OF THE BOARD OF DIRECTORS
OF THE ASSOCIATION OF BEACHHOUSE OWNERS OF KIAHUNA PLANTATION
August 9-11, 2013 at 1:00 PM PDT
Doubletree Hotel San Francisco Airport, CA
Board Present: Kay Carey Bill Falkenhainer John James
Alan Hart Ben Miller Roger Mullenhour
Randy Nordstrom Craig Price Scott Tiraschi
Ex Officio: Mickey Sanders
Outrigger: Faye Fernandez Chris Gampon Gregg Enright Gana Maheshwaran Marianne Thesken
CALL TO ORDER: The meeting was called to order at 7:18 PM PDT on August 9 by Ben Miller.
It was announced that the Board would be adjourning into Executive Session the items to be discussed are the Phase II redetermination of minimum rent, Washer\Dryers, Sandwich Lease Purchase, Phase V redetermination of minimum rent., Board Powers, Revisions to Rental Programs, and Delinquencies.
Falkenhainer moved, Price seconded, a motion to adjourn to Executive Session.
Motion Passed Unanimously.
Open Meeting Adjourned
The Open Session reconvened and was called to order at 1:04 PM PDT August 10 by Ben
Miller.
APPROVAL OF AGENDA: Motion: James moved, Tiraschi seconded a motion to approve the agenda. Motion passed unanimously.
APPROVAL OF THE MINUTES:
Motion: Carey moved, Mullenhour seconded a motion to approve the meeting minutes of May 2, 3 and 25, 2013. Motion passed unanimously.
EXECUTIVE SESSION
Miller reported that the Board met in Executive Session to discuss the Phase II redetermination, Washer/Dryers, the Sandwich Lease and the upcoming Phase V redetermination. He noted that the Board approved entering into a preliminary contract with Uson Ewart for the Phase V preliminary appraisal. Miller said he plans to negotiate with lessors before going through the panel process. He said the lessors want to wait until Phase II landlease is determined prior to negotiating.
Miller reported that the legal briefs for the Phase II landlease redetermination have been submitted to the arbitration panel. The panel is reviewing them and will release their award by September 9, 2013. He noted that once the determination is announced, the Board may consider filing appeals.
WASHER/DRYERS
Infrastructure Study
Mullenhour reviewed the 2009 Infrastructure Study which looked at 6 buildings. He noted that minimal action has been taken to correct the aging infrastructure and no plans or requests for funding have been presented to the Board. He noted that the Kiahuna electrical system was built in 1974 and not designed to withstand today’s loads. He noted that upgrades would result in significant costs. He noted there are plumbing issues that need to be addressed, also.
Mullenhour noted that the installation of additional breakers have created a dangerous situation. He noted that the property has been fortunate until now but the Board has the responsiblity to take action to protect the property and interests of all owners.
Action: Post the 2009 Infrastructure Study, the spreadsheet regarding electrical load by building and the spreadsheet showing in room amps on the website.
Discussion followed about the Reserve Fund and prior Boards. Miller noted the fund exists and the current Board has members who have more expertise in engineering fields than previous Boards.
Discussion followed about washer/dryers. Owner voiced their concerns regarding existing washer/dryers. Several said they felt picked on or blamed for the infrastructure problem. The Board asserted that the main issue with washer\dryers is safety and the risks associated with electrical and plumbing.
Mullenhour showed a video about dryer fires.
Discussion followed about the washer/dryer report and the qualifications of Chris Berg. Berg was contracted to do an audit of the washer/dryers and he followed the directions given to him. He noted that the County told Berg that Kiahuna was a commercial property. Nordstrom said that a qualified engineer should have been hired to conduct the survey. Carey noted the Board instructed Gampon to do an audit and then hired Berg as an independent contractor to do an audit. Gampon noted the findings were similar.
Miller noted that the Board took the preliminary step to make sure the washer/dryers could be operated safely. He noted that cleaning of the lint is necessary for the safe operation of dryers. Mullenhour and Tiraschi explained venting and duct issues as well as plumbing issues.
Discussion followed about the invasion of common elements.
Discussion continued about a solution to the problem. Berlon #123 suggested that homeowners get county permits.
Recess
Miller called for a break at 3:10 PM and the meet resumed at 3:35 PM.
Motion: Falkenhainer moved, James seconded a motion that all owners with washer/dryers pull building permits and get a final inspection signed off by the County with the exception of those owners who have final signed permits. The inspections should be done as soon as possible within the next 60 days if possible. Until the final permit is issued, there will be no use of dryers.
Prior to the vote, Nordstrom suggested that the motion be split in two separate motions.
1. Obtain a permit and 2. Do not use dryers.
In favor: Falkenhainer, Carey, Price, Hart, James, Mullenhour, Tiraschi
Opposed: Nordstrom
Motion passes.
Discussion followed about whether it was feasible to get a permit in 60 days.
Action: Gampon will provide a list of contractors to the homeowners.
Discussion followed about the risk and whether the motion should include lint cleaning.
