and facing possibly years of viability in the meantime while the whole owners' lawsuit drags on, what fiduciary choice does a manager have but to proceed with the remediation and the special assessment to accomplish it?

In other words, the whole owners' lawsuit is entirely to blame for this whole mess.

 

[slabeaume]

Any idea what will happen to our Wyndham ownerships that have KBV as our home resort?

 

[bnoble]

If a special assessment is levied, you will get a bill for it.

I have no idea what happens to your account if you decide not to pay it. I suspect the entire account will be suspended.

Note that it is possible to “unconvert” the week at no cost, but it might take a while—and possibly too long to avoid the assessment as a converted week owner.

 

[slabeaume]

If a special assessment is levied, you will get a bill for it.

I have no idea what happens to your account if you decide not to pay it. I suspect the entire account will be suspended.

Note that it is possible to “unconvert” the week at no cost, but it might take a while—and possibly too long to avoid the assessment as a converted week owner.

If we unconvert, I assume we become pahio KBV owners again. Doesn't that mean we'll be hit with the assessment anyway? What would be the advantage of unconverting?

 

[bizaro86]

If we unconvert, I assume we become pahio KBV owners again. Doesn't that mean we'll be hit with the assessment anyway? What would be the advantage of unconverting?

If you had other wyndham ownerships elsewhere you might be able to then default on this one without it affecting your ability to use the other deeds.