Trouble - Marriott Grand Residence Tahoe [Management Agreement in Jeopardy?]

[timsi]

Just received this. Glad to see they are at least having conversations on the issue. If a fair representation of their conversations, it looks like they are now only about $400K to $500K apart. According to the Board, the Manager’s position is that the 2024 Budget approved by the Board is at least $739,000 less than what the Manager says is necessary to meet the needs of the GRC (guess that means the remaining $800K sought by the Manager was not necessary to preserve the brand and was for what??), and the Board says it is willing to increase the budget by an additional $300K (plus potentially look for additional revenue streams to close the gap).

01-29-24 Dear Fellow GRC Owners: The GRC Board Team met with the Marriott Senior Executive Management Team on January 24, 2024, to discuss details relating to the Board-approved 2024 Budget. This meeting had been requested by the Marriott Senior Management Team and agreed to by the GRC Board. The meeting was held at the GRC. By way of background, in September 2023, the Manager had proposed a 19.7% year-over-year increase in the amount of $12,035,524 for the 2024 budget. After review and deliberation, the Board approved a 5.26% year-over-year increase in the operating expenses. The total amount of the approved 2024 Budget is $10,539,378. The Manager’s position is that the 2024 Budget approved by the Board is at least $739,000 less than what the Manager says is necessary to meet the needs of the GRC. The Board disagrees and thinks the 2024 approved Budget ($10,539,378) is sufficient to meet the needs of the GRC. The primary purpose of the January 24 meeting was to discuss the Board’s and Manager’s respective positions and try to reach a resolution. Unfortunately, the meeting did not resolve the disagreement as to the adequacy of the 2024 Budget. The Board’s position is that the Manager can and should further reduce controllable costs, including labor, while the Manager’s position is that it cannot reduce those costs without adversely impacting the Marriott “brand standard.” At least two options were discussed, including a proposal by the Board to increase the 2024 Budget by as much as $300,000. The BOD offered the additional funds to maintain owner expectations and to maintain the brand standard. However, no consensus was reached, and at the conclusion of the meeting, the Board requested that the Manager prepare another proposal for consideration that addresses the Board’s concerns about labor costs considering the Board’s willingness to increase the 2024 Budget by three hundred thousand dollars. Considering these shortfalls, the BOD is also actively researching opportunities to create additional revenue streams that will help address the budget deficit. We are currently waiting for the Manager to make their proposal. We hope to be able to provide additional information and further updates in the coming weeks. Regards, The GRCLT Condominium Inc. Board of Directors

It seems that Marriott faced a significant setback in the initial round, especially if they admitted to being able to manage the resort with $757,000 less in 2024 than their initial request. Didn't they know it all along, and if so, why did they imply in the letter to the owners that they couldn't keep the lights on, afford insurance, and maintain the resort standards if the HOA didn't agree in full with the proposed budget? Their attempt to pressure the HOA has not gone as planned and has only drawn more attention.

The $757,000 reduction is approximately 7.5% of the 2023 budget, nearly halving the proposed year-over-year increase. I hope the HOA members at other resorts do take notice, as this situation might have broader implications.

Regarding what expenses to cut, if I were a resort owner, I would trust the board members to handle this responsibility, considering they are best positioned to evaluate the specifics. I don't think we can determine the feasibility of trimming the HR budget for example, because as guests we don't interact with all the people on the payroll. According to reports from @dioxide45, if I remember correctly, some resort employees may have corporate tasks, and the HOA could be questioning these associated costs. Maybe they have other cuts in mind, we just don't know how reasonable they are, as neither side has provided more details.

 

[WBP]

It seems that Marriott faced a significant setback in the initial round, especially if they admitted to being able to manage the resort with $757,000 less in 2024 than their initial request. Didn't they know it all along, and if so, why did they imply in the letter to the owners that they couldn't keep the lights on, afford insurance, and maintain the resort standards if the HOA didn't agree in full with the proposed budget? Their attempt to pressure the HOA has not gone as planned and has only drawn more attention.

The $757,000 reduction is approximately 7.5% of the 2023 budget, nearly halving the proposed year-over-year increase. I hope the HOA members at other resorts do take notice, as this situation might have broader implications.

Regarding what expenses to cut, if I were a resort owner, I would trust the board members to handle this responsibility, considering they are best positioned to evaluate the specifics. I don't think we can determine the feasibility of trimming the HR budget for example, because as guests we don't interact with all the people on the payroll. According to reports from @dioxide45, if I remember correctly, some resort employees may have corporate tasks, and the HOA could be questioning these associated costs. Maybe they have other cuts in mind, we just don't know how reasonable they are, as neither side has provided more details.