PARKING
Mullenhour said that Greg Kamm was consulted regarding the proposed additional parking near the lagoon. He said that Kamm was not in favor of it because the County may require a shoreline setback survey and a SMA (Shoreline Management Application). Mullenhour referred to a 2001 parking requirement from the County and said Kamm is not sure whether the County will still require the additional parking. Mullenhour said that 7 additional spaces could be added on the top drive and near the baseyard. Mullenhour recommended that the Board not pursue the additional parking near the lagoon.
KIAHUNA SWIM & TENNIS CLUB (KSTC)
Miller reported that the Resort Operating Committee (ROC) had a meeting related to the East West Partners offer to purchase the KSTC. He reported that that East West has a 90 day extension from the Trust who is waiting for the Phase II landlease to settle.
Motion: Carey moved, Price seconded a motion to form a committee to negotiate with East West Partners. Motion passed unanimously.
Miller said that he will decide later who will be on the committee.
Discussion followed about running the membership through the Association and the need for a homeowner vote.
Discussion followed about using the Sheraton pool. Gampon noted that the Mauka side will be re-roofed and the area will be a construction zone. He noted that the tennis courts are being removed.
Discussion continued about the location of the pool on site.
FINANCE
Price reported that as of June 30, 2013, there was $687,373 in the Operating Fund and $913,891 in the Reserve Fund. Year-to-date (YTD) revenue was $1,981,124. Total expenses year to date were $2,083,194 for a YTD loss of $102,070. This was over budget by $83,298.
YTD favorable variances were: income $2,615; total payroll & related $32,012; utilities $40,493; beach hut $14,180; building and maintenance $5,254; and refuse $4,604.
YTD unfavorable variances were: professional fees $179,922; grounds $2,197
YTD land lease arbitration expenses are $227,420.
Price reported there were no non related meeting Board expenses.
First Quarter Financials
Motion: The Finance Committee moved that the Board approve the second quarter 2013 financials. Motion passed unanimously.
COMMITTEE REPORTS
BUILDING & GROUNDS COMMITTEE (B&G)
Orchid Garden
Mullenhour reported that there are no immediate plans to cover the utility lines in the Orchid Garden. He said it may be included in next year’s budget
Barbeques
Mullenhour reported that for the 2014 budget, the Building and Grounds Committee proposes to remove the three portable barbeques near the lagoon, install one double island grill near the Hawaiian Garden and leave the picnic tables.
Drainage
Mullenhour reported that a plan for the Twin Cannon water containment is in place and the cost will be in the 2014 budget. He noted that it is expected to be completed in the first quarter of 2014 pending budget approval.
Gampon reported that he is exploring other options to connect to the Sheraton drain. He noted that the Trust did not approve the plan to cross over lot 208.
African Tulip Trees
Mullenhour said that the Orange African Tulip trees that pose a threat to buildings and guests have been identified. Bonilla has received a removal proposal with guaranteed pricing for 2014. It will be put in the 2014 budget and work should begin in January.
Action: Several trees fall within the Moana maintenance area. Gampon to advise Moana of the cost and invoice them.
Parking Lot Lighting
The Building and Grounds Committee will review in November.
Parking Along Poipu Road
Gampon reported that the no parking resolution will be heard at the County Council meeting on Wednesday, August 17.
Parking Lot Paving
Gampon reported that the parking lot is almost finished. He noted the Marriott Waiohai is sending a check for . of the East Entrance. Miller said that he has asked Phase 1 to pay their . share.
Action: Gampon to send invoice to Moana for their share of paving the parking spaces.
Lagoon Repair
Mullenhour reported that the lagoon wall was crumbling and was repaired in July. When the lagoon was drained, another collapsed 10 foot section of the pond was discovered. The project went over budget by $1000. Mullenhour noted that two fountains of salt water were discovered at the bottom of the lagoon. He said the Building and Grounds will look at the lagoon again in November to determine if more repair is needed.
Golf Cart Safety Inspections
Gampon reported that the golf cart safety inspections are underway. The Security carts have been inspected and Castle has been informed of the program.
Hot Water Heaters
Mullenhour reported that Bonilla is looking for a source for the GE Hybrid water heaters. He said he is checking with KIUC regarding the rebates. He noted that Phase I has one installation. Mullenhour suggested that the AOBO fund a pilot.
Infrastructure Study
Motion: James moved, Nordstrom seconded a motion to generate a request for proposal an infrastructure study. Motion passed unanimously.
Price suggested that the Board look at the study to get real numbers for the 2014 budget. He suggested a reserve study for 2014.
Drainage Area in Phase V
Mullenhour reported that potential safety issues were uncovered during routine trimming of the drainage area in Phase V. There is drainage from Poipu Road that runs under our driveway between buildings 41 and 42. On the road side, there was not a safe area to trim the wall vegetation. Reserve funds of $7700 dollars were requested and approved to resolve this safety issue in 2013.
Mullenhour noted that the other side of the driveway has a similar issue and is unprotected from someone falling over the edge into the culvert. Several proposals were reviewed and a decision to plant 70-80 small Bougainville plants closer to the driveway to form a hedge. The $1000 was requested and approved by the Finance Committee. The work has begun and should be completed in September.
