More mini-system thuggery - Bluegreen this time

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

Not too long ago, Fairfield got very heavy-handed with HOA's at Bluebeard's Castle in St. Thomas, both spending money to try to put Fairfield stooges in office on the HOA board in place of independent directors, and stonewalling in lawsuits with the HOA boards.

Now, according to an article in Timesharing Today, Bluegreen is up to tricks that could also put them in control at Pono Kai. They have cut a deal to buy weeks from the current HOA board for less than others are charged, and will soon own 10% of the inventory. At the last election, they block voted their weeks and the candidate that would have been last, instead won a seat on the board. Bluegreen management at this resort denied a sitting board member the right to inspect proxies before the meeting in violation of the by-laws (and perhaps state law). An owner there is issuing a call to action to Pono Kai owners to organize to stop the Bluegreen juggernaut.

Many resorts have had to struggle to push devlopers who hung on too long out the door. Now we have these mini-systems trying to take over. Owners need to get involved with our HOAs to be certain we keep them independent of these special interests.

It is a huge conflict of interest when an organzation with a management contract also tries to control the HOA board.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

Woo Hoo. This is great news. Pono Kai has been difficult in terms of availability since so few weeks are in the Bluegreen Vacation Club trust. Since they are buying a bunch of new units, it should loosen up availability.

It used to be that Bluegreen owners could get bonus time almost anytime they wanted within 90-days of check in. But, one of the other owners got ticked off at this and had the practice stopped. I really hope they use their power to take over to reinstate it.

Bluegreen is guaranteed a majority vote on the BVC Trust. It's actually written into the declarations. As long as they continue to treat owners right, I don't mind. The small resort with the weeks based exchange system just doesn't work. Bluegreen's model works much better.

Fixed weeks in Bluegreen double and triple in value once they become part of the vacation club. That, my friend is called value add.

Over time, big companies get too big and they need to be attacked by smaller competitors. In this case, Bluegreen is on the upswing.

Thanks for the great news.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

The tough sales and foreclosures go to systems

To help avoid the very problem brought up so many times - owners "bailing out" on resorts due to high fees or lost trade value as owners are held to equivilent exchanges rather than free upgrades - there has been a trend toward having the many minisystems buy into resorts. The resort gets a guaranteed quick sale of foreclosured or deed back weeks, the resort knows the annual fees will be paid and the system gets new inventory. With a well designed agreement the system would agree to vote their ownership with the majority of individual owners and agree not to take control of the Board. I know of three different minisystems at two different resorts that have that type of agreement.

There is a real worry that a mass purchase by any single system could lead to an unfriendly take over of the Board so it is important that any plan includes an agreement to prevent it. In some states there are regulations against the developer retaking control of a Board but it doesn't hurt to get an agreement in writing rather than depending on outside, and expensive to enforce, rules.

Overall like Boca I see it as a win win if the proper controls are in place.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

It is not a win-win if either 1) the mini-system developer is given a sweetheart price that others are not offered, as has been alleged at Pono Kai, and 2) the mini-system developer is also in the management position, as is true both with Fairfield at Bluebeards Castle and Bluegreen at Pono Kai. It is a really incestuous situation for a management organization to be ''responsible'' to an HOA board that it in effect controls. Then it becomes open season on the other owners.

HOA's need to be controlled by member-owners NOT management or a developer.

[timeos2 Senior Member Find all posts View Profile Close timeos2]

I too vote for non-developer management

I have to agree that usually management by the developer is not a good thing. But I discount the claims of unfair pricing or favoritism as I know that often the week(s) are offered to current owners first yet go unsold. So it's better to have a quick sale at a lower price which restarts the flow of annual fees than a protracted, week by week offer that may end up costing the Association a year or more of maintenance. Quick turnaround is a real value and more than makes up for a reasonable discount in the sales price. Plus I've seen where the contracted buyer will pick up the rather substantial tab for foreclosure costs - that alone may be as much or more than the week(s) would sell for. That plus a quick turn around to the new owner is a definate win for the paying owners.

In a specific case like FF buying into a resort like Bluebeards they should have been seen as the white knight IMHO although after both sides bungled the process now a case can be made that they also stepped out of line. That mess is simply best left alone until both sides come to their senses and start worrying about the resort rather than winning the battle. No one in their right mind would buy into Bluebeards with all that grief hanging over it.

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

In the Bluebeards Castle situation, the HOA's long ago agreed to send the matter to arbitration, sort out who owes who what, and move on. It is Fairfield that refuses arbitration, and is bound and determined to drag the thing out in court, hoping to either wear down the HOA's or take them over at HOA meetings before the dust clears. This behavior by Fairfield is deplorable, and I would not touch ownership of a week at any resort that Fairfield is involved with.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

I have to agree that usually management by the developer is not a good thing. But I discount the claims of unfair pricing or favoritism as I know that often the week(s) are offered to current owners first yet go unsold. So it's better to have a quick sale at a lower price which restarts the flow of annual fees than a protracted, week by week offer that may end up costing the Association a year or more of maintenance. Quick turnaround is a real value and more than makes up for a reasonable discount in the sales price. Plus I've seen where the contracted buyer will pick up the rather substantial tab for foreclosure costs - that alone may be as much or more than the week(s) would sell for. That plus a quick turn around to the new owner is a definate win for the paying owners.

In a specific case like FF buying into a resort like Bluebeards they should have been seen as the white knight IMHO although after both sides bungled the process now a case can be made that they also stepped out of line. That mess is simply best left alone until both sides come to their senses and start worrying about the resort rather than winning the battle. No one in their right mind would buy into Bluebeards with all that grief hanging over it.