That's a huge reduction to the Operating Budget. If I were an owner at GR, Tahoe, I'd want to know, on a line item basis, where expenses are being reduced, AND what the implications are of each reduction. Concurrently, I'd be exploring new, creative revenue streams (to the HOA).

I really do hope that MVC and the GR, Tahoe owners can achieve consensus, and some harmony. In my opinion, GR, Tahoe is beautiful, I love the versatility of the quarter-share product, and the additional versatility that MVC added (expanded, further, with ABOUND), beyond the initial design of Heavenly-Grand Summit.

 

[timsi]

That's a huge reduction to the Operating Budget. If I were an owner at GR, Tahoe, I'd want to know, on a line item basis, where expenses are being reduced, AND what the implications are of each reduction. Concurrently, I'd be exploring new, creative revenue streams (to the HOA).

I really do hope that MVC and the GR, Tahoe owners can achieve consensus, and some harmony. In my opinion, GR, Tahoe is beautiful, I love the versatility of the quarter-share product, and the additional versatility that MVC added, beyond the initial design of Heavenly-Grand Summit.

Do you believe Marriott cannot effectively manage the resort with just a 9-10% increase? They did not explain in detail why they needed a 19% increase, leading me to suspect there was a lot of wiggle room.

 

[Dean]

It seems that Marriott faced a significant setback in the initial round, especially if they admitted to being able to manage the resort with $757,000 less in 2024 than their initial request. Didn't they know it all along, and if so, why did they imply in the letter to the owners that they couldn't keep the lights on, afford insurance, and maintain the resort standards if the HOA didn't agree in full with the proposed budget? Their attempt to pressure the HOA has not gone as planned and has only drawn more attention.

The $757,000 reduction is approximately 7.5% of the 2023 budget, nearly halving the proposed year-over-year increase. I hope the HOA members at other resorts do take notice, as this situation might have broader implications.

Regarding what expenses to cut, if I were a resort owner, I would trust the board members to handle this responsibility, considering they are best positioned to evaluate the specifics. I don't think we can determine the feasibility of trimming the HR budget for example, because as guests we don't interact with all the people on the payroll. According to reports from @dioxide45, if I remember correctly, some resort employees may have corporate tasks, and the HOA could be questioning these associated costs. Maybe they have other cuts in mind, we just don't know how reasonable they are, as neither side has provided more details.

Do you believe Marriott cannot effectively manage the resort with just a 9-10% increase? They did not explain in detail why they needed a 19% increase, leading me to suspect there was a lot of wiggle room.

Were you at at the meeting? Rest assured MVC laid out exactly what was entailed in the needs defined by the recommended budget AND the cuts required to get to the minimum budget. One would have to question whether members would be happy with those cuts/changes. I do hope they can work it out but I continue to believe the relationship is already strained such that it will be difficult going forward if the players remain the same.

 

[timsi]

Were you at at the meeting? Rest assured MVC laid out exactly what was entailed in the needs defined by the recommended budget AND the cuts required to get to the minimum budget. One would have to question whether members would be happy with those cuts/changes. I do hope they can work it out but I continue to believe the relationship is already strained such that it will be difficult going forward if the players remain the same.

The owners should be first informed about the details of the proposed increases, as the management company has not clarified in detail why an additional $2 million is necessary. For example, they haven't specified the portion of this amount attributed to increased costs in insurance and utilities. Will Marriott provide a detailed explanation for why they can operate with $757,000 less? I am not holding my breath, as it seems they prefer to present the budget increases in broad strokes. As of now, all we know is that if the 2024 budget is $757,000 less than proposed, owners will pay $82,000 less in management fees and sales taxes so the actual “cuts” are only about 675k.
Let’s assume that the lower increase in maintenance fees will lead to a reduction in services at the resort. Owners will have the chance to notice and decide if they are comfortable with that or prefer to pay more and this can be rectified with future budgets.
I had doubts that Marriott had genuine intentions to sever ties with the resort, and this latest information increases my belief that the threat was nothing more than a bluff. I hope that they will find the best compromise. I suspect Marriott applied the same strategy they use at other resorts – my way or the highway – but given the higher concentration of ownership at this resort, it simply did not work.

 

[Dean]

No argument a certain amount of disclosure is reasonable but giving out every single detail is not appropriate, esp where salaries are concerned or specifics of possible personnel cuts. The starting difference was $1.5M not $2M. When MVC send out the initial information, the BOD freaked out, so I doubt MVC is likely to send out the negotiation specifics until they come to the point of an absolute ultimatum which it sounds like they may be approaching. I wouldn't be surprised if there are contractual limitations on release of certain information as well though I haven't seen the management contract.

