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

[SueDonJ]

I wouldn't be surprised at all if MVC has overspent or shifted funds from the reserves at several other properties that are causing 15%+ increases. I wish other BOD's used guidelines of the local CPI's because most of my resort MF increases have greatly exceeded inflation for the past few years. Ocean Pointe is the most guilty of abusing its owners.

See, now I would be surprised to learn of Marriott admitting to overspending or underfunding or shifting funds or doing anything else that would be in violation of the governing docs and/or wouldn't conform to a bills-in-payments-out budget system at any of the resorts! To me that would be egregious conduct akin to mismanagement.

Understand, I'm not saying that I think Marriott has a history of being perfect. What I'm saying is that I believe Marriott has rights to the collected funds that might come as a surprise to any of us, which is why whenever they're accused of financial wrongdoing the first thing I ask is, "where is the proof that Marriott has done what's alleged, and, where in the laws/regulations/governing docs does it say that what Marriott has done is not legally correct?"

 

[Superchief]

See, now I would be surprised to learn of Marriott admitting to overspending or underfunding or shifting funds or doing anything else that would be in violation of the governing docs and/or wouldn't conform to a bills-in-payments-out budget system at any of the resorts! To me that would be egregious conduct akin to mismanagement.

Understand, I'm not saying that I think Marriott has a history of being perfect. What I'm saying is that I believe Marriott has rights to the collected funds that might come as a surprise to any of us, which is why whenever they're accused of financial wrongdoing the first thing I ask is, "where is the proof that Marriott has done what's alleged, and, where in the laws/regulations/governing docs does it say that what Marriott has done is not legally correct?"

MVC is not at all transparent regarding how maintenance fees are determined and what is covered by many of the itemized expenses. They also now control many of the boards. Several new expense items have shown up over the past few years that aren't explained, including owner services, human resources, and others. Some resorts have more than one group of expenses. I was a very loyal Marriott and MVC customer/owner since the 1970's. Ever since the spinoff of MVC and the Marriott family leaving the company, they have become much more concerned about increasing profit at the expense of customers, employees, and owners. It would be easy for them to drive up expenses without most of us knowing what they are doing. Why are their resort MF's in FL increasing much more than those of Disney and other timeshare companies? You are fortunate to own at Hilton Head resorts that tend to have lower increases than most others. There is also a lot more turnover of GM's than there was in the past, which makes it even more difficult to know what is going on.

 

[Theseus]

I sent an email to the MGRC board via the email provided to ask the Board if it has a response to this correspondence from the management company.

It appears you sent your email to mailto:GRCBOD@vacationclub.com as indicated in the McCormack letter? I’m under the impression @vacationclub.com addresses are Marriott controlled. If so, might MVC be using this to solicit GRC owner sentiments as part of its evaluation of whether to sever its management contract?

 

[Theseus]

Here is the Board's response. If allegations are true, what does it say about the Management Company's actions in other properties???

December 6, 2023

Dear Fellow Grand Residence Club Lake Tahoe Owners,

As President of GRCLT Condominium, Inc. and on behalf of the Board of Directors, I am writing to you in response to the unfortunate and misleading letter that was sent to the membership on December 4, 2023, by Tom McCormack, purportedly on behalf of the Management Company (i.e. Marriott Resorts Hospitality Corporation). Mr. McCormack’s letter does not accurately represent the facts of the current budget situation, and, because of the Management Company’s unauthorized and unprecedented decision to send his misleading letter to all Grand Residence Club owners, we feel compelled to respond.

The Board of Directors is comprised of individuals that have been elected by you. We take very seriously our duty to make decisions that individually and collectively we believe in good faith to be in the best interests of the Association, including you as owners and members. Serving the Association as a Director is voluntary and without compensation yet requires a significant time commitment. Fortunately, several Board Members have served the Association for well over a decade and have garnered what I believe is invaluable institutional knowledge regarding Grand Residence Club operations, including financial and budgetary matters.

One of the primary duties of the Board is to approve an annual budget. Beginning approximately 15 years ago, the Board and Management Company agreed that a reasonable benchmark to aid the Board in its deliberations to approve a budget for the following year was the San Francisco Consumer Price Index for August. The Board would typically approve a budget with a percentage increase, year-over-year, that was higher than the San Francisco CPI, based on the Board’s reasoned judgment of what the anticipated basic expenses of the Association for the following year would be.

As part of this deliberation process, the Management Company historically has prepared a pro forma budget for the Board to consider that included the San Francisco CPI as a comparative benchmark, but which typically included a budget recommendation by the Management Company with a year-over-year increase that was significantly higher than the benchmark. It is important to understand that the Management Company is incentivized to have a larger budget approved by the Board because under the terms of the Management Agreement, the Management Company’s fee is 10% of the Association’s basic expenses. Although the Board values the Management Company’s input in its deliberations to approve a budget, the Board historically has approved a budget that is greater than the San Francisco CPI but less than the Management Company’s recommendation, again based on the Board’s reasoned judgment of the estimated basic expenses for the following year. We believe this prudent fiscal approach to budget deliberations and approval has served and continues to serve the Association and its owners very well.

In September of this year, we discovered in the minutia of the Association’s 2022 Tax Return prepared by the Management Company that indicated the Management Company had overspent the 2022 Budget by $238,000 without ever disclosing it to the Board and without ever obtaining the prior written consent of the Board, as required by law. The Management Company has ignored our request to reimburse these funds.

