Nov. 2014, Report to VGV Owners
November 26, 2014
Dear Fellow Virgin Grand Villas Owner:
As your elected representatives on the Board of Directors, we participated in September in a session with management to consider a proposed budget for 2015 and in the November 2014 meeting of the Board. This is our report to you.
Maintenance Fees Going Down Once Again
Thanks to good work by the management company, vigilance by your Board of Directors, a lower rate of non-payment of maintenance fees, and a decrease in water usage (because pool leaks were discovered and repaired), maintenance fees are going down again this coming year. The decrease is not significant – an average of $14.23 per unit week (a little less for small units, a little more for large ones), but of course, any decrease is better than an increase, provided that there is no reduction in the quality of the resort or the services that we receive when we visit.
We were able to achieve a small reduction despite the facts that our property insurance premiums have increased substantially, from $66 per unit week in 2011 to $209 in 2015, and that in 2015 we will incur fees for alarm maintenance and termite treatment that we must pay every five years. A main driver of the increased insurance premiums is the revaluation of the property by the insurance company; the property is worth considerably more as a result of the improvement of the buildings in the last few years.
However, we think that it is safe to predict that over the next few years, we will probably experience maintenance fee increases, although we will try to keep them as small as possible. In addition to any normal cost-of-living increases (for example, in staff wages), one reason for the expected increases is Starwood's continuing conversion of its hotel rooms, including the poolside rooms, to time share units. As you know, in recent years Starwood created the Bay Vista and Coral Vista developments on what was hotel property, and it is now starting a fourth timeshare development at The Westin St. John by converting some hotel rooms in Building 12, one of the poolside buildings. Each conversion causes the number of units on hotel property to decrease, because two hotel rooms are often converted into one two-bedroom unit. The legal agreements that govern the property provide that most common expenses are shared in proportion to the number of units (not the number of bedrooms) for each entity. So, for example, in 2014 our Virgin Grand property accounted for 28.7% of the units, and therefore bore 28.7% of the common expenses (such as waterfront activities and the salaries and benefits of the front desk workers, the reservation clerks, and the security personnel). But in 2015 our share of the units and of those expenses will be 31.1%, and our share will continue to increase for as long as Starwood replaces hotel rooms with a smaller number of timeshare condominium units.
Until the creation of the Coral Vista development, there were 175 hotel units. Now there are only 96 hotel units and 54 Coral Vista units, a reduction of 25 units. If there are further conversions of multiple hotel rooms to single ownership units with no corresponding savings in cost resulting from the smaller number of units, our maintenance fees would continue to rise.
Please note that these developments by Starwood are not something that the Virgin Grand Board of Directors can control or even influence. We are providing the information to you so that you can anticipate what might happen, not because there is anything we can do to prevent this possible maintenance fee increase.
As an aside, we have no sense that an elimination of the hotel would necessarily diminish the quality of the resort. We have vacationed at other Starwood Vacation Ownership resorts that had only timeshare units, and no hotel, and the quality of those resorts (such as in Maui and Princeville, Hawaii) is just as high as that of The Westin St. John.
Co-generation of Electricity
The principal issue for our Board discussions during the past year has been how to control our energy costs. As you know, the electrical utility in the Virgin Islands has been charging extremely high rates for power – currently about 50 cents per kilowatt hour. And the rate has increased steadily for the last five years. Not only is the power company's electricity expensive – it is also unreliable, causing frequent power outages at our property.
As you know, we have installed photo-voltaic cells on the roofs of some of the Virgin Grand buildings to produce solar energy for us. But solar energy cannot meet all of our needs. Some additional cells are being installed on certain roof surfaces of the hillside buildings, but most of those surfaces do not receive enough sunlight to make installation of still more cells worthwhile. We also considered a ground array of solar cells below buildings 31 and 32, but we decided that such an array would be unsightly and would destroy the look of the resort.
As we have previously reported, we are considering purchasing co-generation equipment that would produce all of our remaining electrical needs by burning LPG (which comes in liquefied form and produces a combustible gas). At current prices, the cost to us of the fuel would be about 33 cents per kilowatt hour, and a service contract for the equipment will add about 4 cents per kilowatt hour to this cost. The equipment would be located on the hotel side of the road, not on our property, and underground lines would bring the electricity to Virgin Grand.
