$5,893.32 special assessment for Diamond's Point at Poipu

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

Did you make a mistake when you quoted a $500,000 project?
I'm not really sure what you are referring to on the $500K.

For a project such as this engineering will be about 15% of total expense. 10% is a normal figure, but when you are working in a setting that has significant collateral issues - such as cultural impacts, environmental impact and permitting issues. or reconstruction as compared to greenfield construction - 15% or 20% of total project budget to E/A is more reasonable. 15% of $65 million is 9.75 million.

If you're going to do VE of a project, it;'s worth doing a budgeting the effort reasonably and budgeting accordingly, which means that the VE should be in the range of 10% of the design fee, which in this case would be close to $1 million. If you go significantly less than that, the VE actually ends up adding to project cost instead of reducing project cost. For example, I recently completed a technical response to a VE evaluation of a project involving combustion of waste treatment digester gas in combustion engines to produce electricity. The VE consultant recommended relocation of the stacks to a location closer to the engines to reduce construction cost. The problem was that the original stacks were chosen to so that ambient air quality impacts from the engine exhausts would meet air quality standards, and the alternate location recommended by the VE consultant were completely and totally impossible. The VE consultant, however, was squeezed by the project owner on their budget, which led to them excluding any competent air quality consultant on their project team, and in turn resulted in them making totally infeasible recommendations. But my client, the design contractor, had to then show why the VE evaluation was wrong. In the end the client pissed away about 5% of the design project in the battle of the consultants because they short-changed the scope of the VE effort. A fully scoped Ve would have recognized immediately that that stack locations couldn't be changed willy-nilly.

Which is a long way of saying that 5% to 10% of project budget for VE is about what is needed for a decent evaluation. I used $500,000, which at ~5% of engineering is actually at the low end of the range.

*****

As a contractor and a developer I can tell you that the contractor can easily reduce the risk of price increases on material. They get a commitment from the supplier for a period of time. They can also purchase the material and store it if they are worried about the price spiking. It's done all the time on large construction projects (and smaller ones).

I'm sorry. This is not construction of a house or an ordinary subdivision. This is a pretty significant construction. No supplier is going to offer a price guarantee for ~$20 million of materials over a five- to seven-year period without including a huge contingency to protect themselves. (I use a five- to seven-year period because Poipu is proposing three years as a median approach, and I presume that you are suggesting it needs to get stretched out longer than that.)

Labor can't be controlled too much, but hey we are talking about Hawaii where the labor is readily available, affordable and tradesmen are willing to come from the mainland to work in such a nice place. Plenty of contractors are out of work right now and would jump at the chance to work in Hawaii for a period of time.

That's a wonderful assumption, but it totally lacks any grounding in reality. If that were actually a realistic alternative it would already be happening.

Have you actually tried to import mainland labor to Hawai'i??? It sounds so simple to those who have not actually had experience trying to do so. My wife has family who are highly successful contractors in the mainland who attempted to expand to Hawai'i using precisely the same model that you suggest. They build Street of Dreams houses in the US, and they had clients who asked them to do work for them on properties they owned on Maui. Seems simple - they didh't even have to market themselves, since they were coming into Hawai'i with clients and contracts already in hand. Sixteen months later they closed shop in Hawai'i, having lost close to $1 million. An engineering company I previously worked for also attempted to open a Hawai'i office, and we also cut our losses after 18 months.[

The lesson they stressed to me when we talked about it was that they thought it would be simple to port mainland expertise to Hawai'i, exactly as you are assuming. And they confessed that they were totally naive. Based on these experiences, I suggest that you consider this might not be the piece of cake that you are assuming it to be.

You could easily reduce the risk of a 30%-50% increase in cost due to building it over a 5 year period. A simple solution is to award one contract for the first two buildings and then put the rest out to competitive bid before awarding it to the existing contractor. That will keep his pencil sharp.

And what do you do if the second round of bids come back 50% higher than the first one??? Do you really want to take the risk of going back to the owners sayins, "Sorry, we underestimated. You need to cough an additional $2000 on top of the $6000 you've already paid?

Certainly one could go that route, but it seems to me that is a course that has a pretty significant chance of going seriously awry.

And that begs the question, why not just do the whole project as one contract and ask bidders to sharpen their pencils once for a bigger project???? I know that when I ask for quotes from contractors I get much more aggressive quotes when I ask them to bid carefully on one $200,000 project than when I break the project up into $75,000 pieces and I let them know they will be competing for each $75,000 piece. The larger the contract, the more incentive the contractor has to price it aggressively. But if you break it into smaller pieces bidders have less incentive to price aggressively.