Specific to your views on this, if you feel that MVC is simply evil, as it appears you do, why do you continue to play in the Sandbox, I think that's the very definition of Mental Illness. At this point if you do continue, you are agreeing to certain issues that you should either accept or get changed in short order. If you do continue in the system and you can't get those things changed in a short time period, IMO, you lose your right to REASONABLY continue to complain about the same things. But I think most of use feel you passed that level long ago.

 

[davidvel]

No argument a certain amount of disclosure is reasonable but giving out every single detail is not appropriate, esp where salaries are concerned or specifics of possible personnel cuts. The starting difference was $1.5M not $2M. When MVC send out the initial information, the BOD freaked out, so I doubt MVC is likely to send out the negotiation specifics until they come to the point of an absolute ultimatum which it sounds like they may be approaching. I wouldn't be surprised if there are contractual limitations on release of certain information as well though I haven't seen the management contract.

Specific to your views on this, if you feel that MVC is simply evil, as it appears you do, why do you continue to play in the Sandbox, I think that's the very definition of Mental Illness. At this point if you do continue, you are agreeing to certain issues that you should either accept or get changed in short order. If you do continue in the system and you can't get those things changed in a short time period, IMO, you lose your right to REASONABLY continue to complain about the same things. But I think most of use feel you passed that level long ago.

I think calling someone mentally ill for questioning the motives of a management company who basically controls everything, has never been truly challenged, and an incredible financial motive (while it's own house is on shaky earnings) is grossly unfair.

It's like people say to those that challenge government leaders "if you don't like them, then leave the Country." (Except of course when they are the ones that don't like them...)

 

[Volkyro]

No argument a certain amount of disclosure is reasonable but giving out every single detail is not appropriate, esp where salaries are concerned or specifics of possible personnel cuts. The starting difference was $1.5M not $2M. When MVC send out the initial information, the BOD freaked out, so I doubt MVC is likely to send out the negotiation specifics until they come to the point of an absolute ultimatum which it sounds like they may be approaching. I wouldn't be surprised if there are contractual limitations on release of certain information as well though I haven't seen the management contract.

Why not? We're talking about the budget for owners of the property. They should absolutely be entitled to know how every penny of their maintenance fees are being spent. Lack of transparency (on both sides) is part of why there are so many questions being asked or assumed. Seeing as this property sits on a lake which spans two states who both happen to have salary disclosure laws, I don't see why any details should remain hidden from the owners.

 

[Dean]

I think calling someone mentally ill for questioning the motives of a management company who basically controls everything, has never been truly challenged, and an incredible financial motive (while it's own house is on shaky earnings) is grossly unfair.

It's like people say to those that challenge government leaders "if you don't like them, then leave the Country." (Except of course when they are the ones that don't like them...)

Fair enough but it isn't the issue of questioning but the incessant and pervasive approach that I question, not the reasonableness of the question itself. The moderators can censor it if they want.

Why not? We're talking about the budget for owners of the property. They should absolutely be entitled to know how every penny of their maintenance fees are being spent. Lack of transparency (on both sides) is part of why there are so many questions being asked or assumed. Seeing as this property sits on a lake which spans two states who both happen to have salary disclosure laws, I don't see why any details should remain hidden from the owners.

As I noted, I suspect there are specifics that are sensitive to individuals. Plus there may be contractual reasons that certain things aren't released. I'm sure once they approve a budget, it will be sent out c/w how they normally publish a budget.

 

[dioxide45]

The owners should be first informed about the details of the proposed increases, as the management company has not clarified in detail why an additional $2 million is necessary.

Owners aren't really provided this level of detail. Owners elect a BOD to do this work for them. Right or wrong, most owners don't give a crap about most of this stuff. They just pay the bill when it is sent and go and enjoy their vacations.

 

[LeslieDet]

The total amount of the approved 2024 Budget is $10,539,378.

Have you seen that $10MM+ number in the budget distributed to the owners? I'm curious as the 2024 budget posted in #163 was for a different amount. Perhaps the one in #163 was just a draft?

I'm also curious if there was a decision by the HOA BOD to cover the deficit from 2023 with reserves and simply not replace the money to the operating account? That would lead to a reduction in the requested operating costs if the operating deficit from 2023 isn't included in 2024.

 

[LeslieDet]

there are specifics that are sensitive to individuals

Absolutely correct. The reference someone made to "salary disclosure laws" isn't applicable in this instance. That law relates to employers posting salary ranges on all active job postings. it doesn't allow an employer to tell random people what specific employees are paid. Not to mention that the category of employee compensation also includes the employer burden for FICA and benefits. So just saying employee X makes $50K isn't an accurate representation of the actual out of pocket cost to actually employ that person.