Consequently, the Board recently authorized the filing of a lawsuit against the Management Company in El Dorado County Superior Court (Case No. 23CV2018) seeking, among other relief, reimbursement of the $238,000 improperly taken by the Management Company. This lawsuit also seeks the Court’s intervention as to the 2023 Budget and even 2024 Budget that were approved by the Board. As you know from Mr. McCormack’s letter, the Management Company essentially has admitted that it has overspent (or is about to) the Board-approved 2023 Budget by approximately $550,000, which we believe violates the Association’s governing documents, the Management Agreement, and applicable law. What the Management Company characterizes as a “shortfall” would be more accurately described as unauthorized overspending by the Management Company in excess of the fully funded and Board-approved 2023 Budget.

The intent to engage in this same overspending has been admitted to by the Management Company for 2024. As to the 2024 Budget, in October of this year the Management Company presented a pro forma budget to the Board that intentionally omitted the San Francisco CPI benchmark and instead included an astonishing year-over-year increase of 19.7%. Even with increased utility and insurance costs, which the Board recognizes may be significant, the Board concluded that such a drastic increase was excessive and unnecessary to meet the anticipated basic expenses for 2024. Ultimately, the Board approved a 2024 Budget with a year-over-year increase of 4.8% (the San Francisco CPI was 3.4%). A similar variance between what the Management Company presented to the Board and what the Board ultimately approved occurred for 2023. We believe it is noteworthy that the last two years which have seen such a deviation by the Management Company from the historical San Francisco CPI benchmark in the budgets it has recommended to the Board coincide with a persistent gradual decline in the stock price (presently at 2-year lows) of the Management Company’s affiliate, and we believe the Management Company may be under significant pressure to increase revenue, which may explain what we believe to be unwarranted and unlawful strong-arm tactics presently on display by the Management Company.

We want to assure you that the Association is financially secure. However, should an actual cash shortfall occur with respect to the Association’s operating account, we believe that because the Management Company apparently decided to exceed the Board approved 2023 Budget, the Management Company should shoulder responsibility for any shortfall until this issue is resolved in the recently filed lawsuit, instead of having the Board authorize a short term transfer of funds from the Association’s reserve accounts or levy a special assessment against the owners to cover the forecasted shortfall. Additionally, we believe the threats in Mr. McCormack’s letter to reduce or eliminate Grand Residence Club owner services or benefits is disingenuous, ill-advised, and reckless.

While the Board has strived to have good working relations with the Management Company over the years, the recent lawsuit is not without precedent. In 2021, we were forced to file suit against the Management Company for reimbursement of money that the Management Company unilaterally and without authorization took from Association accounts to pay for legal costs associated with other claims, including a class action lawsuit, against the Management Company that did not even involve the Grand Residence Club. The Management Company ultimately agreed to reimburse the Association and the lawsuit was dismissed.

Similarly, from approximately 2015-2017, the Association was involved in a lawsuit against South Lake Tahoe Public Utility District in connection with utility charges that the District had been double billing the Association for more than ten years. Because the Management Company also manages Timber Lodge next door, the disparate utility charges of the adjacent resorts was something that we believed the Management Company should have discovered long before it came to light. However, instead of reimbursing the Association for what we believed was caused by the Management Company’s gross negligence, the Management Company forced the Association to spend years in litigation against the District before a settlement was reached on the eve of trial. It was only after a settlement with the District was reached that the Management Company agreed to reimburse the Association a fraction of the damages it had sustained over more than a decade.

Now, in addition to the pending lawsuit against the Management Company regarding the budget issues described above, the Board may be compelled to file another action against the Management Company related to foreclosed fractional interests. The Management Company was recently forced to admit that it improperly conveyed title to at least six (and perhaps more than ten) fractional interests to Marriott affiliates instead of to the Association upon nonjudicial foreclosure for unpaid delinquent assessments. Not only has the Association suffered hundreds of thousands of dollars in actual damages as a result, but we also believe that the Management Company and its affiliates have been unjustly enriched by these improper conveyances in excess of three million dollars.

It is our hope that this letter provides you with more context and a better understanding of the budget issue we have been trying to resolve with the Management Company. Unfortunately, as described above, we have been compelled to take legal action against the Management Company over the years to enforce the Association’s legal rights under the governing documents and applicable law. This budget dispute is another example of that, and we ask for your continued support to see this through.

I can assure you that your Board of Directors will do everything in its power to protect your investment and all that comes with that, despite the false accusations and threats made by the Management Company.

Sincerely,

James M. Deatherage
Board President
GRCLT Condominium Inc.

@BigDawgTUG, did you receive this email from the mailto:GRCBOD@vacationclub.com address you sent to, or a different one?

It’s been asserted that MVC controls communications with owners so I am interested to know how many other GRC owners received this Board response to McCormack’s letter.

 

[davidvel]

I feel like you're somebody in the grand scheme that we probably should know about and I apologize for not knowing. Do you mind sharing what makes you so knowledgeable, when other GR Tahoe owners in this thread appear to be surprised at what's happening? Do you hold a position that forces you to be aware of all the legal tangles, or, did you get an inkling somewhere and do your own deep dive, or, are you a (past or present) member of the GR Tahoe BOD or maybe have a friend who is, or, something else entirely?

