NEW OWNERS MEETING FEBRUARY 25, 2010

All owners of Starwood Westin Maui Villa North and South meeting scheduled Feb 25th Master meeting please confirm date also check on times and location. PLEASE ATTEND IF YOU CAN!!

This change is due to the fact that the Dec 17th meeting was a flop!!! Only about 15 of us showed up. The proxy went out so late that nobody new about it and some even after the fact. Their excuse was the company they hired to send out the proxys did not do their job. They also mentioned each time they send a mailer such as a proxy it costs about $13,000.00 now that is a lot of money to a company who isn't doing their job!!!

Was there any discussion about the huge increase in our annual maintenance fees (due to the large property tax increase)? The increase, if it continues year after year, will very much impact the value of buying timeshare as opposed to renting.

Hi Jason, Yes, they blamed it on the Gov. of Hawaii. They did mention hiring a law firm to contest the increase but that it could take several years to resolve and are using 2007 property values to determine property tax increase amount even though 2009 values are a lot lower. They did also discuss hiring a company to redo the plans for the North and South for redoing the flood zone insurance policy. So much was discussed and not anything that I can say was positive although since the proxy went out so late they rescheduled another meeting for Feb 25th I will also be there for that. You are welcome to email me personally as the owners that were there ( very few) all were not happy all for various reasons. Right now there is no value to owning vs renting stephanie stephaniechapa@hotmail.com

Stephanie,

I am outraged as well about the increase in fees. I feel as if the government is exploiting us owners because we are not local; this clearly gauges us and only helps local Hawaiians. I am very displeased with the HOA as they should have been watching out for us and proactively spending the money to fight this and create a campaign to do so.

I want to hear more than the possiblity of hiring a law firm and so what it if takes several years, given that we OWN our units several years is better than turning around and taking it up the ying yang year after year. My position is once resolved we owners should be owed paid back for our overpayment.

What confuses me is how does the government justify this? Do you know any good online articles I can read? We are likely not the only owners group affected. This should be a class action suit be all time-share owners that are impacted; a hungry law firm should be ready to pounce on this.

I paid almost $2,800 dollars for my dues this year - 2 bedroom units are going for 3K on Red week; the 40K I spent is worthless and I imagine have now will kill the resale market. The government of Hawaii not only has raised taxes astronomically, they have essentially killed the value of time-shares in Hawaii.

Thanks for attending and keeping us updated, no one else does.

Regards,

Jon Ruiz

Stephanie,

Here is a good article I found. http://pacific.bizjournals.com/pacific/stories/2010/01/25/story1.html?b=1264395600^2773301&page=2#tp_newCommentAnchor

This article just made me more angry over this situation. I smell a rat. The article lays out how hotels are charges less of a rate than timeshares. I think the political lobby of the hotels fought to keep hotel property tax rates lower than timeshares (e.g Starwood, Marriott, etc) because they knew they could pass on the tax increase to owners.

If there is a Maui time-share owner who is reading about this who is a lawyer, it seems to me a "class action suit" is in order.

Regards,

Jon Ruiz

Hi Jon,

I too am outraged. There will be another owners meeting scheduled February 25th please confirm this date. The Governor is not liked by the locals of Hawaii she is really harming the schools as well. But getting back to dues fees. You are correct to say that the value of our time is nothing. I spent 75,000 for 1 week and 40K for another week I too for the HOA dues can go stay even at the villas as a non owner cheaper for the week than the HOA fees. Not good. Besides there are many issues at hand regarding the North property and many North owners are VERY unhappy with the quality of the buildings and what we were sold in preconstruction. It is NOT what we got when the project was completed. I am trying to get as many unhappy North property owners to rally to help the possibility of filing a class action suit against them for their dishonesty in the sales of the product and not an honest disclosure. We can discuss this further off redweek and I would be more than happy to fill you in. I am not going to make the Feb 25th meeting although I will be there for 10 days prior I leave the 24th. If there is anything a property owner would like me to do while I am there please contact me. I am disappointed I can not attend. I do feel it extremely important so please property owners if you can I urge you to do so. We have to stick together to fight for our financial investments and our rights as property owners. Thank you for responding to my blog as I want to spread the word out to as many owners as possible. I will read the article you found thank you for sharing Stephanie

