Point at Poipu, Kaua i Owners Fight Continues

by Cheri Becker

The following information was provided to The Garden Island Newspaper, Kaua i, Hawaii and is reprinted here in its entirety for those owner’s at The Point at Poipu resort who may have not seen the article. The fight is ongoing and COPP’s voice is getting louder.

LIHU‘E — In a wry turn of events, the Concerned Owners of The Point at Poipu (“COPP, LLC”, formerly “CDOPP”), a vacation owners group that was threatened with a lawsuit by the developer/management company of The Point at Poipu in March of last year, is now itself preparing a lawsuit against this corporate giant, Diamond Resorts International, Inc. (“DRI”), one of the largest hospitality companies in the world. There has been an intense struggle between DRI and many upset vacation owners at the resort in Kauai who have owned there long before DRI ever showed up. Many of these owners are alleging that they have been deceived by DRI , that DRI has serious conflicts of interest in Board decisions and does not recuse itself, that there is a shocking lack of disclosure of essential information, that it has been non-compliant with Hawaii Revised Statutes and that the resort is generally mismanaged.

The initial grassroots efforts of this owners group was spearheaded by former President of CDOPP, Rich Batchelder, who retired from the group in October of this year, leaving the group floundering. Unwilling to give up, members of CDOPP recruited a new, energized board to help them. According to Keith Paulsen, the new President, it was a Facebook page designed by one of the vacation owners, Tammy Sona, which helped revitalize the group. This Facebook page now gave members a way to communicate with each other where there had been none before. Sona currently plays a pivotal role as one of the new board members of the owners group that is now called “COPP, LLC.” The address of the Facebook page that she created is: http://www.facebook.com/pointatpoipu.

Meanwhile, the next DRI atrocity was foisted on all of the vacation owners at The Point at Poipu when they were informed in October 2011 of a $65 million assessment to repair damages to the resort from water intrusion. This outrageous price tag would be paid for by the vacation owners and in part by DRI. To illustrate, an owner that holds a vacation interest for two weeks a year is expected to pay, by January 1, 2012, more than $6,300, consisting of maintenance fees and the first-year water intrusion assessment fees. Further, this entire amount would have to be paid by February 1, 2012, in order to avoid: “…the following:

a. A one-time late charge equal to 5% of the delinquent amount.

b. An interest charge of 12% per annum from the due date.

c. General Excise Tax (GET) of 4.16666% on all of the above charges.

d. Owner will suffer suspension of use rights.

e. All future reservations will be cancelled and owner will be required to re-book the reservation and will be subject to first come, first served availability.”

If the account is not paid in full or not operating under a payment plan by February 15, 2012, “…the account will be submitted for collection action resulting in additional collection fees.” If the account is not paid by March 15, 2012, “Your Board of Directors may request any necessary actions to collect outstanding assessments. Actions may include but are not limited to the following:

1. Submit a delinquent account to an attorney.

2. Engage a professional collection agency.

3. Record a claim of assessment lien.

4. Foreclose on the claim of assessment lien.

5. Institute a small claims suit or legal action.

All related costs for the above, including General Excise Tax (GET) of 4.16666%, will be added to the delinquent member’s account.”

Tammy Sona speaks for many vacation owners when she says, “A great number of our owners are retired now, having spent many years working hard so they could enjoy their senior years vacationing in Kaua i. This assessment is such a hardship on these owners, not just the ones that are retired, and some will be forced to surrender their deeds or be foreclosed on. This just isn’t right, it’s not the way you treat people.”

Vacation owners were notified of all this in October 2011, giving them THREE MONTHS NOTICE to come up with thousands of dollars for an unexpected assessment. To add fuel to the fire, two informational meetings were held on October 19, 2011, in Irvine, California, and on October 20, 2011, in San Francisco, California, just days after the assessment fees were announced. Most vacation owners, of course, would not be able to attend these meetings on such short notice and at their expense. NO informational meetings about the water intrusion problem have taken place at the resort!