Does it concern you that this BOD has been involved in so many legal tangles with Marriott, with at least some owners claiming that they've never heard anything about them?

Some of the dirty laundry you've mentioned is in the legal filings @davidvel provided in the attachment to Post #80 above. It mentions the labor disputes for specific employees who worked at Newport Coast Villas but it also mentions at least one case of a plaintiff being a former employee who'd worked at GR Tahoe. Do you know enough to more fully explain exactly how much Marriott took from the GR Tahoe coffers to cover settlements for the plaintiffs who didn't work at GR Tahoe as compared to those who did? Do you know if any of the settlements in any of the GR Tahoe-related lawsuits included an admission of guilt by Marriott?

I also have questions about the GR Tahoe BOD makeup, specifically whether any of the members on the current board have been members on any of the other boards that were in place during any of the past legal tangles? Most BOD members have term limits and some of these lawsuits appear to go back years, and I'd find it curious if any members have been seated for every instance.

Whatever your knowledge base you obviously sympathize with the BOD and ownership. I AM NOT SAYING THAT'S A BAD THING. What I will say is that with the little bit of info that has come out, it doesn't appear to me that either party - Manager Marriott or the resort BOD - is 100% at fault or not at fault. I'll also say that there aren't many timeshare topics that capture my attention the way the legalities do, but I've invested nothing in GR Tahoe so if you prefer to not answer any questions that come from disinterested parties, I wouldn't fault you for that. It won't stop me from asking the questions of whoever wants to provide answers, but it won't make me think any less of you if you choose to ignore me.

Thanks!

Sue,

Great questions that I as well would love to know the answers. I can answer one. Next to never will there be an acknowledgement of fault in ANY settlement agreement, usually when there is some heightened depravity and criminal proceedings. There is no way it would occur in these circumstances.

 

[SueDonJ]

MVC is not at all transparent regarding how maintenance fees are determined and what is covered by many of the itemized expenses. They also now control many of the boards. Several new expense items have shown up over the past few years that aren't explained, including owner services, human resources, and others. Some resorts have more than one group of expenses. I was a very loyal Marriott and MVC customer/owner since the 1970's. Ever since the spinoff of MVC and the Marriott family leaving the company, they have become much more concerned about increasing profit at the expense of customers, employees, and owners. It would be easy for them to drive up expenses without most of us knowing what they are doing. Why are their resort MF's in FL increasing much more than those of Disney and other timeshare companies? You are fortunate to own at Hilton Head resorts that tend to have lower increases than most others. There is also a lot more turnover of GM's than there was in the past, which makes it even more difficult to know what is going on.

I'll admit, I trust Marriott enough that I continue to be happy with my ownership and I expect that to continue until there's proof in front of my face that they don't deserve that trust. Maybe it's like you say, that the resorts where I own have a fairly good history of explaining the budgets every year especially with respect to the one-offs that don't appear to conform to normal and expected expenses, and the MF increases aren't among the highest. And I'll note, when we were hit with Special Assessments several years in a row for hurricane mitigation, the explanation from the GM/BOD was more than satisfactory.

I've owned for fewer years than you but for as long as I have owned, the complaints have been the same: Marriott controls the resort BOD's by holding seats and/or allowing only certain volunteers to be placed on the ballot; Marriott upcharges on the budgets in order to increase their 10% Management Fee (for @bazzap, 15% at the Euro and AP resorts); Marriott adds unnecessary fluff items especially in the Activities purview, again to pad the MF; Marriott doesn't pay its fair share for the sales office and restaurant/common area spaces; Marriott doesn't provide anything more than the line-item annual budget when they should be itemizing everything for the owners; Marriott isn't transparent enough about anything; etcetcetc. The pendulum swings all the way from people who have zero trust in Marriott to the point where it can be wondered why they'd ever own Marriott timeshares, all the way to people who don't even realize that the Annual Package includes a line-item budget for their review! But nobody has ever proven that Marriott is guilty of resort mismanagement, which is what I would call any efforts by them to fleece the owners. If ever they are found guilty of it, of course that will change my opinion of them.

 

[TimGolobic]

I believe the benefits that Tom McCormack, Market Vice President of MVC, represents, of GRC-Lake Tahoe's affiliation with MVC are fair game. Do we MVC owners pay a premium price for ownership with Marriott, absolutely. Coud another management company manage our resorts for less money, absolutely. Do we as MVC owners derive many benefits, as a result of our MVC affiliation, absolutely, including Interval International exchange power that comes with the demand for MVC branded resorts. I also place a substantial value on our Marriott to Marriott (internal) exchange priority, within Interval International. I continue to see value in the relationship with MVC, and the exceptional job performed by the Resort Operations Teams.

My issues with MVC, are with MVC's leadership, sales and marketing, Information Technology, and Owner Services.

I just can't get myself to form any conclusion about the MVC/GRC-Lake Tahoe relationship, other than to say that it looks soured, and I believe the current situations could resolve in a lose-lose outcome for GRC-Lake Tahoe, and MVC. I hope it does not come to that.

