Virgin Grand Villas - Report from Owner-Elected Representatives - May, 2011
Dear Fellow Virgin Grand Villas Owner:
We have now completed our first year as your elected members of the Board of Directors, and we have just returned from the Annual Meeting of the owners association, which was held together with a regular Board meeting in Orlando, Florida. As in the past, our meeting with the management-appointed directors and with the management company staff was cordial and productive.
What’s happening at the resort
We are happy to report that the refurbishing project is on schedule and essentially within the budget that was proposed. If you have been to St. John recently, you have seen the improvements with your own eyes: the hillside buildings have new roofs, repaired stucco, and new and improved doors and windows. Construction is starting just about now on the pool villa buildings. All of the work is projected to be completed before the Christmas season begins.
The resort as a whole has had a similar upgrade: a small silver lining from last fall’s storm damage is that it facilitated resurfacing of the big pool and of the tennis courts, improvements in the kids club, and many smaller upgrades, much of which were paid for out of insurance claims. We learned that the resort was restored to AAA Four Diamond status, and it was designated the best beach resort in the Virgin Islands by the Virgin Islands Daily News.
Another significant improvement is the installation of a voicemail hotline that you can call from your villa. You can leave compliments, complaints, or requests for attention to an engineering problem, and your voicemail will go directly and promptly to Mike Ryan, the general manager, or another of the senior managers. We understand that owners have used this voicemail and report great satisfaction. (You’ll find the number to dial on a tent card next to the telephone in your villa.)
More good news: the iguana shuttle is again running on a regular schedule, and more than 50 of the older golf carts have been replaced. Also, recycling bins for cans and animal-proof garbage cans dot the property. This fall, new gas lines and gas grills are being added to the pool villas, and buildings 41 and 42 will get new pool decking. The hillside pools and their decks are being resurfaced, and new lighting and fencing is being constructed. The freecyle shed is getting increased use (be sure to leave something useful behind when you visit, to get it up to full capacity). And weekly owners’ receptions are being restored in June.
There is a bit of bad news, too: the premium on our association’s property insurance is being increased by 38% (in dollar terms, about $94,000 per annum, or about $20 per average unit week). The reason is a combination of industry-wide property insurance premium increases (occasioned by the Japanese earthquake and the tornadoes in the U.S.) and the storm problems that the Virgin Islands experienced last year. (We are fortunate to participate in an insurance portfolio comprised of a large number of Starwood properties. If we had our own stand-alone policy, it would likely not have been renewed at all, given the storm damage last year and the insurance industry’s aversion to risk.)
The special offer to owners
As you know, many weeks whose owners were locked out because of non-payment of fees were offered for rental to owners for the cost of the unpaid maintenance fee. Fifteen such units were rented, bringing in $35,000 to the association’s operating account. This was a successful first effort, but we hope that if there are a substantial number of such weeks next year, more will be rented to St. John owners, again for the cost of the unpaid fees. There were a few technical glitches this year which we are working with our management company to improve upon for next year.
The online directory
All owners should by now have received an offer to participate in the online owner directory, which will enable owners to contact each other to swap or buy and sell weeks. As of the meeting, 638 of approximately 3,000 owners have listed themselves. The directory will be more useful if more owners list themselves, so we urge everyone to get on the list. Remember, even if you were listed in last fall’s directory, you need to re-list yourself every time the directory is re-issued. The closing date to be listed is June 5. If you didn’t receive an offer to participate, click here to be directed to the input screen for enrollment. We expect that the directory will be available before the end of June.
The online bulletin board
The management company is actively working on another tool to facilitate swaps and sales among owners: an online bulletin board, with access available through mystarcentral.com, on which owners will be able to post weeks that they want to exchange, rent to others, or sell, and weeks that they seek to exchange into, rent from others, or buy. Design of this new system is taking a little longer than we’d hoped, but getting it right, at the lowest possible cost, is worth a little delay, particularly with the directory available in the meantime.