The vacation owners have been led to believe that DRI has performed its due diligence regarding the $65 million assessment. To the contrary, DRI will not release pertinent information such as the consultants’ reports, engineers’ and architects’ reports, insurance policies and other documents that would help to justify this huge expense. COPP, LLC, does not dispute that some of the work is necessary, but it wants the opportunity to bring in an independent third party to assess the situation. “With many of our members having backgrounds in the construction-related industries, we’re not about to accept this without some degree of scrutiny” asserts Paulsen. DRI insists that the insurance company denied the claim for the damage, but no one except DRI has seen the denial letter. DRI has created a website for vacation owners’ perusal regarding the water intrusion problem, but nothing of real substance can be found there.

Former Diamond Resorts International Executive Vice President and General Counsel Elizabeth Brennan was quoted in a March 1, 2010, Garden Island Newspaper article that stated “…the few members of the concerned owners group are not representative of the ownership of this resort and their satisfaction level.” The disgruntled owners group, renamed COPP, LLC (Concerned Owners at the Point at Poipu) has grown to well over 1,000 determined owners looking for changes to the operations and management of the resort.

Members of COPP, LLC, who have been interested in running for a position on one of the resort’s Boards of Directors have been denied by DRI their request for the resort’s membership list, needed to gain support for their candidacy by contacting other owners. This denial, both at The Point at Poipu and at the Kaanapali Beach Club in Maui, is contrary to the laws of Hawaii and to the resorts’ organizational documents. Section 514A-83.3 of the Hawai‘i Revised Statutes requires the board of directors to provide an ownership list to any owner for the use of soliciting votes.

The management and corporate administration fees at The Point at Poipu that were $721,262 in 2007 have increased to $3,265,745, budgeted for 2012–over a 353% increase during this short timeframe. The DRI executives would like us to believe that the Board of Directors (consisting of a majority of DRI employees or relatives of DRI employees) voted for these increases independent of their association with DRI.

DRI’s Vice President of Association Administration, Linda Riddle, was quoted in an earlier article, “If they aren’t happy, they could vote us out. They have the power to do that.” COPP, LLC, members disagree. “If it was that easy, it would be done immediately,” said Paulsen, “but without the membership list everyone knows that it’s virtually impossible to campaign for office, and DRI wants it that way.”

Paulsen adds “with control of the boards, including the Hawaii Collection Board of Directors, the vacation owners are at the mercy of this corporate giant. It’s really a David versus Goliath situation but this is a determined group of owners that are not going to stop fighting no matter who is running the show. I think they are underestimating the strength of the membership and the power of the internet.” Members of COPP, LLC, have been very active on the internet and others have helped support their efforts.

COPP, LLC, registration grows on a daily basis and it is a very simple registration process. Hawaii Collection members can also register by inputting their account number followed by “HC” to identify that they are a points collection member.

The Hawaii Collection consists of The Point at Poipu in Kaua i, The Kaanapali Beach Club in Maui, the Polo Towers Villas in Las Vegas, and the Sedona Summit Resort in Sedona, AZ. Members of the Hawaii Collection are also charged a portion of the assessment based on the amount of points they own, whether or not they have ever used or plan to use the resort in Kaua i.

Brennan and Riddle said the proscription elsewhere in 514A against directors voting on an issue in which they have a conflict of interest could apply to developer reps and deeded owners alike, and said they do not believe there are conflicts of interest when the boards vote on budgets that include fees that impact the company’s bottom line. To that Sona replied, “This statement made by DRI is almost comical. Do they really think people are that stupid? They want us to believe that their employees are going to bite the hand that feeds them, seriously?”

DRI’s tactics have demonstrated its intention to completely take over the Point at Poipu. It has encouraged vacation owners to surrender their deeds in exchange for membership and points in its vacation club. It recently offered some vacation owners a reduced Water Intrusion Assessment if they would give up their deeds for points and then buy additional points in the vacation club. What DRI is not disclosing is that owners who surrender their deeds lose all voting rights and no longer have any say about how the resort is run. COPP, LLC, intends to discourage vacation owners at the Point at Poipu from surrendering their deeds. It fully intends to keep working diligently to reclaim its resort from DRI.

For more information on the concerned deeded owners, visit www.poipuowners.org.

Advantage Vacation will continue to cover and report the on-going story at Point at Poipu in an effort to keep all Point at Poipu owners informed of the developments surrounding the water intrusion assessment and any other pertinent news affecting the owners.

 

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