Similarly, MVW benefits greatly from their GRC management. Aside from the clearly stated 10% management fee, they also operate a rental program for owners that earns a substantial commission, all revenue from valet parking (none shared with the Association), substantial Abound inventory deposited by GRC owners for others to book in to, shared costs with Timber Lodge which lowers each property's expenses and improves operational efficiencies. Simply, it is a mutually beneficial relationship that MVW appears more willing to (threaten to) blow up.

 

[SueDonJ]

It appears you sent your email to mailto:GRCBOD@vacationclub.com as indicated in the McCormack letter? I’m under the impression @vacationclub.com addresses are Marriott controlled. If so, might MVC be using this to solicit GRC owner sentiments as part of its evaluation of whether to sever its management contract?

I'm sure that there will always be nefarious intent attributed to the portfolio-wide practice of Marriott requiring these unique email addresses for contacting the BOD of each resort.

That practice came about after a former BOD president apparently used the ownership list of a certain resort, to which he'd gained access while serving on the board, to try to drum up support for a possible class action he was spearheading against Marriott. Maybe the timing was just a coincidence (although you'll never convince me of that) but it has effectively resulted in board members being highly reluctant to engage in written communication with owners via the board members' private/personal contact info. I think it's a good thing that we can all rest easy knowing that board members aren't acting outside of their capacity and unknown by Marriott; others disagree. Regardless, messages sent to the unique BOD email addresses result in responses. And yes, Marriott will probably be paying special attention to this resort's unique mailbox on a regular basis for a while.

 

[igopogo]

@BigDawgTUG, did you receive this email from the mailto:GRCBOD@vacationclub.com address you sent to, or a different one?

It’s been asserted that MVC controls communications with owners so I am interested to know how many other GRC owners received this Board response to McCormack’s letter.

I did not receive the response. I am a relatively new owner, I think March 2022. My name is still not in the physical book at the front desk, and I'm thinking it takes quite a while for contact lists to get updated.

 

[TimGolobic]

I feel like you're somebody in the grand scheme that we probably should know about and I apologize for not knowing. Do you mind sharing what makes you so knowledgeable, when other GR Tahoe owners in this thread appear to be surprised at what's happening? Do you hold a position that forces you to be aware of all the legal tangles, or, did you get an inkling somewhere and do your own deep dive, or, are you a (past or present) member of the GR Tahoe BOD or maybe have a friend who is, or, something else entirely?

Does it concern you that this BOD has been involved in so many legal tangles with Marriott, with at least some owners claiming that they've never heard anything about them?

Some of the dirty laundry you've mentioned is in the legal filings @davidvel provided in the attachment to Post #80 above. It mentions the labor disputes for specific employees who worked at Newport Coast Villas but it also mentions at least one case of a plaintiff being a former employee who'd worked at GR Tahoe. Do you know enough to more fully explain exactly how much Marriott took from the GR Tahoe coffers to cover settlements for the plaintiffs who didn't work at GR Tahoe as compared to those who did? Do you know if any of the settlements in any of the GR Tahoe-related lawsuits included an admission of guilt by Marriott?

I also have questions about the GR Tahoe BOD makeup, specifically whether any of the members on the current board have been members on any of the other boards that were in place during any of the past legal tangles? Most BOD members have term limits and some of these lawsuits appear to go back years, and I'd find it curious if any members have been seated for every instance.

Whatever your knowledge base you obviously sympathize with the BOD and ownership. I AM NOT SAYING THAT'S A BAD THING. What I will say is that with the little bit of info that has come out, it doesn't appear to me that either party - Manager Marriott or the resort BOD - is 100% at fault or not at fault. I'll also say that there aren't many timeshare topics that capture my attention the way the legalities do, but I've invested nothing in GR Tahoe so if you prefer to not answer any questions that come from disinterested parties, I wouldn't fault you for that. It won't stop me from asking the questions of whoever wants to provide answers, but it won't make me think any less of you if you choose to ignore me.

Thanks!

Hi Sue, no offense. You shouldn't know me unless you are a GRC owner, and even many of them don't. I have been a GRC owner for 19 years. I own multiple units and am possibly the single largest or second largest individual owner of the property. My personal investment is significant, as is my professional investment. This is not meant to be an advertisement, simply stating my involvement. I have operated HeavenlyVillageCondos.com for nearly as long as being an owner. It is a 3rd party rental service for fellow GRC owners who wanted an alternative to Marriott's program with high commissions and fees. Approximately 30% of the owners use my service and it continues to grow each year. My entire business existence is based on GRC. This is not a hobby; it is my career. I attend nearly all Board meetings in the capacity of an owner but have never been a Board member, nor do I have any desire to be one. Though I know all of them personally and professionally (some use my services) and I have great respect for the tireless work of those who previously served and those currently serving in this unprecedented level of conflict. I also have great respect for the on-site staff, whom I feel don't want to be collateral damage in this battle. They'd rather go about their days achieving guest satisfaction with little drama.

Regarding your comment on "legal tangles", it most concerns me that the Management Company has done so many things that warrant "legal tangles", and what they would have gotten away with had it not been for such a diligent and committed Board. Certainly other properties haven't noticed, and I fear that's what Management counts on. These tangles only originate out of bad behavior, all occurring from one side.

I do know extensively about the lawsuit regarding a former terminated employee. But I'm not willing to share the details. I have read the lawsuit. It was wide-ranging and salacious and even if just half of it was true and gone to trial, it would have been damming to those named along with the Company. None of those principals are still on the property. Either retired, quit, or moved within the company, But it was another settlement that Management expected the HOA to pay, ridiculous.

