Sept. 2016 - VGV Owners Letter from BOD
September 2016
Dear Fellow Virgin Grand Villa Owners:
As your elected members of the Board of Directors of the Virgin Grand owners association, we recently participated in the fall meeting of the Board, held in Orlando Florida. Two of the four meetings each year are held by conference call, but the September meeting is an in-person meeting at which, among other business, members review and either accept or suggest changes to the budget that has been proposed by management. The budget is then circulated to owners before final review by the Board in November. Here is a photograph of the Board at work:
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2017 PROPOSED BUDGET
So let’s lead off with some good news:
For the sixth year in a row, the 2017 proposed budget, which you will receive shortly, and to which we expect to give final approval in November, contemplates a small decrease (one percent) in maintenance fees. We recognize that the decreases in each of the last six years have been small, but we regard small decreases as vastly preferable to increases.
The management company has managed to present a budget that again reduces maintenance fees as a result of seeking efficiencies wherever possible, and despite:
increases greater than inflation in the pool of funds available for staff salaries
an expected increase in the cost of electricity (about which we will say more below)
ongoing improvements in the facilities of the resort, many of which we have discussed in past reports and some of which are described below.
Our budget was also helped by the fact that during 2016, as we reported last year, the developer began paying annual maintenance fees on the 112 unit weeks that our association had obtained through foreclosure actions against owners who were delinquent in paying their maintenance fees. We continue to have an aggressive lien and foreclosure policy, so that owners do not have to absorb the maintenance costs that are not paid by the approximately five percent of owners who are delinquent. (If you become behind in your maintenance fee payments, we urge you to make those payments rather than being locked out of the use of your unit, having a lien imposed on your property, and being subjected to a lawsuit to foreclose on your unit week.)
RESORT UPDATE
We can expect these improvements, many of them responsive to requests we have received from owners, during the coming year:
Water fountains at the iguana pools, which the Board approved last year, will be installed and operational by the end of December. In addition, house phones are being installed at the iguana shuttle stops at the hillside pools and near the 3-bedroom villas.
Renovations will be completed soon in buildings 31, 32, 43 and 44. Additional artwork will go into the other buildings, where renovations were completed in the recent past.
Knox and Ollie’s, the new restaurant where Cruz Bay Prime used to be, will open on November 1. At about the same time, Lemongrass will move to being open five nights a week with a buffet and closed two nights a week (probably Tuesday and Wednesday which are the slowest nights of the week). Lemongrass Bar will remain open on those two nights. The space that used to be occupied by the Mango Deli will have a new tenant, featuring coffee service and health drinks in the morning and house-made ice cream in the afternoons and evenings. New awnings are being installed at Snorkels.
Privacy shades are being put in place for massages at the gazebo.
Beach chairs will be added periodically to the freecycle shed, to augment the beach chairs that owners buy and leave in the shed for others to use.
New chairs and tables will be supplied for the hillside balconies. The new chairs will be a bit smaller than those previously used, enabling owners to seat four people around the balcony table. The new chairs will be stackable, so that if an owner would prefer more balcony space, chairs can be moved to one corner.
The pool villas will receive new patio furniture with cushions.
The outdoor Jacuzzis in buildings 43 and 44 will be repaired so that they are all fully operational.
Many of the trees visible from the hillside buildings will be pruned, to improve the view of the bay. Not every tree can be pruned, however, because some of them are protected species and a few are not on our property.
BUDGET ISSUES
We had to budget for an expected increase in electricity costs during 2017, from the current rate of 28 cents per KWH to a possible rate of 35 cents per KWH. We have no control, of course, over the rate charged by the utility (which is based in St. Thomas), but we believe that the current rate (down from 51 cents per KWH a few years ago) will go up because the utility has not yet converted from diesel fuel to liquid propane gas and will need to spend money to replace outdated infrastructure before it can make the planned conversion. (If we are wrong and the rate does not go up, there will of course be a surplus compared to the amount that we have budgeted.)
Although we can’t control the utility’s rates, we do have some control over consumption. Please turn off the lights and televisions, and set the thermostat on your air conditioning to 70 whenever you are out of the villa.
As in the past several years, the maintenance fee for 2017 includes a contribution to the hurricane contingency fund we created several years ago that would pay for the 5% deductible ($1.3 million) in the event of a catastrophic major storm. (The deductible kicks in if our property is damaged by a tropical storm or hurricane that has been given a name by the weather service.) We hope to make a final reservation of funds for that contingency in the 2018 budget, so that if there is no major storm and no increase in the insurance company’s assessment of the value of Virgin Grand, owners will not have to fund this contingency as part of our maintenance fees starting in 2019. Of course if there is a damaging “named storm,” we will have to replenish funds that we spend on repairs. We have been lucky in recent years (the most damaging storm was not a “named storm” so it was covered without our having to pay a deductible), but St. John is in the path of potential hurricanes and many experts expect them to become more frequent and stronger as a result of global warming.
As you know from our previous reports, our share of the common area costs of the resort (shared also by the hotel and the three other condominium associations) has been going up ever since 2008 as a result of the conversion of hotel rooms to a smaller number of condominium units. Common costs are items such as security for the entire resort and activities such as providing the kayaks on the beach, as opposed to landscaping maintenance of the Virgin Grand property, which is entirely our responsibility. In 2007, our share of the common area costs was less than 25 percent. In 2017 it will be about 33.6 percent and by 2018, when all the hotel rooms will have been converted to condo units, our share will stabilize at a little more than 36 percent. Most of these costs are distributed in proportion to the number of units in each entity (that is, the hotel and each condominium association), rather than the number of bedrooms in each entity. We were concerned that the allocation by units rather than bedrooms was unfavorable to Virgin Grand, but a careful analysis revealed that the difference between these two methods of computing the allocation was only a fraction of one percent, and in fact the method that the management company uses is slightly favorable to Virgin Grand. In other words, under either method of computation, our portion of shared common area costs would have increased since 2007 from less than 25 percent to a little more than 36 percent in 2018.
OWNER BULLETIN BOARD
{insert hard to follow instructions to get to VGV Owner website - ridiculously hard to navigate no matter how they instruct - instructions shouldn't even have to be needed - IMO, sorry}
ANNUAL MEETING
The annual meeting of the association will be held at the resort on the morning of Monday, February 27, 2017. We hope to see many of you there. Bring your questions or, if you can’t be there in person, email questions to us and we will ask them for you. We will send out our next report after that meeting.
Philip G. Schrag
phil.schrag@gmail.com
Robert H. Werbel
robert.werbel@yahoo.com