Summary Update: Much has happened in the background these past few months since the last newsletter. The management for KTOA changed on November 15, 2007 to our own organizational structure. Richard Kehoe and his staff member Kayc Reed took over the actual onsite management under the direction of the Board. See “Management” below for more details. In January, one of our Board members, Loren Bowman, suffered cardiac arrest the second day after arrival on Maui in January and passed away several days later. It was a sad and tragic event. Then Kayc Reed, who had been hired in November 2007, suddenly became very critically ill, also in January, and was not well enough to return to work until April 1. President Don Swatman meanwhile had to defer his arrival for three weeks due to a family member’s similar and also very critical illness. When he arrived on Maui, Kayc was in the hospital and Richard Kehoe was fielding all the member calls and e-mails. Don and Richard covered the management until the third week after Don’s arrival when Richard hired another employee, Laurel Callahan, to be our onsite manager in the interim. Both Kayc and Laurel have been in the hospitality business over the years and have worked together before. Kayc bravely tried, with her laptop on the hospital bed, to help Laurel with the essentials and Don and Richard gave her a crash course to help orient her to KTOA. The good news is we now have both Laurel and Kayc sharing the management onsite role and who can cover for each other. Now we have a team that is quickly refining, with the Board’s assistance, all the nuances of managing the KTOA organization. All the changes and orientations were made at a time many of our members also were experiencing KTOA booking policy change questions so the combination of both events made management of our organization very challenging. The show however, went on. The new mattresses arrived, new linens were bought and other upgrades and replacements freshened the units. If any members experienced any missteps during this time Management and the Board apologize for any inconvenience and thank you for understanding. Other things that took place were updating and refinement of all the unit inventory and storage inventory and centralized accounting for items added to or removed from the inventory. Dan Bosse, Don Swatman and their wives Jan and Mary spent a day in storage organizing and later Kayc and Laurel detailed the inventory for the central records. Dan updated the reserve account inventory and made expected life schedules for length of time between repairs and replacements. Richard Kehoe is plotting the results and accounting for inflation so we know when replacements are expected. This is a continuation of the effort over the years that our Treasurer Emeritus Don James has been doing to insure we have adequate reserve funds. They should be thanked for a time- consuming job well done. The House book in each unit has been updated with several pages of information and helpful ideas. When you have a moment, take a look. One area that has caused concern again this year is the apparent misunderstanding of booking protocols. The Board and management have tried hard to make our owners aware of the timetable of some of the changes and the grace periods for using saved weeks. This is discussed in more detail below under “booking protocols”. A great deal of organizational refinement has been instigated and the organization of KTOA is becoming more current and precise. For instance, The Board has found a reputable outside auditing firm on Maui to do our annual audit. This year the audit was done smoothly, on time, and reflected the streamlined bookkeeping done by Richard Kehoe our CPA. Mr. Kehoe became our CPA in 10/06 and his good management of our financial records is what lead to the expansion of his functions to manage our organization. Along with all of the management concerns, the Board has also been involved since last year with necessary changes to clean up our CC&’Rs and Bylaws which contained outmoded or unnecessary references from the late 1980s. This is still ongoing with our attorney, but the Board, working with our attorney, is making good progress and we hope to complete this project this summer. The changes that are proposed will also require the confirmation of our owners before the new updates are approved. The Board has worked with another attorney to clean up old dues delinquencies. A number of delinquent accounts have now become current and those that have not have been processed through the State as non judicial foreclosures. The one Right to Use week in default has been taken back by KTOA and eleven more fee simple weeks are due to be auctioned on August 6. The accompanying information will provide you with details of the sale. KTOA will have an upset price for the amount of each delinquency and the sales will be by individual lots. If the upset price is not met, KTOA will receive the unit weeks back for future sale. The Board has also concerned itself with the recommendations provided in the final report from the Ad Hoc committee that was formed at the last annual meeting to consider possible modification of the booking protocols. The Board indicated at the meeting last year that the membership would have the opportunity to vote on possible modifications. See “Ad Hoc Report and Commentary” below for more details. Another area of concern the Board has considered is the renewal of the contract between KTOA and RCI. The Board is currently in negotiations with RCI to make the agreement equally fair to KTOA. Currently it is not a fair and reasonable agreement, in our opinion, and we have submitted to RCI our proposed amending changes but have not heard back as yet. The Board will solicit a vote of our members by mailed ballot prior to any RCI membership changes by KTOA. The Board has been advised by our attorney that the governing changes of the Board increasing from five to seven members is structurally unclear in our present documents. This matter will need to be reconsidered and voted upon by our owners as part of the changes in our governing documents. Meanwhile, our attorney recommends that this year there should be a five person Board pending the owner approval of the revised governing documents, this year, which all owners will be given the opportunity to vote on in the ballots to be sent in August.. There is one Board position available this year. Incumbent Board member Lane Durgin has agreed to run for that position. Lane has taken an active role in the Board meetings and in helping to revise the governing documents. Additional owner candidates who also wish to run for the open position are asked to provide a two to three hundred word summary of their background and experience and ideally a colored photo of themselves to go on the KTOA website. The deadline for applications to be included in the mail in ballot which will be to sent all the members, is August 1.