Reserves for the future
As we previously reported, our maintenance fee is never going to revert to the 2008 level, because the developer subsidy has ended and because we are now planning reserves so that we don’t again have massive, surprising short-term fee increases. However, maintenance fees decreased for 2011 and because the refurbishment project is ending, we expect another decrease for 2012. We don’t yet know exactly how much the decrease will be. We are now beginning to rebuild our reserves to plan for the future replacement, at the end of their useful lives, for items such as roofs, chillers, pavement and pool resurfacing, cabinetry, plumbing fixtures, windows, doors, exterior stucco, interior furnishings, appliances and electronics.
Next year’s budget will also include an average of $75 per unit week for construction payments that we deferred from 2011 to 2012 to keep maintenance fees down in 2011, the increased insurance premium, and expenses that we must incur to comply with requirements of the Americans with Disabilities Act, the regulations for which were recently amended to apply to time share developments. As previously reported, we may also suggest to the Board that we begin to build a reserve to cover the huge (more than $1.5 million) deductible on the property insurance policy, to protect us, eventually, from having to have a special assessment if there is a major, devastating hurricane. This reserve will, however, take up to a decade to build up to a level at which it could cover most of the deductible.
Next fall, the Board will also consider having an outside consultant conduct a one-time study of our reserve planning, to assure us that our reserve planning is neither significantly too high nor significantly too low.
The management company has made the governing documents available to owners through mystarcentral.com, and owners may request additional documents (such as a more detailed budget or a list of the projected costs of all replacement items for which we are now budgeting through the reserve). (To request these additional documents through mystarcentral.com, go to the page entitled “Your Owners Association”, select one of your units, and then click on “Request Your Association Documents” on the right side of the page.)
Owner questions
We discussed a couple of items regarding specific questions we received from owners during the board meeting. They had to do with mandatory SVN membership for owners who never exchange, and with storage lockers on site. The Board has asked the management company to look into both of these items and report upon at the next meeting.
Foreclosures, and sales of association-owned units
The foreclosure process has begun for 26 unit weeks whose owners are in arrears, and more foreclosures are likely. We urge all owners to pay their maintenance fees and to continue to enjoy our slice of paradise. But if you fall behind and are unable to keep up with your maintenance fees, and your unit is not mortgaged, you might explore whether the association will allow you to turn over your deed rather than going through a potentially expensive foreclosure process.
Approximately 20 deeds have been turned over to the association so far, and these units will be offered to Virgin Grand owners, at greatly reduced rates, before they are offered on the open market. If you have registered your email address on mystarcentral.com, you will hear more through email about this special offer in the coming months. The proceeds of these sales will go to the owners’ association.
Proxy notices
Some owners told us that they were unhappy that the notices of the annual meeting provide only the name of the Secretary of the Association, an SVO-appointed director, as the person to receive proxies. This is a normal practice for Associations; however, in the future, these notices will list both the Secretary and one of the owner-elected directors as an alternative. However, there is less to this change than meets the eye, for two reasons. First, unless an owner provides specific instructions as to how a proxy is to be cast with respect to an issue on the agenda, any member of the Board receiving a proxy must vote the proxy as the Board directs. Second, there are rarely if ever contested matters to be decided at the annual meeting. The main purpose of soliciting proxies for the annual meeting is only to establish a quorum. The exception is that two directors are elected by the membership every three years (the next election will be in 2013). But in the last election, owners voted directly for candidates, and the Board determined that any undesignated proxies would be cast for the two candidates receiving the highest weighted voting total. Starwood was entitled to cast votes by virtue of its ownership of unit weeks (it still owns about 8% of the unit weeks) and voluntarily agreed to cast its votes in the same manner as the undesignated proxies voted by the Board so as not influence the election. We expect that this procedure will be followed in the future.
Communications from owners
During the last six months, we have received many emails from owners telling us how pleased they are with the tangible and intangible changes at the resort. Thank you for allowing us to serve you during this period in which our property is rapidly improving.
All our best,
Philip G. Schrag
phil.schrag@gmail.com
Bob Werbel
robert.werbel@yahoo.com
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