You unit isn't worthless and rental rates are bad because owners don't have the stomach to maintain the rental rates. there are too many owners freaking out and accepting rents at or below maintenance because they don't have an oligopoly to keep rates firm. Unfortunately sell/rent by owner websites pit owners against each other rather than support the owner marketing effort to ensure a reasonable floor pricing on the units. Yes, it's aggravating costs have risen. The solution is to coordinate proxies to name an owner attending the meeting and vote out the HOA/Developer board members and replace them with non developer affiliated owners.

Just as at other locations, it's time to give fliers to owners/guests every time you stay at the resort, collect e-mail/phone/address info as much as possible, create a Yahoo group where your information can be better shared since it is somewhat discouraged on RW forums, and that way when 15 owners show up for an annual meeting they have thousands of proxies with their name on it rather than none.

Peter,

You are correct, the unit isn't worthless. It still has rental value, trading value on Startwood, and Interval International. I have been able lock off and rent either the 1 bedroom or the studio every year that I have owned it. I then either bank or use the other unit. As example, I banked a studio week and was able to get a week through II in a 2 bedroom in Marriott Newport Coast. So you are correct there is value. My point is that re-sale values are highly impacted becuase it is in fact impossible to organize all the owners and agree on a rental floor. In the secondary market, rental price is key and one only has 12 months to "stomach" holding on thier unit. And as you point out, there is no oligopoly, it is completey a free market. Right now the supply is of low rent units is too high and the demand too low. When I price my unit I look at all the units available and what the average prices are.

I have seen rents that are way above the average - I am curious if they rent their unit. So, that being said, it doesn't change that the HOA needs to look seriously at what is driving expenditures and find ways to provide quality resort experience yet reduce expenditures. Moreover, a "root cause" analysis needs to be created as to why our maintence fees have increased over the last few years and put together an action plan per issue to bring the fees down.

The current trend is higher and higher rates and the HOA board has been completely silent as their response. I sent an email over a week ago and I have recieved no response. I brought out several issues. Here is the content of my email.

Hello, My name is Jonathan Ruiz and I own two Island View EOY - Odd & Even units at the Kaanapali North Properties. The last four years the increase in maintanence fees has been horrendous. It is to the point where there is now near parity between secondary market rental rates on sites like Redweek.com and our dues. This fact has caused the value of ownership to diminish to near zero. Why would a potential buyer pay for a unit at any cost if they could rent at a simillar cost to owning? Again as maintanence fees and rental fees reach parity, it is an economic bad to pay anything for a unit. That is, as long as maintenence fees and rental fees stay in this state. At this point, there are no data points that have been communicated by you, the board, that cause me to believe that maintanence fees will go down in the future; the trend has only be higher and higher fees. In fact, I have recieved no communication as an owner about the board's feelings or plans on this matter. And this is a matter of grave concern. February 25th Meeting: Which brings me to my next point, the upcoming February 25th Owner's Meeting. I recieved my proxy in the mail but the only inserts it contained was whether I wanted to delegate my vote to the board or not. Why would I delegate my vote to the board when:

Using the maintennce fee metric, the board performance has been poor There is no central site or communique' (electronic or physical) to find out anything about the board, who you are, and what your opinions are. There is no central site or communique' (electronic or physical) to find out what the agenda for the meeting is and what your opinions are, what the plan of actions are, what you are contending for Moreover, the requirment that we have to attend in person to listen in and voice our opinion is ludicrous in this day and age. I work for a technology company and most of our customers use either Microsoft Live Meeting or Cisco Webex to allow remote particpation in meetings. Both Microsoft and Cisco own all the infrastructure needed in our global data centers for this service. The Board would simply have to pay for a fee to use such a service and provide the dial-in information \ computer connection info to join. Owners can simply download the client from either company's web-site and particpate in the meeting in an Audio only mode by dialing in from a standard telephone or hearing Audio and seeing any PowerPoint presentation that is being used from their computer. Here are two URLs for you to look up each service:

Microsoft Live Meeting: http://office.microsoft.com/en-us/livemeeting/HA102030111033.aspx - note you can buy 5 professional users for $77.10 and allow up to 1,250 participants in the meeting. That would more than cover the number of owners who actually may call in. Cisco Web-ex: http://www.webex.com/lpintl/us/sem/web_conferencing2.htm?CMP=KNC-sem&TrackID=1011901&hbxref=http%3A%2F%2Fwww.bing.com%2Fsearch%3Fq%3Dwebex%26src%3DIE-SearchBox%26FORM%3DIE8SRC&CMP=CMP=KNC-sem&goid=WebexUS_1011901 Given the devestating impact to the value of our property, we are at a very important fork in the road. On road 1, we do nothing and allow our property to reach zero value. On road 2, we actually put a plan in place to achieve lower maintenance fees (i.e. reduce expenditure, increase revenue, etc). We also find a lawyer willing to take on a "class action suit" against the government entities who have singled out time-share owners raising taxes higher than not only other condominiminum owners but hotels as well. Class Action Suit: The one arguement I have heard why increased taxes is justified does NOT hold water. That is, one blogger said that the non-residents cost the government more than residents due to the public services that are required to keep non-locals safe. My response is two-fold:

1) Other Condominuem Owners: Show me the empirical evidence of the governments costs that are explicit to providing safety to tourists. Second, show me that these costs are not re-couped in other ways such as the sales tax and resort taxes that are also paid by non-locals. 2) Hotels: The fact that there is disparity in the rate hotels pay vs. timeshares is a tremendous unjustice. Hotels are owned by big business, timeshares are owned by individual families. So the issue is this, charging higher taxes to time-share owners only hurts timeshare owners. Hawaii as a destination continues to be a place that attracks renters. Hotels will continue to have non-local tourists using their rooms and many time share owners are having to rent their units just to pay their soaring maintanence fees. So even if we take the argument that non-locals cost the government proportionately more than locals, that only applies to the justification for disparity between local condominum owners and timeshare owners. It does NOT make any sense for the disparity between time-shares and hotels. It would be also interesting to gather the data on how many hotel rooms exist in Maui vs. Time-share units.

Given this logic, I can only conclude that the government of Hawaii is exploiting time-share owners because we are non-local, individual familes, who are un-organized and represent no political threat. On the other hand, hotels chains as Starwood and Marriott, have deep pockets and paid for legal teams and full time political lobbyists. This then means a portion of society has been sectioned off and exploited, thus the basis for a "class action suit." I would suggest the participants in such a suit would all timeshare owners in Maui.

Maintenance Fees: I would suggest a detailed root cause analysis report needs to be completed on all the reasons why maintenance fees have soared. For each reason, an associated mitigation must be identfied. It is these mitigations that should be the on the agenda for the owner meetings and communcated to ALL OWNERS prior to the meeting. As an example, I understandt that many others have not paid their maintenance fees, having the impact of a reduction in revenue. The question I have is this, what is Starwood and the board doing to rent these units to non-owners and explictly what portion of that revenue is shared by Starwood and the HOA. It would seem to me that a majority of the rental income should come back to the HOA and only a small % fee should be paid to Starwood for their service in renting their unit. My logic is this - apparently it is our maintance fees which cover the operation of the property. If we bear the brunt of the impact why don't we also gain the lion share of the assocated rental revenue? This is another area that an action plan should be put in place. I look forward to your thoughtful response. Kind Regards Jonathan Ruiz Owner