 

[timsi]

Specific to your views on this, if you feel that MVC is simply evil, as it appears you do, why do you continue to play in the Sandbox, I think that's the very definition of Mental Illness.

This is a new low. Shame on you!

 

[timsi]

Owners aren't really provided this level of detail. Owners elect a BOD to do this work for them. Right or wrong, most owners don't give a crap about most of this stuff. They just pay the bill when it is sent and go and enjoy their vacations.

You are correct about this; the owners will never receive the details. I was responding to comments before mine, suggesting that owners should have comprehensive information, line by line, regarding the "cuts." My point was that if that is the expectation, they should first be given the details of the increases, as information on that front is lacking.

 

[Dean]

This is a new low. Shame on you!

Listen, it is not my intent go be personal but it is an honest expression of how I feel about the situation where one continually complains over the top over a long period of time about something they choose to participate in when they have the option of moving on.

 

[davidvel]

Owners aren't really provided this level of detail. Owners elect a BOD to do this work for them. Right or wrong, most owners don't give a crap about most of this stuff. They just pay the bill when it is sent and go and enjoy their vacations.

Owners, under CA law are entitled to the following:
(Civ. Code § 5200(a).)

financial documents required by Civil Code § 5300 (budget, reserves, lien policies, insurance, financial statements, etc.);

interim financial statements, including (i) balance sheet, (ii) income and expense statement, (iii) budget comparison, and (iv) general ledger;

a summary of the association's reserves (Civ. Code § 5565.)
state and federal tax returns;

reserve account balances and payments from reserves; and

invoices, receipts, canceled checks, purchase orders approved by the association, credit card statements for credit cards issued in the association's name, statements for services rendered, and reimbursement requests submitted to the association (Civ. Code § 5200(b)).

CC&Rs, articles of incorporation, bylaws, condominium plan, operating rules, election rules, etc. (Civ. Code § 5200); and

schedule of monetary penalties used in rules enforcement.
executed contracts
minutes (board, committee, and membership meeting agendas and minutes, except for executive session minutes)
election materials
insurance policies
architectural plans
escrow documents (required by Civil Code § 4525 between buyer and seller such as governing documents, assessments, violation notices (the general membership does not have the right to other members' violation notices), construction defects, etc.)
membership lists
governing documents
Source: https://www.davis-stirling.com/HOME/H/HOA-Records-Subject-to-Inspection

 

[igopogo]

Owners, under CA law are entitled to the following:
(Civ. Code § 5200(a).)

I’m wondering whether the manager is sufficiently distinct from the association (arms length?) that we only get to see the payments to the manager, and not the details of how those payments are used.

 

[timsi]

Listen, it is not my intent go be personal but it is an honest expression of how I feel about the situation where one continually complains over the top over a long period of time about something they choose to participate in when they have the option of moving on.

Please stop, as you are only sinking deeper. If unsuccessful attempts raise concerns to you about mental well-being, be mindful of your own actions and refrain from repeatedly asking me to be silent or sell. If it didn't work the first 5 times, it will NOT work the 6th.

You are resorting to ridiculous hyperboles like "evil," and I hope that's not the standard you are holding them to. Marriott initially claimed to need an additional $2 million for 2024 to keep the lights on, but now it seems they acknowledge they can manage without 760k. If this doesn't make you question how increases at this resort and others have been proposed and accepted, nothing else will.

 

[dioxide45]

Owners, under CA law are entitled to the following:

Perhaps they are entitled to it, but is it sent to every owner or only if they request it? I indicated that most owners don't give a crap and just want to vacation. Thus they don't request any of this. It also looks to be all based mainly on past expediaures, so may not provide details of increases. I also understand that CA law allows for the association or management company to charge for providing these documents, which could be up to $200. There may be redactions that need to be made. It isn't as easy as stuffing it all in an envelope or copying it all to a thumbdrive.

 

[LeslieDet]

I’m wondering whether the manager is sufficiently distinct from the association (arms length?) that we only get to see the payments to the manager, and not the details of how those payments are used.

No one is entitled to see how the "management fee" paid to the manager is used by the manager. There is a difference between the manager collecting the HOA dues (ie maintenance fees from owners) vs the fees paid to the manager for managing the property. Of course all owners are entitled to see the books and records of the HOA to understand where the HOA money is being spent. You are going to see categories on the general ledger, income statement, balance sheet, tax returns, etc. Look at the financials, wasn't it you who posted some info earlier? You will also see the gross sums paid to the management company under the appropriate G/L entry, just like you'll see how much was paid for insurance and utility bills. But if you are asking if you are somehow entitled to see details of how the money paid to the manager is used by that company, then the answer is no.