Aside from the most recently elected member, all of the current Board members have served multiple terms, there are not term limits. Marriott has one seat they control, and the original developer has a permanent seat. As owners, we value the history and institutional knowledge that those repeatedly re-elected officers brings. Marriott wants high turnover to make that historical knowledge go away. And they have tried to un-seat long-time members during elections, once successfully, but not since.

I agree that we have two sides that can be fairly stubborn. But the Board is trying to hold Management accountable and resolve their past improprieties without agreeing to a max increase in costs. Ironically, trying to keep the dues increase lower is also a benefit to Marriott. They own approximately 20% of the units and their costs would skyrocket as well. Our Board is actively trying to save them money.

 

[davidvel]

Hi Sue, no offense. You shouldn't know me unless you are a GRC owner, and even many of them don't. I have been a GRC owner for 19 years. I own multiple units and am possibly the single largest or second largest individual owner of the property. My personal investment is significant, as is my professional investment. This is not meant to be an advertisement, simply stating my involvement. I have operated HeavenlyVillageCondos.com for nearly as long as being an owner. It is a 3rd party rental service for fellow GRC owners who wanted an alternative to Marriott's program with high commissions and fees. Approximately 30% of the owners use my service and it continues to grow each year. My entire business existence is based on GRC. This is not a hobby; it is my career. I attend nearly all Board meetings in the capacity of an owner but have never been a Board member, nor do I have any desire to be one. Though I know all of them personally and professionally (some use my services) and I have great respect for the tireless work of those who previously served and those currently serving in this unprecedented level of conflict. I also have great respect for the on-site staff, whom I feel don't want to be collateral damage in this battle. They'd rather go about their days achieving guest satisfaction with little drama.

Regarding your comment on "legal tangles", it most concerns me that the Management Company has done so many things that warrant "legal tangles", and what they would have gotten away with had it not been for such a diligent and committed Board. Certainly other properties haven't noticed, and I fear that's what Management counts on. These tangles only originate out of bad behavior, all occurring from one side.

I do know extensively about the lawsuit regarding a former terminated employee. But I'm not willing to share the details. I have read the lawsuit. It was wide-ranging and salacious and even if just half of it was true and gone to trial, it would have been damming to those named along with the Company. None of those principals are still on the property. Either retired, quit, or moved within the company, But it was another settlement that Management expected the HOA to pay, ridiculous.

Aside from the most recently elected member, all of the current Board members have served multiple terms, there are not term limits. Marriott has one seat they control, and the original developer has a permanent seat. As owners, we value the history and institutional knowledge that those repeatedly re-elected officers brings. Marriott wants high turnover to make that historical knowledge go away. And they have tried to un-seat long-time members during elections, once successfully, but not since.

I agree that we have two sides that can be fairly stubborn. But the Board is trying to hold Management accountable and resolve their past improprieties without agreeing to a max increase in costs. Ironically, trying to keep the dues increase lower is also a benefit to Marriott. They own approximately 20% of the units and their costs would skyrocket as well. Our Board is actively trying to save them money.

Thank you for this detailed information, understanding the limits of what you choose to disclose. I will note as to your last comment, that Marriott gets a 10% rebate on what they pay, as well as a 10% increase on what every owner pays. They still come out ahead with increases.

I appreciate @SueDonJ's more loyal position to Marriott, and at times have been her foil. But this has not been out of anything other than natural skepticism, and understanding that a mere fraction of MVC owners have even a sliver of knowledge of what people here do, and I believe there has been a significant bending of the governing docs to allow many things they have done, including the 13 month reservations across resorts, and the points club (Bonvoy). I am sure that less than 90% f owners even understand that their timeshare is governed by an HOA and BOD. They just think it is a timeshare. <- period

I think it is both healthy and necessary that those owners with a bit higher level of understanding and professional sophistication discuss and keep these issues in mind and not simply revert to the old " I still think its a good value and I like Marriott, so until it turns to crap, I don't care" mentality.

 

[DanCali]

When the management company and HOA board are in direct financial conflict, owners ultimately pay for it.

And if they are not in conflict, owners apparently also pay for it just in the form of outlandish MF increases like a 33% hike over 2 years... That 2024 MF thread feels like Bizarro World.

 

[DanCali]

I've owned for fewer years than you but for as long as I have owned, the complaints have been the same: Marriott controls the resort BOD's by holding seats and/or allowing only certain volunteers to be placed on the ballot;

This is true - those complaints have been around for a long time. But was has changed is the points system and the real estate trust behind that, which keeps the voting power of all the underlying weeks with MVC. Perhaps with some exceptions like GRC and the international RTU weeks, it should not be surprising if MVC does indeed control the majority of the BODs, or is very close to that point. They've been adding weeks to the trust from the vast majority of resorts over 13 years. Consequently, their voting power has just grown. And these high MFs increases will lead to more foreclosures, more weeks in the trust, and even more voting power for MVC.