The Board will be meeting this summer to prepare and provide our members with the opportunity to vote on many of the questions that the Board has considered this year. The Board has the authority to manage KTOA but needs owner approval of the governing documents. The Board wants to understand your opinion on the other questions which will be presented to you prior to the annual meeting on September 20 in Las Vegas. By giving all our members the opportunity with mailed in responses to specifically weigh in with votes for new Board members, and other issues as well, members who cannot attend the meeting, like last year, will have a voice in the decision making of our organization. Please watch for the information packet which will arrive before the 20th of August, one month before the Annual meeting on September 20. It will contain the ballots, ballot pro and con considerations, biographical summaries of candidates for the Board openings, the meeting agenda, and a formal announcement of the meeting. The meeting will be held at the California Hotel, in downtown Las Vegas, Nevada, September 20, 2008. The doors open at 8:30 AM and the meeting will begin at 9 AM.
Here are more details on subjects mentioned in the summary above: Management: The Board decision to take on a different form of management was stimulated by the apparent need to have a better working relationship with management that was more focused on the needs of a small organization, such as KTOA, that did not have the opportunity to have an “onsite manager and office.” The next best option was to have a competent manager nearby to our eleven units. We had selected first a CPA in 2006 to unravel book keeping issues we had with our previous manager. We then brought The CPA on board as our permanent financial person in January 2007 and removed all financial functions from the management at that time. The Board then engaged our CPA firm to take the extra step on November 15, 2007 when we signed a new management agreement with them to replace the previous company. The change provided us with personnel focused on KTOA. The change provided us with a much improved financial management and proximity to KTOA. However, the Board is faced with challenges in structuring the agreement to comply with current timeshare laws. Hawaii law requires a broker be in charge of management. However, it does allow for self management. Some creativity has been involved to properly make the contract fit the rules. There have been discussions between DCCA which handles these matters for the State and our President. In a recent discussion with the director of the section, she said she would be cooperative to find a way to make our modified self management arrangement work. Since then our attorney and DCCA have identified a solution that will resolve any question and our attorney has asked for ratification of a verbal commitment by DCCA that they have approved our changes. The necessary contractual changes will then be included in our present agreement and included in our request for owner approval of the governing documents update. The new management team works out of the existing CPA office, where the co-managers employed by our CPA do the day to day oversight and onsite management. They share the week’s different management duties, by each working part time, but providing good coverage both during the week and the onsite Saturday departure and pre- entry inspections. The agreement encourages them to fine-tune the hours so there is more opportunity to interact with owners via e-mail or call backs so there can be better preparation and a better trail for fewer misunderstandings. If owners cannot e-mail and must call, please leave a message, as requested, with a call back number and noting the question. Laurel and Kayc cannot be at the phone constantly and still cover call backs, calls about stock items, trips to our storage, shopping, arranging for subcontractor repairs and maintenance and communication with the Board liaison, conference calls, e-mails and more. Non Judicial foreclosures and Auction: Currently 11 weeks are scheduled to be auctioned August 6, 2008 unless the dues, attorney fees and other court fees are paid in full prior to that date. The enclosed information about the sale and the units being auctioned is being provided to all our owners who may wish to bid. Please call the attorney listed in the announcement of the sale, not KTOA, if there are any questions. Also provided is an announcement about Owner’s Title being bought out by Hawaii Escrow and Title. Some of the prior foreclosures were retitled through them. Booking Protocols: Each time an owner books time on the KTOA calendar, the confirmation is only assured if it is done by following the booking protocols which have been described in previous newsletters and are again repeated here. This information is also noted on the top of the confirmation. The only thing that changed for 2008 bookings was the limitation during weeks 50 through 15 to booking ONLY actual weeks owned. No saved or accumulated weeks during that time. For the balance of 2008 owners could still use 2006 and 2007 saved weeks just as before. Weeks not used for years prior to 2006 dropped out and became unusable. Continuing in 2009 only actual owned weeks may be used from week 50 through week 15. (This is approximately from December 15 though April 15) Beginning in 2009, unused saved weeks from the immediate prior year may be used, but only outside of weeks 52 through15 each year. Each time an owner receives a confirmation, management also receives a duplicate. One of their duties is to then check the confirmation against the owner’s record of use and weeks owned. Possible errors in booking, when they occur, will be questioned with an e-mail or call for an explanation. Sometimes there is a justifiable explanation, sometimes it is unacceptable overbooking. The call or an e-mail request for an explanation is a courtesy rather than simply cancelling the apparent overbooking. After seven days the booking may be cancelled if there is no appropriate owner response back to management. Making a plane reservation around an improper booking is not a reason for” letting it go”. Unless an owner has made specific arrangements visible to management, that they have acquired additional weeks from another owner, the time in excess will be cancelled. Cancelling the first week of a booking, the anchor week, at the owner’s request cancels the entire multiple -week booking to avoid “desired week creep.” This means if an owner really wanted the first week in February, but started by securing time in late January and scrolling down and then calling to cancel the January week, that would cause the remainder booking to also be cancelled by management. When booking on Monday morning, if the next rollup week does not appear due to an electronic glitch, wait until 9:10 AM, then send an e-mail or call to KTOA requesting your desired booking. Calls will be clocked in the order received, based on the phone time and the e-mail time and they will be entered by management before the system goes live, in the order received, until all the open times are gone. This problem has only occurred twice and the alternate protocol is only valid if there is a glitch, as noted, that does not clear before 9:10 AM. Calls time stamped prior to 9:10 AM HST will not be considered. The phone will not be live answered but will roll to the recorder for time dating.