Hi Jonathan and all other owners,

What a great thought. I am pleased with the response of this blog and the issues brought up at hand. I will be on the property Feb 14th and returning the 24th I unfortunetly will not be there for the meeting which I am so disappointed about. Will anyone from this forum be there? Or does anyone know someone whom can address our issues and concerns. There are many great points that need to be addressed It seems to be the maintenance fee impact is a big issue. I understand the logic and wanting the government to prove their reasoning but the bottom line is 1. The government doesn't care and it will take years before anything could or would be done. 2. The cost of the lawyers will be astranomical unless an owner would rally to proxy themselves to help with the HOA is fighting this at minimal to no cost. 3. On another note the locals do not like the governor of Hawaii she is runing the schools and the education department for the children. She needs to be gone!!! I don't have much more to say as I have to reread the forum responses to respond and my time is very limited today but again if someone would like me to do anything or speak to anyone while I am at the property next week let me know. My concern is yes the maintenance fees but mainly the quality of the North and the deception on what was sold preconstruction. It looks like a cheap apartment complex with NO ovens and expects me on Ocean Front (no elevator near by) to walk down 5 flights of stairs with food in hand to BBQ and then back up and hoping one is available besides leaving my guests and or family. My Father was disabled and couldn't walk far first time at the property after construction. We were in out OF he never left his room the elevator was so far from the room and it was like we were a rat in a maze in the meanwhile passing everyones garbage in the hallway as we tried to find the elevator. Once we got there we then had to walk back to the ocean what a joke. This and so many otherissues with the proerty I hate the North and wish I never bought the 2 weeks. I am hoping there are others like me who feel the same way about the North you may have your reasons as well as this is only one of my issues. Please lets fight this as the sales staff is a bunch of scam artists. I am in real estate in the bay area and now that what was sold was NOT what was built. But then the 200 pages of fine print I am sure they covered their ass!!!

Stephanie

Please remember to make as strong an attempt as possible to ensure any owner you give your proxy to is not an employee or otherwise affiliated with any company doing business with the developer. I know it's tough, just do your best to be careful!

Thanks for the great response Jonathan. I'm sorry to hear Stephanie is so unhappy. While I'm an SVO owner but not KORV/KORVN, I think the KORVN are very attractive units. I don't understand why you would say KORVN "looks like a cheap apartment complex ", I find them to be among the best timeshares I've ever stayed in - not the best mind you but pretty darn near the best. I also prefer units with ovens, especially when they are 1BR/2BR but since a large number of vacationers don't use the oven I can understand why the developer didn't include them. I do know quite a few people who have traveled to Maui and avoid KORVN over holidays specifically becasue they can't cook a turkey or other large meat item in the convection oven! I understand if stairs are an issue for your family that will impact your appreciation of a vacation. But when you bought Stephanie, you could see the size of the complex and how much larger it is than the South Phase. You father's decision to stay in the unit is not due to elevator location since that only affects access within the building. Please do not misunderstand me ... I agree it would be better to have more elevators. I'm just saying you appear to be blaming the centralized elevators on why your father couldn't leave the building whereas I feel strongly the size of the complex (which was very obvious during construction and sales) and Maui activities in general are the limiting factor on the ability for someone in your father's condition.

Back to topic, when in a recession or for the most part when people need to be careful with money, I believe people learn how to spend less. This is true for companies as well, and the articles I read in the Wall Street Hournal have mentioned on multiple occassons that consumers have been spending less and saving more money for the last 1-2 years of the "Great" Recession. Why then have the developers / managers forced cost increases on timeshare owners? I do not believe they have the motivation to contain costs since they do not bear the impact of it, their fees are higher since usually management fees are based on percentage, and in many cases the developer is able to repossess units (usually due to loans on the unit) and re-sell them later. I find this provides the developer with more incentive to support actions causing owners to lose units rather than retain them.