The bank loan is probably not an option for another reason, interest and fees.
This will just add to the cost of construction. Why get a loan when you can collect it from the owners, "interest free" and charge a special management fee built into the $65 million.

The bank loan is not an option because the AOAO has no assets to pledge as collateral. Anyone who spends any amount of time entertaining thinking about that as an option is betraying their lack of knowledge.

I hope the organized battle plan comes to fruition and maybe we will see some changes.

An organized battle plan presumes that there someone in a leadership who knows how to organize. So far I have seen little evidence that people who are up in arms are aware of the need to find someone who actually understands what can be done. Instead, when someone suggests that their perceptions of the situation may be off kilter, they shoot the messenger instead of considering the message.

There is no hope for doing anything until owners a sufficient number of owners are prepared to come to grips with reality and address what is feasible to accomplish given the realities and constraints of the circumstances. Haven't seen anything like that happening yet.

[DontGetMeStarted Junior Member Find all posts View Profile Close DontGetMeStarted]

Sorry for the multiple posts. The lack of immediate feedback led to the conclusion that initial attempts were unsuccessful. If the moderator has the facility to remove duplicate posts, I am grateful for that.

Personally, I see an effective plan coming about as an outcome of an iterative process of proposal, critique, proposal. That is the beauty of social media. For example, #1 presupposes obtaining a list and contact info on all owners. Coordinating several synchronistic communications before agreeing to a slate of candidates for the board.

[MadOwner Junior Member Find all posts View Profile Close MadOwner]

Concerned Deeded Owners at the Point at Poipu( CDOPP)

November 1, 2011

Note: We will be changing the name to reflect that this group consists of deeded owners and point’s program owners (Hawaiian Collection). We are looking for a remedy for both ownership groups as a collective group of vacation owners.

We would like to welcome all of the new and existing registered members, as well as those of you that have not yet registered on our website. We appreciate your patience while we have been gathering information and reorganizing the Board of Directors for CDOPP. We are receiving a lot of new registrations on a daily basis and we are working diligently to get information to you. The website is being worked on daily to provide better communication and more content, as we look to make positive changes.

Several years ago, many owners at the Point at Poipu banded together and formed CDOPP with the intent of collecting contributions in an effort to get the Association Membership List released to CDOPP. In addition, CDOPP launched the website CDOPP Home Page as an effort to inform and further identify owners that shared the same concerns.

The board members devoted countless hours collecting information, talking to concerned owners, meeting with government officials, seeking legal consultations, documenting the complaints made by owners of the Point at Poipu, as well as many other actions. Much of the work had to be done “behind the scenes” in an attempt to keep things confidential. In the winter of 2011, the website was hacked by someone forcing the Guestbook page to be shut down. This led members and others to believe that the group was inactive. In addition, the newsletters were making their way into to the hands of Diamond Resorts employees through a member that registered as a concerned owner, which we now believe may have been an employee of Diamond Resorts or one of their affiliates.

In response to the shocking Water Intrusion Assessment Invoice, one of the new board members, Tammy Sona started the Facebook page Point of Poipu Angry Owners (https://www.facebook.com/pages/Point...=wall&filter=2). Between the new Facebook page and the water intrusion assessment notice, there has been an increased awareness of our group and the realization that there is an even stronger need to band the owners together. Many are looking to our group to assist in protecting our resort from the poor decisions made by the Board of Directors at our resort under the guidance of the current management company, DRI. The registrations on the website have been growing in numbers very rapidly over the past few weeks and we expect that to continue as more owners are becoming aware of our efforts.

Here are a few basic facts that we would like to share with you.

1. The 2012 AOAO & VOA Approved Budget consists of various line items. We would like you to be aware that Diamond Resorts is collecting a total of $3,265,745 for management and corporate administration fees. This does not include the $612,732 budgeted for administration fees.

2. The water intrusion fee is nearly $6,000 per deeded week for the deeded owners and an unknown amount for the Points people in the DRI Hawaiian Collection. This is an economic hit of at least $65 million dollars for the deeded and Hawaiian Collection (points/Club/Trust) owners. “Your” VOA & AOAO Board of Directors voted to require this payment with the terms and penalties presented in the assessment. “They” decided to spread the assessment over 3 years instead of giving owners the option to spread it over a greater number of years to make it more affordable.

3. The State of Hawaii has received dozens of complaints to act on, and they need to receive even more to get them to enforce their own laws concerning time-shares in the State of Hawaii.

4. “Your” elected Board Member, Cleana Dean, is the mother of Linda Riddle (a Vice President with DRI) and was elected to the Board of Directors without disclosure regarding her relationship with DRI.