 

[dioxide45]

This is true - those complaints have been around for a long time. But was has changed is the points system and the real estate trust behind that, which keeps the voting power of all the underlying weeks with MVC. Perhaps with some exceptions like GRC and the international RTU weeks, it should not be surprising if MVC does indeed control the majority of the BODs, or is very close to that point. They've been adding weeks to the trust from the vast majority of resorts over 13 years. Consequently, their voting power has just grown. And these high MFs increases will lead to more foreclosures, more weeks in the trust, and even more voting power for MVC.

At some point you would think Marriott would end up with an unsellable product.

 

[jwalk03]

At some point you would think Marriott would end up with an unsellable product.

Exactly! The value proposition is already bad when buying direct; but when even the good weeks have little to no value because the maintenance fees outpace the value the whole thing comes tumbling down. (Eventually)

 

[SueDonJ]

Hi Sue, no offense. You shouldn't know me unless you are a GRC owner, and even many of them don't. I have been a GRC owner for 19 years. I own multiple units and am possibly the single largest or second largest individual owner of the property. My personal investment is significant, as is my professional investment. This is not meant to be an advertisement, simply stating my involvement. I have operated HeavenlyVillageCondos.com for nearly as long as being an owner. It is a 3rd party rental service for fellow GRC owners who wanted an alternative to Marriott's program with high commissions and fees. Approximately 30% of the owners use my service and it continues to grow each year. My entire business existence is based on GRC. This is not a hobby; it is my career. I attend nearly all Board meetings in the capacity of an owner but have never been a Board member, nor do I have any desire to be one. Though I know all of them personally and professionally (some use my services) and I have great respect for the tireless work of those who previously served and those currently serving in this unprecedented level of conflict. I also have great respect for the on-site staff, whom I feel don't want to be collateral damage in this battle. They'd rather go about their days achieving guest satisfaction with little drama.

Regarding your comment on "legal tangles", it most concerns me that the Management Company has done so many things that warrant "legal tangles", and what they would have gotten away with had it not been for such a diligent and committed Board. Certainly other properties haven't noticed, and I fear that's what Management counts on. These tangles only originate out of bad behavior, all occurring from one side.

I do know extensively about the lawsuit regarding a former terminated employee. But I'm not willing to share the details. I have read the lawsuit. It was wide-ranging and salacious and even if just half of it was true and gone to trial, it would have been damming to those named along with the Company. None of those principals are still on the property. Either retired, quit, or moved within the company, But it was another settlement that Management expected the HOA to pay, ridiculous.

Aside from the most recently elected member, all of the current Board members have served multiple terms, there are not term limits. Marriott has one seat they control, and the original developer has a permanent seat. As owners, we value the history and institutional knowledge that those repeatedly re-elected officers brings. Marriott wants high turnover to make that historical knowledge go away. And they have tried to un-seat long-time members during elections, once successfully, but not since.

I agree that we have two sides that can be fairly stubborn. But the Board is trying to hold Management accountable and resolve their past improprieties without agreeing to a max increase in costs. Ironically, trying to keep the dues increase lower is also a benefit to Marriott. They own approximately 20% of the units and their costs would skyrocket as well. Our Board is actively trying to save them money.

Thank you, I really do appreciate you being so forthcoming. Two things:

About the info coming out now related to the many legal issues in this resort's history, what you call "dirty laundry" - It appears it's only coming out now because the resort finances are in such flux, and it's very concerning that some owners appear to not have had any prior knowledge of any of it. Of course any owner who is in the know is absolutely correct to be concerned that these legal tangles exist, but I wasn't asking for an in-depth explanation of each and every case as much as I'm asking how all of them could have transpired *without Marriott or the BOD* thinking that the ownership base could/should have been better informed! If I were an owner I'd be quite concerned that this BOD has learned how to game the system and take advantage of Marriott's propensity to settle legal issues rather than take them through the Courts (a practice most large corporations follow,) because over the years I've watched Marriott sever management agreements with several resorts when it's no longer been advantageous or cost effective for them to fight boards/owners who actively push back against Marriott's management "style." (And as an aside, if ever what Marriott does it so egregiously in violation of laws or regs or the docs or even basic good business practices, to the point where as you claim if an issue goes to trial "it would be damning for the Company," well, then, isn't it irresponsible for the BOD to have accepted settlements that didn't result in Marriott's alleged egregious behavior being made known to every owner? Who has this BOD actually been protecting?)

The budget issue is, understandably, more important to owners because the impact of timeshare ownership on the owners' wallets is front-and-center. But what's come out only recently is that for several years there's been a vast chasm between the budget amounts submitted by Manager Marriott to this resort's BOD and the budgets approved by the BOD, apparently to the extent that Marriott has had to exercise granted rights to dip into the coffers and cover the shortfall lest the resort suffer. As has been said by a few in this thread, the CPI, any CPI randomly chosen or of the locality, is a poor benchmark on which to hold timeshare expenses. Regardless, apparently this BOD has been much more concerned with holding the budget hostage to a random CPI than to any figures submitted in Marriott's budget. I agree that a BOD is charged with and should go over the budget with a fine tooth comb and question everything but at some point the exercise needs to result in a workable solution for all parties, and it doesn't appear that's been this BOD's intent or practice.

IMO there must have been better, more transparent, methods that both Marriott and the BOD could have practiced through these years of turmoil. I won't ever disagree with anyone who says the Company holds too much information too close to its vest - I just think it's an exercise in futility to demand anything more from them than the minimum that the laws/regs/governing docs require of them. But the BOD's, aren't they supposed to be working for us, the owners?

