The question, though, is what constitutes "overspending." The Manager named in the Management Agreement procures the utilities/insurance/appointments/etc and has the right to be reimbursed by the resort for those costs. The Manager determines the "brand standard" (which is defined in several of the governing docs) and the items necessary to uphold it, and is entitled to reimbursement by the resort. The Manager is entitled to a percentage-based Management Fee that's non-negotiable and must be reimbursed by the resort. And on and on and on and on ...
I appreciate your point of view, thanks for participating.
Can you share the correlation between the line items in the HOA budget and the line items that make up CPI? I've taken a look and just can't get it to match to any substantive level.
Again, this thread is too singularly important to drag in other timeshare companies and get this thread off-track. That situation has been mentioned elsewhere on TUG and we can leave it for the owners there. I don't have an opinion one way or the other because I know next to nothing, and don't care to learn more, about that company which is now affiliated with Marriott.
While a CPI index may be useful guidance for community HOAs in typical urban communities, those are communities with residential properties. The HOA may operate a golf course and Club, but it's not employing staff to clean and maintain each of those 400 homes. The operations of those communities are different from resort properties, with hired operational management, rentals, significant number of employees, and revenues generated from hospitality services. The resort destinations also tend to have higher than an average suburban community utility costs and maintenance costs because it's a resort destination. Plus, residential HOAs do not budget for reserves to replace all of the furniture and fixtures of each home, and unless the homes are all connected, each homeowner is on their own to carry casualty insurance. Your HOA will only pay for the casualty coverage for the common area buildings, not the entire community. And, don't forget that in the type of community where you served on your HOA, your HOA is not responsible for maintaining the interiors and replacing the furniture and fixtures in all 400 homes. So, while using a CPI factor may offer guidance for budgeting a residential community's HOA with a gate guard and a country club and golf, etc., it isn't an apple to apple comparison between owner-occupied units and fractional ownership interests with a mixed use commercial area like exists at GRCLT.
The budget of a Marriott-owned and managed resort that is also part of Abound is directly relevant to any discussion of Marriott's budgeting practices.
But a resort which was developed by a completely different company than Marriott and has lately come under the Marriott umbrella and/or affiliated with Abound will have a completely different set of original governing docs from the ones with which I'm most familiar. The bulk of my comments in situations/threads like this involve reading the docs and trying to flesh out their meaning in the context of the raised issues, so you'll forgive me if I don't want to become familiar with the language of a company that means nothing to me and so choose not to post related to issues about which I'm completely ignorant.
Key Quotes from Post 56 (BOD Response letter)
The CPI is an overall inflation indicator that incorporates the designated key components. I would expect that the inflation rates for the items you listed would be similar to the overall inflation rate, with a few exceptions (insurance, taxes) for some specific locations. Employee costs, landscaping, and housekeeping would likely be similar to the other key items on the list. As long is the CPI is determined at a relevant local level, it provides a good benchmark for the costs increases. I can understand a concern for using the San Francisco CPI for Tahoe. (Does anyone know the area of coverage for the SF CPI? Does it include the East Bay or Sacramento areas?)
The items I set out are the summary lines for SF CPI, care of bls.gov. I really can't see any decent correlation between the basket of items that make up CPI and the line items in an HOA budget.
Unless there is a specific contractual term to the contrary in the management agreement, the board absolutely has 100% say over what the manager does with respect to the hoa. Though, I agree that the provisions and the management agreement allow MORI to pay certain necessary expenses such as utilities and insurance, and be reimbursed by the HOA for those costs.
It seems as though you are relying heavily upon the wording from the BOD president's letter. Don't forget the wording from the management letter that started this post:
Each letter was obviously written to defend the position of the author: MVC and BOD. I don't totally believe either letter and am focusing on the details provided. MVC initially overspent in 2022 without notifying the BOD of this shortfall. Although I'm sure there were significant increases for insurance rates in the area, they could not justify an overall 20% increase in resort expenses. The 'budget shortfall' for the insurance cost represents only a small proportion of the overall operating budget. Did the management company provide any suggestions regarding what could be cut to be able to accommodate the increase for insurance costs? The BOD and MVC both have a responsibility to come to a resolution. There had to be a lot of additional expenses in the MVC proposed budget to cause a 20% increase.
You are not taking into account the BOD meetings that were held during 2021, 2022 and 2023. Look at those July 2023 minutes. The manager clearly notified the BOD with financials. The quarterly reports at each and every meeting would include the income and expense statements, the bank account balances, etc. You cannot simply conclude that the info wasn't communicated when the minutes reflect the financials were provided. The BOD is required to function using the business judgment rule. As we have established, the BOD owes a fiduciary duty to the owners when making decisions that impact the association. Simply because the BOD president claims what he claims does not mean that any wrongful act occurred by management paying the bills. Who knows what the management may have suggested. It seems as though the management made suggestions that the BOD ignored. You can't get blood out of a turnip. Who knows if there were any categories that could be cut?
Our comments that the BOD will not survive is not because Marriott will remove them, they can't. If I were an owner at Grand Residence at Lake Tahoe, I would be voting them out.
There is NOTHING that a timeshare developer, manager, BOD or owner association does, can or can’t do, will or won’t do that’s “unrelated to the governing documents.” If you claim that Marriott is or isn’t doing something correctly, I go to the governing docs to find the language that either proves or disproves your allegation. It’s as simple as that. If you want to goad me into commenting on matters at resorts that aren’t supported by the typical Marriott documents with which I’m familiar, you’re not going to be successful.
This is false. We have already established from an owner that the BOD was notified.
We have also established, by the BOD letter, that they work with MVC to reach a compromise budget that is less than what MVC originally proposes.
Marriott has various tools at its disposal, including a significant voting block. I understand that, if you were an owner, you would recommend vote them out even without all the necessary facts. However, other owners may prefer a more thorough understanding before deciding.