However, we are still evaluating whether this would be a worthwhile investment. If the current rate that we pay for electricity were to continue or increase, we could recover our cost in less than seven years, and after that, we would save a good deal on our electric bills. But it has been announced that the local utility company is converting its generating equipment from diesel fuel to LPG. That could significantly decrease the price of the electricity that we purchase. We cannot presently estimate the pace of the utility's conversion or whether it will really result in a lower price for electricity. It is therefore quite challenging for us to predict the amount that we would save by purchasing co-generation equipment or how long it would take before we would break even on our investment in the machinery and start to save money. So we are continuing to study the issue rather than deciding to buy co-generation equipment at this time. Meanwhile, because the savings from the utility's conversion may not actually be realized, we are investigating the expected useful life of the co-generation equipment and the availability of long-term service guarantees.
Owner Posting Bulletin Board
We continue to receive some mail from owners who ask us how to access the owner bulletin board for listing units for rent, sale, or exchange, so as a friendly reminder we have included the instructions here:
Secure access to the site is provided to Owners registered with MyStarCentral. Please follow the steps below.
I have a MyStarCentral account:
Visit starwoodvactionnetwork.com and click on 'Owner Login' in the upper-left corner of your screen.
Enter your Username or Email and your Password and click 'LOG IN'.
Hover your mouse over 'Owner Quick Links' in the upper-right corner of your screen and select 'MyStarCentral' from the drop down list.
Click on 'Your Owners Association' in the left-hand navigation menu.
Select a 'Westin St. John Resort & Villas - Virgin Grand' unit and click 'View the Details of this Ownership Week'.
Click on 'VGV Owner Posting Board' in the right-hand section of your screen.
I do not have a MyStarCentral account:
Visit starwoodvactionnetwork.com and click on 'Owner Login' in the upper-left corner of your screen.
Click 'REGISTER NOW'.
Follow the on-screen prompts to complete the online form.
Click 'Go directly to the StarCentral homepage'.
Click on 'Your Owners Association' in the left-hand navigation menu.
Select a 'Westin St. John Resort & Villas - Virgin Grand' unit and click 'View the Details of this Ownership Week'.
Click on 'VGV Owner Posting Board' in the right-hand section of your screen.
This will take you to the Association's website where you must read and accept the terms and conditions of the disclosure statement. You will then be taken to the homepage where you can sign up and create your member profile.
Please be aware that you must create a member profile and be logged in to create or view current listings. Just beneath the boxed message on the homepage, there is a link you may click on to view detailed instructions for use of the website. This detailed instruction document and the FAQ page can be accessed without logging in to the website.
There is one tricky part about logging in for the very first time. When you have followed the instructions above and get to the main page for our posting website, you will see this box:
User Login If you are registering for the first time on our bulletin board, DO NOT enter your email or password where it says to enter them. Instead, click on the words "New members click here to sign up." After you have signed up as directed, on return visits to the site you will enter your email and the password that you selected.
Also, a few Mac users have had difficulty signing in with Safari. If you use a Mac and have difficulty, try using Google Chrome.
Chikungunya Virus
A tropical virus called chikungunya has now affected the entire Caribbean region. See the recent New York Times article about it and the St. John Tradewinds article (reporting that the disease has reached St. John). This is a virus borne by day-biting mosquitoes. The resort treats standing water on the property, and there are also 26 mosquito traps on site. However, many of us also travel to other places on the island. We therefore advise owners to use mosquito repellant containing DEET during daylight hours, particularly when venturing off the resort grounds.
Sidewalk
We are investigating the possibility of building a sidewalk along the main road from our property to the St. John Market, so owners who shop there would not have to walk in the road. We have asked the Board of the Bay Vista development to share the cost with us, as Bay Vista owners also shop at the St. John Market.
Annual Owners' Meeting
The next annual owners' meeting will take place at the resort on April 20, 2015. We encourage those of you who will be in St. John at that time to attend, when there will be an opportunity to ask questions at the end of the meeting.
Sincerely,
Philip G. Schrag
phil.schrag@gmail.com
Robert Werbel
robert.werbel@yahoo.com
This email was sent by SVO Management, Inc. You've received this email as a convenience in the general course of communication regarding your ownership.
