It isn't hard for MVW to get employees deeded interests at a property.
When you say they are clearly representing MVC's interests, do you have fact based specifics of decisions that specific individuals have take that demonstrate that or are you assuming that people operate in that way?
I mean that votes on board decisions which are made by board members who work for MVW are going to be voted as they are directed by corporate. That's an assumption I’m making, but I don’t think it’s a wild assumption. The MVW employees who are assigned to VOA boards as part of their job are there to represent the company's interests. The company owns/controls lots of weeks, giving them a big voice (a HUGE voice at some properties) and their goals may, or may not, align with the interests and goals of owners like you and me.When you say they are clearly representing MVC's interests, do you have fact based specifics of decisions that specific individuals have take that demonstrate that or are you assuming that people operate in that way?
My personal experience of the MVC management teams is that they strongly favour their local customers and can get frustrated with constraints applied from above or outside by local regulations. I've not seen anything specific that there is a material adverse impact on owners from owner board members who may be favoured by MVC or appointed by MVC.
My personal experience of working in big corporates, is there there is often a greater connection between local customers and the company representatives than there is to the corporate mothership, and you have to have corporate policies in place to keep people from wandering off down localised paths.
I have no doubt that there can be bias conscious or otherwise, but that's normal human behaviour. I've not seen anything that demonstrates a systemic and adverse impact on owners. I bet MVW leadership wish they did have that much control over their staff
But for that to happen, there would need to be a relatively large corporate department that received the info on all the individual areas where decisions would be made. Then they would need to assess those against someone kind of criteria that would cover both global and local requirements and then pass that instruction back down the chain. We'd know if that existed and few large companies operate that level of command and control as it's then pointless and a waste of shareholder money employing local management teams. The task of generating and updating the assessment criteria alone is undeliverable, given the diversity of locations.
Most HOA byelaws have provisions that a minimum number of Board members must be elected by Owners that are not (or are not otherwise affiliated with) the Developer (which role MVC represents in all cases I am aware of....even where it wasn't the original "Developer" but it it's successor). If the Trust is managed by MVC, that would also exclude trust votes in my view (again, only for those seats that specifically must be elected by Owners that are not (or are not otherwise affiliated with) the Developer.I mean that votes on board decisions which are made by board members who work for MVW are going to be voted as they are directed by corporate. That's an assumption I’m making, but I don’t think it’s a wild assumption. The MVW employees who are assigned to VOA boards as part of their job are there to represent the company's interests. The company owns/controls lots of weeks, giving them a big voice (a HUGE voice at some properties) and their goals may, or may not, align with the interests and goals of owners like you and me.
So when a property's individual weeks are mostly owned by the Abound trust, that means the MVC gets most or all of the board seats, I would assume, and that property will be operated with essentially no oversight from non-MVC owners. It feels a bit like the fox guarding the henhouse, except that it’s not in the fox's interest to kill all the hens at once, he needs to keep them producing.
I am not accusing MVC of poor management or of running up MFs to pad their management fees, though there may be examples of both out there. Mostly they seem to do a reasonable job. But I worry about whether that will continue if their sales decline and they are desperate to prop up their revenues.
There should be clear guidelines on this outlined in the byelaws. For the HOAs I still have access to docs for, there is a clear description of what people are able to serve as an Owner director for any ownership by another legal entity (such as an LLC, Trust, corporation...etc).
I just went back to a couple of HOA byelaws and noticed both have some way of getting on the ballot even if not placed there by the "nominating" committee. It usually requires the support/signature of some minimum number of other owners....and in the cases I looked at it wasn't absurd (e.g. for Grand Chateau it is 10 other owners support).
I think this is a very valid question for the Board/MVC. Presumably the ramp up is to build up reserves to a specific level to meet the anticipated needs from the reserve study. Once they are built to said level, it would seem they should level off and or decrease....once you replace an item with a 20 year useful life, you should be able to amortize the reserve to required for the next replacement over 20 years (as opposed to the rapid "catch-up" being done now to account for previously underfunded reserves).