5. It appears that DRI has taken over the Point at Poipu in its entirety with no resistance except for the actions initiated by our members group.

The initial goal of this group (CDOPP) was to obtain the membership list consisting of contact information for all of the owners of the Point at Poipu to provide a direct line of communication with other owners for voting purposes. Without this list, we believe that it is virtually impossible to obtain the support of other members and also to ask them to vote (or assign their proxy to a representative of CDOPP) for OWNERS, not affiliated with DRI at the next election. We believe this has to be done in order to gain the majority interest on the boards of OUR resort.

The identified goals of CDOPP going forward are as follows:
1. Obtain the contact information of as many of the owners as possible.
2. To continue our efforts to obtain a copy of the membership contact list.
3. Assist owners with information about candidates that we support in upcoming elections.
4. Provide communication to owners beyond what the current management company provides.
5. To have an option regarding the costs of our management fees and the ability to seek other qualified management companies or to change the structure of management at our resort.
6. Assess the options available regarding the Water Intrusion issues
7. Take action to make changes to the existing assessment, including working out an agreeable payment solution with our AOAO and/or VOA Board of Directors. It’s pretty easy to defend their actions to us individually, with a group this size, we believe they will be compelled to make some changes.

The new Board of Directors has been working diligently and we are looking forward to sharing the actions that are being planned to help achieve the goals that we have identified with you.

CDOPP
Keith Paulsen – President
CDOPP Home Page

If you have contributed to CDOPP previously and would like your contribution returned, contact us and we will return your contribution immediately. If we do not receive a request for a refund by November 15, 2011, we will assume that you want to continue to support the efforts of CDOPP.

The information and opinions expressed in this letter are the opinions of the members of CDOPP. For legal purposes, we ask that you always include this disclaimer in your correspondence with CDOPP or other written communicationContributions and/or registration to CDOPP by any Diamond Resorts International employees, relatives of employees, subsidiary or affiliated companies, or any other person not purely identified with the purposes of the CDOPP cause, is strictly prohibited and legal action will be taken as deemed prudent and necessary.

[pseda Junior Member Find all posts View Profile Close pseda]

In response to the gal who received her 14K assessment bill from DRI. WE received our assessment at 16K plus. Yes, we are more than angry; especially since we knew nothing of this until the statement arrived. Have received no options to vote on anything relating to being owners, in several yrs. (our mailing address hasn't changed). Where is a special election on something this important and large? Also noticed that for those who trade in points towards dues, the monetary value of each point has going down since last year. Gee, were we told of this? I'm sorry but I don't think what they're doing is legal. We are the owners and should be allowed to voice our opinions re: such a large issue. I'm for bulldozing the resort and starting over. This is the most scandalous feeling event I've ever been involved in. Something has to be done and everyone involved needs to let their voices be heard!

[pseda Junior Member Find all posts View Profile Close pseda]

For a project such as this engineering will be about 15% of total expense. 10% is a normal figure, but when you are working in a setting that has significant collateral issues - such as cultural impacts, environmental impact and permitting issues. or reconstruction as compared to greenfield construction - 15% or 20% of total project budget to E/A is more reasonable. 15% of $65 million is 9.75 million.

If you're going to do VE of a project, it;'s worth doing a budgeting the effort reasonably and budgeting accordingly, which means that the VE should be in the range of 10% of the design fee, which in this case would be close to $1 million. If you go significantly less than that, the VE actually ends up adding to project cost instead of reducing project cost. For example, I recently completed a technical response to a VE evaluation of a project involving combustion of waste treatment digester gas in combustion engines to produce electricity. The VE consultant recommended relocation of the stacks to a location closer to the engines to reduce construction cost. The problem was that the original stacks were chosen to so that ambient air quality impacts from the engine exhausts would meet air quality standards, and the alternate location recommended by the VE consultant were completely and totally impossible. The VE consultant, however, was squeezed by the project owner on their budget, which led to them excluding any competent air quality consultant on their project team, and in turn resulted in them making totally infeasible recommendations. But my client, the design contractor, had to then show why the VE evaluation was wrong. In the end the client pissed away about 5% of the design project in the battle of the consultants because they short-changed the scope of the VE effort. A fully scoped Ve would have recognized immediately that that stack locations couldn't be changed willy-nilly.

Which is a long way of saying that 5% to 10% of project budget for VE is about what is needed for a decent evaluation. I used $500,000, which at ~5% of engineering is actually at the low end of the range.