Also, I would like to know what happens when the developer repossesses a unit where maintenance has not been paid. I spoke with SVO regarding this when I read a newsletter for Sheraton Vistana Villages where they stated the owners bear the cost of unpaid maintenance. When I called to ask how I could buy the units which were foreclosed on, I was told [effectively the way the conversation went after I have to re-word my question multiple times] the developer took possession of the unit and re-sold it. The HOA is not taking possession. I do not have a formal written response yet, but I would expect if maintenance delinquencies cause foreclosure, the HOA would gain control of the unit to resell, not the developer.

The only reason the developer rather than HOA should have any right to taking over the unit is if a loan on the unit were delinquent. In either case, if dues are delinquent, the HOA should have lien rights on the unit so during foreclosure the HOA is able to recoup the maintenance and fees and penalties WHICH ULTIMATELY MEANS OWNERS SHOULD NOT BE BEARING THE COST OF DELINQUENCIES. If dues are not delinquent but the loan is, when the developer forecloses, the developer is the new owner responsible for the maintenance. What am I missing? If the developer gets the unit in foreclosure without paying the HOA delinquencies, they are getting a unit which has been subsidized by the owners. That should never happen and I don't understand how that could even be legal.

Hi Peter,

I did not read your entire email but found it important to reiterate my thoughts about the North Property. First you know nothing about my Father. He and my mother bought 2 weeks at the North pre construction with the intentions of using them. There was no indication of the construction except for they were a bit smaller than the South, that he could live with. In 2005 He was suffering from bone cancer at the time a VERY painful disease. By 2007 he did have difficulty walking as the cancer grew more painful but wanted to vacation in Maui with the family and to see what it was that they bought as 2007 was the first year of its use. We all went to Maui to vacation in our newly built timeshare to find it a major disappointment. And yes he stayed in him room the entire 2 weeks too paiful to walk to the elevator not that close to the OF units or think about goiing down the conviently position staircasae leading to the ocean. Enough said that was his last time in Hawaii as he passed away October I have no reason to read anymore of your email if you don't own there you have nothing to comment about.

Hi Stephanie,

When you are there can you get electronic copies of the CC&Rs, the by-laws, articles of incorporation, as well as the latest financials?

I would like to review them to the root cause analysis myself.

Thanks,

Jon

Hi Jon,

Im sorry I did not get your email. I had already left the property on the 21st and was staying at the Hyatt I did not have internet ability. However I had a dear friend (owner) attend the meeting I will give you an update on what was discussed and the outcome as soon as I hear from her.

Stephanie

I have a question for anyone who knows. I own two odd year EOY units (both island view) and two even year EOY units ( one island and one oceanfront). Since tax time is here and the taxes have increased at an exorbinant rate, are these property taxes deductable? I would think that since it is a deeded property the owners should be able to benefit by deducting their portion of property taxes. I can't find what the amount paid for a 2bdr/lockoff is. Do we (owners) get these deductions or does the HOA? I would think that since the $ is coming out of our pockets we should get the deduction. Anyone have any insight to this question?

Thanks, Mike from Nebraska

I just found this blog. We are current owners at westin Kaanapali north and we too were sold a bill of goods. Unfortunately it takes being Taken to wish that I had investigated these slime buckets before signing on the dotted line. IF you or anyone is trying to get a class action suit together I AM IN! Kim

Every year I call Starwood to find out my portion of property taxes for both my Maui and Kauai timeshares and I pass the info along to my accountant who says it is deductible. It's a pain to have to call. Wish they just listed it on the annual maintenance fee invoice.

John Ruiz, my name is Dr Peter Tomasello . I have multiple issues with the Starwood Westin timeshares in Maui .!!! Please call me at your earliest convenience to discuss . My cell 305-984-2363 Thank you look forward to speaking to you

My name is Dr. Peter Tomasello, I have two timeshares in Weston I believe this is a scam and rip off if you could please give me a call it seems you've had some postings and may have some information my cell phone is 305-984-2363 if you can call me at your earliest convenience thank you I think we all have similar issues with them