March 2018
Dear Fellow Virgin Grand Villas Condominium Association Owner:
We recently participated as your elected members of the Board of Directors in the 2018 Annual Meeting of owners. The highlight of the meeting was a thorough, lengthy presentation reporting on the destruction caused by Hurricane Irma and what Vistana is doing to restore the property this year, with an eye to reopening the resort on January 4, 2019. The presentation featured many slides showing the damage. To view the presentation, please
click here.
To view videos that were also presented, please click on the links below:
DAMAGE, CLEANUP AND RECONSTRUCTION
The damage to the entire Westin St. John (“WSJ”) resort is estimated to be about $120 million (by contrast the insured value of our Virgin Grand buildings is approximately $43 million). Only part of that damage was sustained by our buildings; nevertheless, there were no buildings on the property that were spared structural or water damage. The water damage was so extensive that drywall had to be removed in every villa, and in many units, studs and rafters that had gotten wet will have to be encapsulated during the next several weeks before the drywall can be replaced. Maximum sustained winds were 220 miles per hour with wind gusts at the WSJ registering 274 miles per hour before the wind meter broke. The resort lost power, and the building containing some of the generator equipment lost part of its roof and was flooded, but General Manager Sam Hugli and his engineers were able to get the generator going after only seven hours. 313 guests were on the property at the time, and all of them were evacuated within days thereafter to Puerto Rico to return home. No injuries to guests or associates were reported.
Vistana and the Boards of the four timeshare associations hired Cotton International, the world’s second-largest post-disaster contractor, to clean up and rebuild the resort. Since last September, about 300 people (130 WSJ associates) have been working to remove the massive amounts of debris left by the storm’s destruction and about 300 people (80 WSJ associates) will work in the rebuilding process. Hurricane Maria, on the heels of Irma, slowed progress because it dumped more water onto St. John and caused the closure of the ports of San Juan and St. Croix. Nevertheless reconstruction has now begun.
The aim of the reconstruction is to make our resort even better than before. All damaged drywall is being replaced, as are damaged ceiling tiles, soffits, doors, windows, cabinetry and lighting. The pools are being resurfaced. The exteriors will be power-washed and repainted. The unit interiors will be restored to their prior condition, with all upholstered furniture and carpeting replaced along with any damaged hard goods such as tables and cabinets. Snorkels will be rebuilt but we do not know whether any high-end restaurant will replace Knox & Ollie’s.
Your Board has been particularly thorough with respect to concerns about mold that may have grown on damaged surfaces in the days and weeks after the storm. The Board hired an independent company, Environmental Analytics, based in Arizona, to evaluate biological problems and report directly to the Board as well as to Cotton. Environmental Analytics had no prior relationship with Vistana or with Cotton. Its president recently spent a week taking samples on the property, and he will return at least two more times to make sure that the buildings do not present biological hazards to owners and guests when the resort reopens.
HUMAN RESOURCES
Vistana took a great deal of care to prevent undue hardship to its employees, many of whom have not only lost the opportunity to do their regular jobs for 16 months but also suffered damage to their homes. Staff associates were paid for a month without having to come to work, and after that were given the opportunity to work on the cleanup and receive their regular pay and benefits. Those who did not want to do this were offered severance packages and help in obtaining employment at other Vistana resorts. Each associate also received $1000 or $2000, based upon need, from a fund set up by ILG (formerly Interval Leisure Group), Vistana’s parent company. Vistana associates provided donations of all types of daily-use items as well as gifts for Santa’s visit with the children of WSJ associates. The resort donated discarded furniture and linens to the WSJ associates and also provided food and clean water to the greater St. John community as well as WSJ associates.
INSURANCE
As we previously reported in detail, even though our insurance policy has a 5% deductible, we do not expect to have to impose a special assessment to pay it. For several years, we have been building up an insurance contingency fund to cover the hurricane deductible, and this fund now has about $2.3 million in it. We also have regular replacement reserve funds that could be tapped into, and we have an operating surplus because the resort was closed during the last three months of 2017. Some of that operating surplus will have to be expended, however, to train new staff associates during December 2018, because some of the people who worked at the resort before the hurricane have found other jobs or moved out of the Virgin Islands. We may also have to make provisions in the 2019 budget for a one-time expenditure to cover some of the costs associated with reopening the resort next January. Any unexpended operating surplus will carry over to 2019 and be available to offset our expenses going forward. We expect to know more about the impact of the hurricane on our budget in a few months, after the damage assessment is final and we know the amount of our liability for the deductible. We probably won’t know how much the additional staff training will cost until late in 2018.
THE ISLAND
The resort is likely to recover more rapidly than much of the rest of the island’s infrastructure. Cruz Bay does not yet have electricity 24 hours a day. Internet service is very spotty and cell phone service is poor, as only AT&T has rebuilt cell phone towers. Some restaurants are open, but there are almost no tourists, so now that most of the FEMA workers have departed, many of those restaurants are open only a few days a week with limited menus. The public passenger ferry is running but the car ferry has very limited service. Caneel Bay was severely damaged and it is unknown whether or not it will reopen. In all likelihood, neither ZoZo's nor Asolare will reopen, but Skinny Legs is up and running. The donkeys, deer and iguanas survived; in fact the donkeys seem to inhabit the shells of the beachfront cottages at Caneel, while for the present time, deer graze near our own Lemongrass Restaurant. The north shore beaches have largely been cleaned of debris, but there has as of yet been no survey of damage to the reefs. We all hope that more of the island’s infrastructure will come back by the time our resort reopens, but the island’s recovery may be much slower than that of the Westin St. John.
Click here to view a recent article in The New York Times on St. John’s recovery.
ALTERNATIVE VACATIONS
As you know from previous messages, Vistana is making special efforts to make sure that all owners receive alternative vacation options. Vistana is making its rental inventory available to St. John owners to facilitate exchanges at other Vistana resorts. Banking StarOptions from 2018 is free of charge, and the banked options will be valid for three years instead of the usual two years. You can also deposit your unit week with Interval International, but as usual, the exchange through Interval International depends on relinquishment by an owner at a resort to which you want to go.
OTHER BUSINESS
Aside from receiving management’s report on progress and addressing questions posed by owners, the main business at this annual meeting was the owners’ election of a new director to succeed Robert Werbel, who has served as one of your owner-elected directors for the last eight years. Laurence Pelletier was elected to replace Bob and we are pleased to observe that Larry’s expertise appears to be both significant and relevant. The Association and the Board passed resolutions expressing appreciation for Bob Werbel’s commitment and service. The resolution will be included in the meeting minutes, which is available to owners upon request.
A FAREWELL MESSAGE FROM BOB WERBEL
Thank you for your support eight years ago in electing Phil Schrag and me as your owner-representatives to the Virgin Grand Board of Directors. I appreciate the privilege, which Phil and I have attempted to fulfill responsibly on your behalf. You should know that in deciding not to seek re-election this year I have believed that it is important that my replacement have sufficient opportunity for an orderly transition while Phil remains a director. I look forward to returning to our resort in 2019 and greeting many of the friends that the last eight years have allowed me to make.
Philip G. Schrag
phil.schrag@gmail.com
Robert H. Werbel
robert.werbel@yahoo.com