 

[SueDonJ]

This is true - those complaints have been around for a long time. But was has changed is the points system and the real estate trust behind that, which keeps the voting power of all the underlying weeks with MVC. Perhaps with some exceptions like GRC and the international RTU weeks, it should not be surprising if MVC does indeed control the majority of the BODs, or is very close to that point. They've been adding weeks to the trust from the vast majority of resorts over 13 years. Consequently, their voting power has just grown. And these high MFs increases will lead to more foreclosures, more weeks in the trust, and even more voting power for MVC.

I've never known a Marriott timeshare entity, regardless of which incantation we're talking about, that hasn't had majority control of the resorts which it has allowed to remain in its portfolio. Some resorts have been held feet-to-the-fire by Marriott and capitulated to keep the name on the door, others did whatever was necessary to get Marriott to sever the management agreement. But overall, Marriott holds the cards - and one major reason is the number of owners who simply don't participate in the process. In an ideal world every owner would at least read the Annual Packet and vote their proxies without prompting, but it simply doesn't happen in numbers large enough to make a difference. That was true during the years when the Abound Trust didn't exist and it's still true today.

 

[CULox99]

I had submitted my initial request to GRCBOD@vacationclub.com as indicated in the McCormack letter. I received the BOD response letter from Sharon McKarns who is the Board Secretary. I have submitted questions back to her based on my concerns and hopeful resolution with MVC due to my personal viewpoint and value of the MVC partnership. I absolutely do not want to see MGR go independent with a new management company. I am by no means in the corner of MVC on these issues, but hopefully the BOD and MVC can come together to find resolutions to the issues outlined by both sides. Feel free to send you're owner questions to Sharon as I am sure she is tracking them for response from the BOD.

Dear Members of the GRC,

Attached, please find the Board response to the letter sent out by Tom McCormick of Marriott yesterday. Please reach out if you have any questions upon reading the letter.

Thank you,

Dr. Sharon McKarns
Board Secretary
grcboardsecretary@gmail.com

 

[bnoble]

even the good weeks have little to no value because the maintenance fees outpace the value

It all boils down to what "outpace the value" means. If it means "Does not save over Marriott's prevailing cash rates," I think it is unlikely that fees ever cross that line in general. That's because Marriott is not about to charge less than it costs to run the resort--and probably won't even get close to that. But fees are based on what it costs to run the resort*, plus or minus. If "outpace the value" means "less than I can rent from an owner," well again not many owners are going to rent at a loss for very long before disposing of the week.

Obviously, there could be exceptions to that in e.g. highly seasonal weeks-based destinations, where some of the lowest demand weeks are under water. But, that's exactly the problem that a point system is able to solve. Existing resorts will take a while to get there, because low-value weeks will be surrendered first. But high-value weeks will eventually go back too, just due to friction. Many owners will not want to spend the time and effort selling on an open market, even though it is clearly the right thing to do in dollars-and-cents terms.

But if "outpace the value" means "it's not worth paying Marriott prices when non-Marriott alternatives provide better value," then that's a different story. But it is still just a matter of degree. Many people have long thought that Marriott does not provide value in this sense of the term. Others will continue to believe they do.

-----------------
*: This is partly a matter of faith. But, if you don't believe that this is mostly true, I'd argue that it is long past time to sell.

 

[vikingsholm]

Hi Sue, no offense. You shouldn't know me unless you are a GRC owner, and even many of them don't. I have been a GRC owner for 19 years. I own multiple units and am possibly the single largest or second largest individual owner of the property. My personal investment is significant, as is my professional investment. This is not meant to be an advertisement, simply stating my involvement. I have operated HeavenlyVillageCondos.com for nearly as long as being an owner. It is a 3rd party rental service for fellow GRC owners who wanted an alternative to Marriott's program with high commissions and fees. Approximately 30% of the owners use my service and it continues to grow each year. My entire business existence is based on GRC. This is not a hobby; it is my career. I attend nearly all Board meetings in the capacity of an owner but have never been a Board member, nor do I have any desire to be one. Though I know all of them personally and professionally (some use my services) and I have great respect for the tireless work of those who previously served and those currently serving in this unprecedented level of conflict. I also have great respect for the on-site staff, whom I feel don't want to be collateral damage in this battle. They'd rather go about their days achieving guest satisfaction with little drama.

Regarding your comment on "legal tangles", it most concerns me that the Management Company has done so many things that warrant "legal tangles", and what they would have gotten away with had it not been for such a diligent and committed Board. Certainly other properties haven't noticed, and I fear that's what Management counts on. These tangles only originate out of bad behavior, all occurring from one side.

I do know extensively about the lawsuit regarding a former terminated employee. But I'm not willing to share the details. I have read the lawsuit. It was wide-ranging and salacious and even if just half of it was true and gone to trial, it would have been damming to those named along with the Company. None of those principals are still on the property. Either retired, quit, or moved within the company, But it was another settlement that Management expected the HOA to pay, ridiculous.

Aside from the most recently elected member, all of the current Board members have served multiple terms, there are not term limits. Marriott has one seat they control, and the original developer has a permanent seat. As owners, we value the history and institutional knowledge that those repeatedly re-elected officers brings. Marriott wants high turnover to make that historical knowledge go away. And they have tried to un-seat long-time members during elections, once successfully, but not since.