In Bluegreen, there is NO independent board of trustees. Bluegreen is the developer, the currency (Bluegreen Vacation Club points) manager, the resort management company, the title company (Resort Title Agency), the resale company (Pinnacle Vacations) and the customer service entity.

Bluegreen makes no claims of being independent. If you really need an independent board, you need to go elsewhere because it ain't here. Fairfield isn't independent, WorldMark aren't independent. I'll bet that Hyatt, Hilton, and others are not independent. Many public companies don't have independent boards. Any public company where the CEO has the Chairman title is such an entity. So, success of a company is NOT directly linked to the independency of the board of directors. It's nice, but not necessary nor sufficient to protect the owners.

What PA and others are doing with WorldMark seeking to make the WorldMark board independent is laudable and now I believe they may get it in a couple of years. In that club's case, they need it because Cendant is doing bad things to that club.

Getting back to the original discussion. It is NOT Thuggery to buy deeds from an HOA that hasn't been able to sell them themselves. It is good business sense. Those deeds, once converted to points, will be worth a ton to Bluegreen Vacation Club owners. I heard they bought them for about $2500 per deed. That's are worth about $4-6k on the resale market and about $12-18k from Bluegreen directly.

It is merely an allegation that proxies weren't counted properly probably by a disgruntled owner/board member who was getting muscled out and out manuevered. That is just business, not thuggery. Hostile takeovers of board of directors happen all the time. It's a legitimate business practice. Survival of the fittest for business. If it weren't for such brutal business, our country would be like Cuba... stuck in the 50's.

So, I reiterate my claim that this is a GREAT thing for Bluegreen owners. I hope they get enough deeds to vote out the entire rest of the board at Pono Kai so we can get our bonus time availability back. Bluegreen's system for getting people to go to a resort for vacation is superior to those that preceded it at Pono Kai. I hope they do a hostile takeover of a few other resorts in Hawaii.

[BocaBum99 Super Moderator Find all posts View Profile Close BocaBum99]

In the Bluebeards Castle situation, the HOA's long ago agreed to send the matter to arbitration, sort out who owes who what, and move on. It is Fairfield that refuses arbitration, and is bound and determined to drag the thing out in court, hoping to either wear down the HOA's or take them over at HOA meetings before the dust clears. This behavior by Fairfield is deplorable, and I would not touch ownership of a week at any resort that Fairfield is involved with.

In a war of attrition, the fat man always wins. Business isn't fair. Evolution isn't fair. Survival of the fittest isn't fair.

I don't buy Fairfield points only because their maintenance fees are too high. If they cut them by 40%, I would probably own a few million.

If their rebranding effort to Wyndham is successful and Fairfield resorts are now as valuable as Marriott's, then I'll buy some at the current prices. But that means that they will rent for twice as much as they do today. So, that will be my litmus test.

[aliikai2 Super Moderator Find all posts View Profile Close aliikai2]

not exactly true, Steve

At the last election, they block voted their weeks and the candidate that would have been last, instead won a seat on the board. .

There wasn't a quorum, so the board installed the 2 incumbents to the positions that had previously held.

BG has fronted PK as an interest free loan the funds to be received from the sale of these 305+- weeks , and the deal breaks down to around $1800 per unit plus $600+- in annual fees.

Couple these purchases with their previous purchases of the Finova weeks ( around 320) and last years reacquired weeks, they now own 700+- weeks from the pool of 7800, they are creeping up upon 10%.

As a management company they have done a great job of keeping our fees down..
I think we may be the only Hawaiian resort that hasn't had any increase in the last 4 years, while remolding 20 percent of our units each year.
I checked into conversion of our weeks, they want a purchase of 3000 points @ $4995 and they want to issue points based upon the week on the title.
I tried to explain that these are full floats 1-52 and the deed week was just for inventory purposes to no avail.

Needless to say, since my units wouldn't yield the required points for the vacation we now use, we passed.

However the annual fees would have been substantially less, about $1200 per year.

So, I may still do this if I can snag another unit to give us the required 45k in annual points.

Fwiw, Greg

[Carolinian Super Moderator Find all posts View Profile Close Carolinian]

Considering the number of owners who don't bother to return proxies, a 10% stake can have a huge impact in an HOA election, when one considers the numbers that actually vote in a typical HOA election. It is very dangerous to have management with that much clout. If they control the HOA board, there is no one to look over management's shoulder.

You must be speaking of a different election year than the one discussed in TSToday. The account of the concerned owner and Bluegreen's response both speak of an actual vote occuring and agree on the result.

Having Bluegreen in this position should be an even bigger concern since they do not even allow their own members to elect an HOA board for Bluegreen's vacation club! This is hardly a commitment to owner democracy!

[aliikai2 Super Moderator Find all posts View Profile Close aliikai2]

Thanks for your concern

But as a vested owner at the PK I watch these things , and regardless of what somebody posted in TT , the results were sent to us via US mail, along with the boards agreement to sell the units to BG.
If at some point the BG thing gets out of hand, the majority of the owners will cure the problem, but voting out the board.

But at this time, the relationship is some what symbiotic, and appears to be good for both the host and the parasite.

JMHO, Greg

Considering the number of owners who don't bother to return proxies, a 10% stake can have a huge impact in an HOA election, when one considers the numbers that actually vote in a typical HOA election. It is very dangerous to have management with that much clout. If they control the HOA board, there is no one to look over management's shoulder.

You must be speaking of a different election year than the one discussed in TSToday. The account of the concerned owner and Bluegreen's response both speak of an actual vote occuring and agree on the result.

Having Bluegreen in this position should be an even bigger concern since they do not even allow their own members to elect an HOA board for Bluegreen's vacation club! This is hardly a commitment to owner democracy!