 

[LeslieDet]

Perhaps they are entitled to it, but is it sent to every owner or only if they request it? I indicated that most owners don't give a crap and just want to vacation. Thus they don't request any of this. I also understand that CA law allows for the association or management company to charge for providing these documents, which could be up to $200. There may be redactions that need to be made. It isn't as easy as stuffing it all in an envelope or copying it all to a thumbdrive.

The info that is required by CA law is what is already being provided to owners. They can (and should) also ask to review the audited financial statements. The BOD will see the details in the book and records -- they'll be able to see, for example, each utility bill if they so desire. They can see each and every bill paid by the management company using HOA money. They are able to see the detail on each income/expense sheet, each G/L entry. Owners will receive the summary info, they elect their board to pay attention to the details.

If the HOA hires independent contractors who bill the HOA directly, the owners will be able to see that contract. But the owners are not going to be allowed to see the personal details on each employee who makes up the "Front Desk" expense category for example. The financial reports will identify the total expenses to that category, not the detail of each employee name and their income and benefits received.

 

[timsi]

No one is entitled to see how the "management fee" paid to the manager is used by the manager. There is a difference between the manager collecting the HOA dues (ie maintenance fees from owners) vs the fees paid to the manager for managing the property. Of course all owners are entitled to see the books and records of the HOA to understand where the HOA money is being spent. You are going to see categories on the general ledger, income statement, balance sheet, tax returns, etc. Look at the financials, wasn't it you who posted some info earlier? You will also see the gross sums paid to the management company under the appropriate G/L entry, just like you'll see how much was paid for insurance and utility bills. But if you are asking if you are somehow entitled to see details of how the money paid to the manager is used by that company, then the answer is no.

The payment to the management company includes more than just the management fee; it covers a variety of expenses such as salaries, utilities, furniture etc. - it can literally cover everything. I believe @igopogo was inquiring about whether owners have the right to review the original receipts for all these expenditures.

 

[LeslieDet]

The payment to the management company includes more than just the management fee; it covers a variety of expenses such as salaries, utilities, furniture etc. - it can literally cover everything. I believe @igopogo was inquiring about whether owners have the right to review the original receipts for all these expenditures.

Money paid out by the management company on behalf of the HOA, that IS the info already provided in the financials for the HOA. Money earned by the management company and how the management company spends the money it earns is not part of the HOA. The HOA expenditures are also audited.

When you say you think that inquiry was asking whether owners have the right to review the original receipts for all expenditures, as referenced by applicable CA law, the owners have a right to see all of the financials. The income and expense reports will show the expenditure. If the BOD wants to see the actual bill that is being paid for utilities or insurance or buying 100 mattresses, that is available to them. The BOD represents the owners in seeing those details. But, the BOD is not going to see detailed reports that says employee A earns $X and had benefits paid of $Y. The report will be payroll paid on date in total amount of $XX.

 

[timsi]

Money paid out by the management company on behalf of the HOA, that IS the info already provided in the financials for the HOA. Money earned by the management company and how the management company spends the money it earns is not part of the HOA. The HOA expenditures are also audited.

When you say you think that inquiry was asking whether owners have the right to review the original receipts for all expenditures, as referenced by applicable CA law, the owners have a right to see all of the financials. The income and expense reports will show the expenditure. If the BOD wants to see the actual bill that is being paid for utilities or insurance or buying 100 mattresses, that is available to them. The BOD represents the owners in seeing those details. But, the BOD is not going to see detailed reports that says employee A earns $X and had benefits paid of $Y. The report will be payroll paid on date in total amount of $XX.

Indeed the BOD does not necessarily need to see what employee A or B earn. However, they may have a need, maybe even an obligation to know, for example, the average compensation for each category such as front desk staff, maintenance , housekeeping, management positions etc., as well as the number of people employed in each category. They need more granular information than “the payroll expenses are $XX” for assessing the appropriateness of compensation.

 

[LeslieDet]

Indeed the BOD does not necessarily need to see what employee A or B earn. However, they may have a need, maybe even an obligation to know, for example, the average compensation for each category such as front desk staff, maintenance , housekeeping, management positions etc., as well as the number of people employed in each category. They need more granular information than “the payroll expenses are $XX” for assessing the appropriateness of compensation.

The BOD cannot micromanage staffing that is hired for the operations of the facility. That is why the HOA has a manager. The BOD doesn't assess the "appropriateness of the compensation" for housekeeping, etc.