I agree that we have two sides that can be fairly stubborn. But the Board is trying to hold Management accountable and resolve their past improprieties without agreeing to a max increase in costs. Ironically, trying to keep the dues increase lower is also a benefit to Marriott. They own approximately 20% of the units and their costs would skyrocket as well. Our Board is actively trying to save them money.

Thanks for your very useful and informed comments on this topic, Tim. I suspect there are very few owners who know as much about the situation as you.

We have owned at Grand Residence for almost 15 years. It is different than ownership at single week type Marriotts (and many other timeshare companies) IMO, as we also know that experience from owning a Timber Lodge week and other systems' weeks too. The Grand Residence has felt more like a cozy family (though one in which you don't know many of the members necessarily) than part of a large amorphous entity. Some of the other Marriott owners here may not quite understand why this seems like such a bolt out of the blue to us, as I've felt more tied to Marriott through the Grand Res - and the difference of being a quarter share weeks owner. That has made it easier to feel loyal to an organization to which you've been closely tied in a larger way than most random week or points owners, I think, and perhaps have used their services and timeshares more than most other owners over the years.

At any rate, Tim is not only knowledgeable, but has provided a high level of service and attention to owners' needs in his rental program in my experience, as a renter of some of our Grand Residence unit time through his service. So I take what he has to say here pretty seriously.

 

[Ralph Sir Edward]

I do for MRD (Shadow Ridge).
View attachment 85480
View attachment 85481
View attachment 85482

Not applicable to GRC. Only the Covenants for GRC are applicable.

Was GRC built independently of Marriott? (I don't know.) I can't determine who has the facts on their side without the GRC doc.

 

[davidvel]

Not applicable to GRC. Only the Covenants for GRC are applicable.

Was GRC built independently of Marriott? (I don't know.) I can't determine who has the facts on their side without the GRC doc.

You commented on ROFR, and I provided the docs I have. My understanding is that ROFR language is fairly standard among resorts that have ROFR, with varying time limits for response being the main differences. That being said, I'm not sure what ROFR really has to do with this whole thread anyway.

 

[Ralph Sir Edward]

One of the complaints of the GRC BOD was that Marriott was taking over Periods for non-payment of MFs. Does the governing Docs allow this?

According to what Tim Golobic stated in his post above, apparently, it was not a Marriott developed project. "Marriott has one seat they control, and the original developer has a permanent seat."

If correct, the governing docs would have to be different from that standard Marriott governing docs. What do they say about foreclosures and ROFRs?

 

[AlmostRetired]

I think it is both healthy and necessary that those owners with a bit higher level of understanding and professional sophistication discuss and keep these issues in mind and not simply revert to the old " I still think its a good value and I like Marriott, so until it turns to crap, I don't care" mentality.

GRC is an anomaly in both ownership investment and current BOD/Marriott Resort Management conflict. It does require a higher level of owner knowledge. As I preciously mentioned, I believe the relationship between the management side of MVCI and a resort (owners) is symbiotic. This is vacation time so the only brain power I want to use it to understand the rules and learn to get as much as I can within the rules. So for me it is as simple as "I will continue to own as long as I get the value from my ownership I expect". If I have to worry about the integrity of the partnership, I will get out way before it turns to crap. I only own 2 1/2 weeks so I understand fractional shares are much more complicated.

This is true - those complaints have been around for a long time. But was has changed is the points system and the real estate trust behind that, which keeps the voting power of all the underlying weeks with MVC. Perhaps with some exceptions like GRC and the international RTU weeks, it should not be surprising if MVC does indeed control the majority of the BODs, or is very close to that point. They've been adding weeks to the trust from the vast majority of resorts over 13 years. Consequently, their voting power has just grown. And these high MFs increases will lead to more foreclosures, more weeks in the trust, and even more voting power for MVC.

The likely order for foreclosures will be Bronze, Silver, Gold and Platinum. This is also the order of negatively impacting the MF of point owners when moved into the trust. As MF of a deeded week increases, it increase for the trust also and for all point owners. A Bronze week in the trust might be 980 points. The MF per point for that unit in the trust is $2 per point. All of the non ocean resorts in HHI and most of the resorts in Orlando have MF's over what the point MF value is. All of this burdens the MF of the trust. I bring this up because trust owners will be crushed by the weight of the foreclosures moved into the trust maybe before it gets to gold and way before it get to Platinum foreclosures. We should be glad foreclosures are being moved into the trust. If not it would burden the owner in that resort. Knowing that Marriott is taking over foreclosures also means no one has to call Marriott to ask to take back your week. Stop paying and it will happen on it's own.

Exactly! The value proposition is already bad when buying direct; but when even the good weeks have little to no value because the maintenance fees outpace the value the whole thing comes tumbling down. (Eventually)

Buying direct has never been the best value for acquiring weeks. Points will collapse before deeded weeks as MF increases.

 

[BigDawgTUG]

@BigDawgTUG, did you receive this email from the mailto:GRCBOD@vacationclub.com address you sent to, or a different one?

It’s been asserted that MVC controls communications with owners so I am interested to know how many other GRC owners received this Board response to McCormack’s letter.

The original email came from MVCIAssociationServices@email1.marriott-vacations.com