WSJ-VGV - Nov. 2015 Report to Owners
For this interested - here's a copy of the full email sent from the VGV HOA
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Dear Fellow Virgin Grand Villas Owner:
As your owner-elected members of the Board of Directors of Virgin Grand, we recently participated in two board meetings. The first meeting was held in early October to participate in preparing the 2016 budget. The second meeting was held on November 20 to approve the proposed 2016 budget, which was included with the Notice of the November meeting that was sent to all owners.
MAINTENANCE FEES GOING DOWN AGAIN
The good news is that there will be no maintenance fee increase next year! In fact, there will be another small maintenance fee decrease (1.5%). This reduction in our fees will occur despite having increases in the cost of insurance, employee wages, benefits, other contractual costs, and adding to reserves for improved communication services.
This is the fifth consecutive year in which maintenance fees have gone down. Although a significant part of the reduction resulted from circumstances beyond management's control (a reduction in the cost of electricity from 51 cents to 38 cents per KWH), we can also appreciate management's continuing efforts to control costs and to increase efficiency.
MORE IMPROVEMENTS COMING
Notwithstanding the decrease in maintenance fees, the resort is still improving. Buildings 33, 34, 41 and 42 were renovated in 2015, and buildings 31, 32, 43 and 44 will have renovations in 2016. (Despite several attempts, we could not obtain the required unanimous consent from the owners of unit weeks in any of the units in buildings 41 and 42, so the renovations in those buildings will not include a fixed wall in the upstairs bedroom area as many owners of those units had requested).
The Board also approved our suggestion that ADA-compliant chilled water dispensers be installed at both of the hillside pools, and that towel drying racks be provided for the patios in all of the pool villas. And on a more mundane note of interest to those of us who cook in our units, expect more sturdy garbage bags in your kitchens. (This is something that both owners and the cleaning staff have desired).
DEVELOPER PURCHASE OF FORECLOSED UNIT WEEKS THAT WE OWN
Another development is that the Virgin Grand developer has agreed to purchase all 112 unit weeks that the Association owns as a result of foreclosures on delinquent owners. These are unit weeks on which the owners were not paying maintenance fees and, as a result, the rest of us had to pay their share of operating costs. So, commencing in 2016, the developer will pay the maintenance fees for these unit weeks until new fee-paying owners purchase them.
This sale is of significant benefit to all of us as owners. In the past two years, we have held "bargain sales" to enable existing owners to purchase this inventory. Despite very low prices, we were able to sell to owners only a fraction of the unit weeks that we owned, and therefore the sales (and the annual fees paid by the new owners) resulted in a smaller impact on maintenance fees than we had hoped. The sale of these 112 unit weeks will result in an annual benefit to the Association in excess of $200,000 (far more than we could anticipate as a result of a third "bargain sale" where far less than all of the unit weeks would be sold). We will also realize a one-time benefit of $242,480 from the proceeds of the sale. While it is of course helpful for the Association to receive this cash payment, we consider it to be less important than the ongoing receipts of increased maintenance fees, attributable to these 112 unit weeks. Next year, the Board will decide how to allocate those funds. Some of the proceeds from this payment could be applied to accelerate, during the next one to three years, the full funding of the special reserve that we created four years ago to pay for the $2.3 million deductible on the insurance policy that protects us in the event of a hurricane. Currently, that fund has about $1.5 million. Some of the funds can also offset what would otherwise be an increase in maintenance costs attributable to the Association resulting from the conversion, by 2017, of 96 hotel rooms to 48 timeshare units, which will cause an increase of about 5 percentage points in our proportionate share of the costs associated with the operation of the common areas such as the big pool and the tennis courts. We currently pay $186,662 each year to maintain those common areas, or about $39.78 (on average) per unit week.
Earlier this year, we anticipated, and announced in a report to you, that we would have a third "bargain sale" this year. Because of the fortuitous development of the sale of our entire inventory of foreclosed unit weeks, there will not be such a sale. In future years, under our agreement, the developer has a right of first refusal to buy such unit weeks as we acquire by foreclosure at a scheduled price. If the developer does not exercise this right, we could at some point hold another sale to owners. And if for any reason we become dissatisfied with this arrangement in future years, the Association has the right to cancel the agreement.
You should be aware that the three developer-appointed directors to the Association Board did not participate in the negotiations resulting in this arrangement and recused themselves from voting when it was presented to the Board; it was negotiated and approved by the two of us and unanimously approved by us as, in our considered judgment, being in the best interests of the Association and its owners, taken as a whole.
FREECYCLE SHED UPDATE
The freecycle shed seems to be working very well. General Manager Mike Ryan reports that at checkout time on Fridays and Saturdays, between 10 and 12, there are typically 25 to 30 beach chairs in the shed, available for use during the week by Virgin Grand owners and their guests. And by 4 pm, they have all been taken by incoming unit owners and their guests. As a result, the Board has authorized a small expenditure ($500 per year, or about ten cents per unit week) to purchase additional beach chairs or other equipment to be housed in the shed. Reminder: if you take something from the shed, please return it there at the end of your stay, and don't leave it in a locker or at the beach. And if you happen to buy equipment while you are in St. John that you don't want to take back with you, please contribute it for freecycling.
NEW DIRECTOR OF OPERATIONS
When you next visit the resort, please welcome the new Director of Operations, Sam Hugli, who brings his many years of experience in the hospitality industry to our resort. We encourage all owners to attend the owners' cocktail party, held in the late afternoon on nearly every Monday, weather permitting. Mr. Hugli will often be present, along with Mike Ryan.
VISTANA SIGNATURE EXPERIENCES
As had previously been announced, Starwood Vacation Ownership ("SVO") is being spun off by Starwood to become a stand-alone public company, Vistana Signature Experiences ("Vistana"), which will manage the timeshare resorts previously managed by SVO. This development was anticipated to be completed during 2015, but we have been advised to expect it to occur during the second quarter of 2016. And just a few weeks ago Starwood announced that upon completion of the spin-off Vistana will merge with Interval Leisure Group ("ILG"), a "provider of non-traditional lodging…that currently operates more than 200 resort properties around the world". In that announcement Starwood stated that timeshare owners will continue to have access to the Starwood Preferred Guest ("SPG") program and, as well, exchange privileges, including through the Starwood Vacation Network and Interval International, which is part of ILG.
Recently, it was announced that Starwood and Marriott International will merge to create the world's largest hotel company. This is expected to occur mid-year of 2016, following the spin-off of SVO to Vistana and its immediate merger with ILG. SVO will remain part of Starwood until its merger with ILG is complete. As of now, no changes have been announced to owners' SPG program status, Starpoints or existing reservations.
NOTICES FROM US AND FROM THE RESORT
If you received this newsletter from a friend or relative rather than directly from an SVO email, you probably have not given SVO the email address that you most often check. In that case, you might want to update your email listing online at starwoodvacationnetwork.com so that you receive all emailed notices from the resort and from us, your elected representatives.
ANNUAL MEETING
The 2016 annual meeting of the Association will be held on February 22 at the resort. If you will be at the resort that week, we encourage you to attend and ask questions. Information will be sent out in advance of the meeting.
Sincerely,
Philip G. Schrag
phil.schrag@gmail.com
Robert H. Werbel
robert.werbel@yahoo.com