*****


I'm sorry. This is not construction of a house or an ordinary subdivision. This is a pretty significant construction. No supplier is going to offer a price guarantee for ~$20 million of materials over a five- to seven-year period without including a huge contingency to protect themselves. (I use a five- to seven-year period because Poipu is proposing three years as a median approach, and I presume that you are suggesting it needs to get stretched out longer than that.)


That's a wonderful assumption, but it totally lacks any grounding in reality. If that were actually a realistic alternative it would already be happening.

Have you actually tried to import mainland labor to Hawai'i??? It sounds so simple to those who have not actually had experience trying to do so. My wife has family who are highly successful contractors in the mainland who attempted to expand to Hawai'i using precisely the same model that you suggest. They build Street of Dreams houses in the US, and they had clients who asked them to do work for them on properties they owned on Maui. Seems simple - they didh't even have to market themselves, since they were coming into Hawai'i with clients and contracts already in hand. Sixteen months later they closed shop in Hawai'i, having lost close to $1 million. An engineering company I previously worked for also attempted to open a Hawai'i office, and we also cut our losses after 18 months.[

The lesson they stressed to me when we talked about it was that they thought it would be simple to port mainland expertise to Hawai'i, exactly as you are assuming. And they confessed that they were totally naive. Based on these experiences, I suggest that you consider this might not be the piece of cake that you are assuming it to be.

And what do you do if the second round of bids come back 50% higher than the first one??? Do you really want to take the risk of going back to the owners sayins, "Sorry, we underestimated. You need to cough an additional $2000 on top of the $6000 you've already paid?

Certainly one could go that route, but it seems to me that is a course that has a pretty significant chance of going seriously awry.

And that begs the question, why not just do the whole project as one contract and ask bidders to sharpen their pencils once for a bigger project???? I know that when I ask for quotes from contractors I get much more aggressive quotes when I ask them to bid carefully on one $200,000 project than when I break the project up into $75,000 pieces and I let them know they will be competing for each $75,000 piece. The larger the contract, the more incentive the contractor has to price it aggressively. But if you break it into smaller pieces bidders have less incentive to price aggressively.


The bank loan is not an option because the AOAO has no assets to pledge as collateral. Anyone who spends any amount of time entertaining thinking about that as an option is betraying their lack of knowledge.

An organized battle plan presumes that there someone in a leadership who knows how to organize. So far I have seen little evidence that people who are up in arms are aware of the need to find someone who actually understands what can be done. Instead, when someone suggests that their perceptions of the situation may be off kilter, they shoot the messenger instead of considering the message.

There is no hope for doing anything until owners a sufficient number of owners are prepared to come to grips with reality and address what is feasible to accomplish given the realities and constraints of the circumstances. Haven't seen anything like that happening yet.

Would so help if DRI would release owners list. People are working on this. Speaking of construction. Why couldn't there be a penalty built in that would fine the construction outfit for unnecessary overages, including time. There is a bottom to this pot of gold and everyone has to be accountable. DRI also needs to trim the fat from their assessed 3M+ management fee as well.

[pseda Junior Member Find all posts View Profile Close pseda]

quoted from TR oglobyte: Just to point out a couple of items.

Doing a through and competent revetting and reexamination of a project of this size and complexity is about a $500,000 project. Since the capital reserve funds have already been expended, implementing your second point will likely require a special assessment in itself. From a practical standpoint, going back to the owners and saying - oh, here's a special assessment on top of the existing one isn't going to fly.

Spreading the SA over a longer period of time will increase the cost of the project. It's less efficient for a contractor to stretch out a project, and if you ask the contractor to assume the risk of changes in the prices of materials and labor, the longer a project stretches the greater the contingency the contractor needs to have. I wouldn't be the least surprised that if you make this a five-year project the project costs would increase by about 30% to 50% - maybe more if the contractor has to carry the full risk of changes in materials and labor.

The issue of loan possibilities is straighforward. What do you propose that the HOA put up as collateral to secure a loan that would be attractive to a bank? If you can't put up collateral no one is going to extend tens of millions of dollars in credit.


******

There are a lot of people justifiably upset and angry. But for people to organize effectively, responses need to be well thought and grounded. If you get people excited and start marching them off in some direction, only to have to stop and say, "Ooops, this isn't going to work after all", support is going to fade quickly.

Sorry to be blunt, but right now what I see is a bunch of corporals running around trying to collectively plan a battle. What is needed is to find an experienced commander who can develop a realistic battle plan.

[pseda Junior Member Find all posts View Profile Close pseda]

quoted from TR oglobyte: Just to point out a couple of items.

Doing a through and competent revetting and reexamination of a project of this size and complexity is about a $500,000 project. Since the capital reserve funds have already been expended, implementing your second point will likely require a special assessment in itself. From a practical standpoint, going back to the owners and saying - oh, here's a special assessment on top of the existing one isn't going to fly.