I’m curious if you have factual support for this contention? The bylaws are the rules for the HOA. Non owners are routinely ineligible to be BOD members. Are you saying that the MVC Trust, as an owner at GRC, is offering up a person to run for the BOD who happens to also be a MVC Point Owner, or are you saying that simply someone who happens to own MVC Points was considered qualified to run for a BOD position? If it’s as a representative of the MVC’s Trust ownership, that’s entirely appropriate because the Trust can only act through human representatives. That person acting on behalf of the Trust ownership doesn’t need to also own personally.
This is mostly incorrect as presented. MVW originally tried to defend the nomination of the non-owner this way, making a grand statement that any points owner can run for a board at any property (or at least a California property). Then they properly changed their position.
Thank you to everyone who contributed to this conversation. It has definitely enriched my understanding. Below are my takeaways:
P.S. - love the numbers you sent Tim- just what I needed - not at all super boring!!
Just to clarify, because the MVC Trust, as controlled by MORI, is an owner of units at GRC, and because the Trust is a legal entity, that entity can only be represented by human beings. That human being who the Trust nominates to serve on the BOD and who then runs for one of the positions, doesn’t need to have ANY MVC ownership as an individual. The person is representing the Trust, and the Trust holds ownership.
No, because every person serving on the BOD owes a fiduciary duty to the HOA. That is why everyone, whether they are someone who works for MORI or an individual owner, owes a higher standard of care (ie fiduciary duty) to the HOA. When owners were acting to harm the HOA by refusing to pay operating expenses, that was a violation of their duty.
Yes, in a properly behaving world. But that is far from reality. And trying to prove an MVW-installed director is not acting as a proper fiduciary is a highly subjective accusation and fairly easy to defend. Just as you have said the current Board was acting wrong, an argument could be made they were doing their job and protecting the owners' financial stake. And a MVW director could say I voted for huge increases "because the property needed it (mumbles under his breath that these charts prepared by corporate say so)" is likewise a fair stance. And without the watchdog, you are relying on and trusting the corporation to be self-monitoring, which I don't think has played out well in any industry that pushes for less oversight. "We'll take your word for it" is not very reliable in the timeshare world.
I am not saying that you take anyone’s word for it. The risk of personal liability for breach of fiduciary duty is real. In everything, there has to be some level of trust. It does no good in the business world to destroy a reputation or create one that says the company is engaged in egregious conduct and self serving actions. And not sure which charts you’re referring to, but as to the reserve analysis, that’s completed by a third party. An independent company. It’s not corporate creating charts to support its position.
I agree that there is at least theoretical liability for breach of fiduciary duty by members of a Board of Directors. And I will admit that I have not read the proposed budget line by line.
E&O coverage doesn’t cover for intentional misconduct. E&O doesn’t cover punitive damages either. E&O doesn’t typically provide for the breach of fiduciary claims you’re talking about when you believe the person will basically do whatever MVW wants to the detriment of the HOA. That isn’t how the business world works. And “Marriott” cannot fire any BOD member. That’s not how a BOD works.
Sure the third party analysis can be off, but it’s up to the BOD and the management to review the reserve analysis and dig into the numbers. That’s part of the reason there’s a third party, so that it’s independent and it provides guidance to the BOD and management. As opposed to disgruntled owners denying the costs to replace the components. And frankly, how many owners really ever grasp the vast FF&E and mechanical systems that are required to properly operate a property of that size? You may think costs are overinflated for replacement, but there’s a lot to the infrastructure and mechanical systems. Also, factors such as useful life are used as industry standards. The roof may need more because of the elements, as an example. But these are aspects that the entire BOD must consider. And a third party gives the analysis independence.
I believe the "firing" comment was regarding the Board member MVW is trying to get elected. They could "fire" that person "fire" and replace with a more loyal servant. As they do with their permanent Board seat. That changes from time to time at their discretion.
Agree that the Board needs to dig in - three independent third party analyses can all land in very different places. The timing of a lot of infrastructure can be discretionary - do you repair a roof or replace it? Do you replace furnaces before their estimated life or keep an eye on them? Any assumptions clearly need to take into account local conditions such as snow load on roofs. I would not want GRC decision- makers to take one third party’s estimate as the gospel. A lot of questions need to be asked and the numbers checked against historicals and comps.
Well said, and it's worth noting that the decisions one makes for a large resort might be different than one would make for your own home or a small property.