Ah hoc committee report and commentary: This committee was formed at the annual meeting last year to consider the 2006 changes to booking and to understand the reasons behind the changes. They were invited to offer suggestions to the Board for possible future changes. Any suggested changes would then be presented this year for all the owners to vote on. When there were over half of the units unsold several years ago, there were booking privileges allowed that did not impinge on the rights of other owners. By statute in Hawaii, each owner has the right to use his actual owned weeks every year. We have an owner now for every week for every unit except the eleven now in foreclosure and the eleven that must be held by law for maintenance and repair. Approximately 87+% own less than four weeks and the balance own more than four weeks with two owners owning eight weeks. If a limit is placed on a certain number of total weeks that can be booked each time a reservation is scrolled, where do we draw the line and still be fair to all owners? That is why, when this was discussed in 2006, only actual weeks owned were allowed into high time to be fair to all owners. The Ad Hoc committee has asked the Board to further debate some of their unresolved questions. The Board refers you to page six of this newsletter “Ideas the committee wanted the Board to further discuss” see numbers 4-6 which will be on the mail- in voter ballot in August. The State requires that there are no more weeks sold than there are weeks in the total system so owners will be able to book their owned weeks each year. In our case, KTOA has 561 weeks available each year. Drawing a line to limit number of weeks booked at each booking creates possible issues with moving from unit to unit, multiple trips and impacts multiple week owners who paid for each of these multiple weeks they own. If every owner came every year the concept of any saved weeks would be impossible. By allowing only the immediate prior year saved weeks and staying the course we started in 2006, we will have a good opportunity to assess our booking traffic and then make possible adjustments such as gradually increasing usage options and still give every owner who wants to come each year the opportunity to do so. The ad hoc committee appointed at last year’s annual meeting to study the booking protocols met three times by teleconference. Here are their recommendations:
The ad hoc committee was unanimous in the following decisions:*
Ideas the committee wanted The Board to consider further:* Here also are the Board’s response on each suggestion: 1) Allow owners to book high time only on alternate years.—NO* 2) Divide the rooms by category of weeks owned using the percentage of owners or weeks in each category to set aside rooms to be reserved for that category. An example of this might be to have the rooms broken down into three groups 3) Offer incentives to owners to book in off- time- NO* 4) Scroll booking to allow only four weeks—The Board voted to put this on the ballot 5) No limit on scrolling- if you own the weeks you can use them per your desire. (see 6 below ) 6) Leave things as they are and impose no further restrictions for the foreseeable future. Do not make any changes now because the full value of the changes made in 2006 will not be apparent until the 2009 calendar bookings are reviewed. The attrition of the excess saved weeks is only half way through the agreed time frame. The actual pressure relief on the 50-15 week period has not even been tested until this December. Modification of the protocols before they have had an opportunity to be evaluated would negate any gain that might be accomplished with the changes and further delay the resolution of the problem, which is to see if it will free up some high time for more users.” The Board voted to place this on the ballot. 7) The committee asked if there could be a bulletin board where owners could trade weeks with each other without having to buy them outright. This would need evaluation and web support. The Board will further consider the request. There are logistic and privacy issues as well as additional management oversight.. The ad hoc committee rejected the following nine suggestions:* 1) Allocate two units in high time for one to three week stays *The Board spent a separate conference call debating the ad hoc committee’s suggestions and thanks the committee for the time and effort they spent on the booking protocols. Please address questions to Kayc at the KTOA e-mail address KTOA.maui@gmail.com By each owner providing KTOA with a current e-mail address it dramatically reduces the time and cost of communicating and the Board thanks everyone who has provided a CURRENT e-mail address to our files
Thank you, Don Swatman, Pres. KTOA
Additions: *Information about the foreclosure auction on August 6, 2008
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