Spreading the SA over a longer period of time will increase the cost of the project. It's less efficient for a contractor to stretch out a project, and if you ask the contractor to assume the risk of changes in the prices of materials and labor, the longer a project stretches the greater the contingency the contractor needs to have. I wouldn't be the least surprised that if you make this a five-year project the project costs would increase by about 30% to 50% - maybe more if the contractor has to carry the full risk of changes in materials and labor.

The issue of loan possibilities is straighforward. What do you propose that the HOA put up as collateral to secure a loan that would be attractive to a bank? If you can't put up collateral no one is going to extend tens of millions of dollars in credit.


******

There are a lot of people justifiably upset and angry. But for people to organize effectively, responses need to be well thought and grounded. If you get people excited and start marching them off in some direction, only to have to stop and say, "Ooops, this isn't going to work after all", support is going to fade quickly.

Sorry to be blunt, but right now what I see is a bunch of corporals running around trying to collectively plan a battle. What is needed is to find an experienced commander who can develop a realistic battle plan.


Mr. Oglodyte: Since you appear to have a good grasp of the big picture, why don't you become the leader and organize?

[Ann-Marie Senior Member Find all posts View Profile Close Ann-Marie]

I just read this entire post with great interest. What I find even more interesting it that I am searching for Kauai and this being one of 2 resorts that I want. NOT ONE unit comes up for the entire search time frame RCI allows.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

Mr. Oglodyte: Since you appear to have a good grasp of the big picture, why don't you become the leader and organize?

For a variety of reasons, the most important of which is that taking on something like that would involve letting other more important priorities slide. Beyond that, getting owners united on something such as this is akin to herding cats, only much harder. In my life I have amply demonstrated, times over, that herding cats is an area in which I clearly have an ADD (aptitude deficit disorder).

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

I just read this entire post with great interest. What I find even more interesting it that I am searching for Kauai and this being one of 2 resorts that I want. NOT ONE unit comes up for the entire search time frame RCI allows.

I have watched it for more than 10 years. When I've seen it, it has been close to use date. When we traded in, I did it in the 14-day window, switching from another resort, as I did for LBR also.

All I see now is 5 units at LBR.
- - - - -
Speaking of reading, if fighting the assessment involves this much reading, I think I'd just give em the 6 grand.

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

In response to the gal who received her 14K assessment bill from DRI. WE received our assessment at 16K plus. Yes, we are more than angry; especially since we knew nothing of this until the statement arrived. Have received no options to vote on anything relating to being owners, in several yrs. (our mailing address hasn't changed). Where is a special election on something this important and large? Also noticed that for those who trade in points towards dues, the monetary value of each point has going down since last year. Gee, were we told of this? I'm sorry but I don't think what they're doing is legal. We are the owners and should be allowed to voice our opinions re: such a large issue. I'm for bulldozing the resort and starting over. This is the most scandalous feeling event I've ever been involved in. Something has to be done and everyone involved needs to let their voices be heard!

There is nothing illegal about it- you as an owner owe what your HOA bills you. On the other hand if you don't get a ballot in the mail why haven't you contacted them to make sure your voice gets heard.

There is no requirement for an owner vote for repairs - your vote is for the HOA Board that represents you. You need to take an active part in that process if you really want changes.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

I'm for bulldozing the resort and starting over.

Sounds like a good plan, except for the starting over part.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

Speaking of construction. Why couldn't there be a penalty built in that would fine the construction outfit for unnecessary overages, including time.

May I safely assume that you realize that adding a provision such as this would cause the contractors to increase their bids to accommodate the increased risk thay are being asked to assume? Can you tell us how much you expect that contractors would add to their bids and how much that would add to the aasessments?

[pseda Junior Member Find all posts View Profile Close pseda]

I don't know when the studies were done, but I doubt it was any more than three years ago. If you bought during the Embassy/Sunterra days you would almost certainly predate any knowledge of the extent of the problem.

Makes me wonder if they kept it under wraps until the last minute to avoid a panic and owners selling before an assessment could be forced.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

Makes me wonder if they kept it under wraps until the last minute to avoid a panic and owners selling before an assessment could be forced.

They didn't keep it under wraps. The situation has been discussed regularly in the owners newsletter for the last year or so, including the decisions about dropping litigation. People who profess that this came out of the blue are really betraying that they have not been in touch with owner communications.

That being said, they certainly gave no hint as to the size of the assessments. That was totally sprung at the last minute. And I'm sure that was done in part, if not primarily, to limit the ability of owners to bail.