Mullenhour said the employees would like to plant vegetables in that area. Gampon said he has reservations regarding that plan.
Barbeque Hood Springs
Mullenhour reported that Bonilla found $20 hood springs that will prevent the hoods from dropping on guests and employees. The GE model cost $90 and continues to fail.
Fire Hydrants
Mullenhour reported that the County has spent considerable time trying to locate, repair and pressurize the pipes necessary for two non-operative hydrants without success. They are continuing to work on finding the problem at no cost to us.
Lagoon Pumps
Mullenhour reported that when the lagoon was drained and the pumps were pulled, one had a cracked case. It was replaced with the new spare which is not working properly and will need warranty work. The finance committee approved $7900 for another spare pump. Bonilla is looking for a different manufacturer.
Well Pumps
Mullenhour reported that there was a pump failure and three locations where the pipes are cracked and affecting the pumping of water from the baseyard to the lagoon were discovered. The Finance Committee has approved $13, 000 to make repairs.
POOL / BASEYARD / PATH
Tiraschi reported that a charging station was installed outside the baseyard. The old electrical line was removed. He noted that he is still waiting for the license agreement from Phase 1 to use the walkway by Building 6 to complete the horizontal access path.
ADJOURNMENT
Motion: A motion to adjourn the meeting at 6:08 PM and reconvene at 8:00 AM on August 11, 2013 was made and seconded. Motion passed unanimously.
RECONVENEMENT
The meeting was reconvened on Sunday, August 11, 2013 at 8:10 AM.
WASHER/DRYERS
Action: Falkenhainer to draft letter to homeowners regarding the required permitting.
The letters should go to owners of washer/dryers via mail and email. Other owners can be noticed in the next newsletter.
Action: Gampon to provide list of contractors and County permitting checklist.
Discussion followed about owner insurance.
Miller said Geraci is updating the House Rules and can include a something about checking for excess lint and a implementing a regular cleaning schedule. He noted that changes to the House Rules are normally presented at the Annual Meeting however; they can be presented prior to the November meeting and voted on at the November Board meeting.
Action: Carey and Geraci to draft a House Rule regarding high risk items.
Discussion followed about the room audits and infrared studies.
Tub Leak
Miller reported that a second story unit has a bath tub that needs repair and the owner is stalling. He noted that the leak is affecting the unit below. Miller said that he has talked to Thompson/Castle to try to get the owner to repair the tub.
Action: Gampon to talk to Bonilla to work out a solution within three weeks
POOL / BASEYARD / PATH
Tiraschi reported that the baseyard plan will include a solar umbrella. He noted that Bonilla is getting proposals. Miller said the Trust (Horwitz) objects to a pool in the baseyard. He suggested giving the path plan to the Trust. Discussion followed about whether the Trust would give approval.
Miller reported that the Resort Operating Committee (ROC) met on Friday, August 9, 2013. The ROC suggested looking at another location for the pool. Miller asked the Board if they would be willing to invest the time and effort into looking at another location and getting owner approval. Discussion followed about other locations and whether a vote was necessary. Miller said that historically, the Board always asked for an owner vote of the phase where the change to common elements would occur. He noted the Phase II owners approved the baseyard location and the Phase IIIA owners did not approve the lagoon location. Discussion followed about Phase I’s opinion and if it was interrelated to the East/West Proposal regarding KSTC.
Motion: Nordstrom moved, James seconded a motion that Miller have a conversation with Horwitz from the Trust regarding the path, the pool and the baseyard. Motion passed unanimously.
Discussion followed about the relationship with the Trust and the location of an onsite pool.
B. Schneider said that an onsite pool is a better choice. He suggested not getting locked into a deal with the KSTC and going without a pool instead. He estimated a 5% loss of revenue without a pool.
Miller asked if anyone wanted to make a motion regarding another location of the pool. No one responded. Miller said the Board should stop talking about other location.
Negotiations regarding Swim and Tennis Club
Miller said he and Carey will talk to East West. Tiraschi asked to be involved as it tied to the development of the onsite pool. Miller noted that no offer would be made without Board approval.
INSURANCE
Hart reported that there has been 4 accident claims at Kiahuna this past quarter. He said our agent is not concerned given the size of the property and guest flow-through. However, he noted that the accident claim rate has increased in the last year after 3 years of less than one claim per year. Hart suggested that the Managing Agent review potential safety issues and standard operating procedure at Kiahuna and provide additional employee training.
Hart reported that in April, our insurance agency initiated a safety audit, given an increase in accident claims. Most of the identified potential safety issues related to safe walking surfaces. The repaving of parking lots addresses one of the improvement suggestions for smoothing the walking areas to prevent trips and falls. The agent gave kudos to Gampon.
Gampon noted that Blum conducts safety training and focuses on the use of personal protective equipment. He did note that certain safety equipment like ties are deficient. He noted that the property is prepared for an OSHA inspection.
Action: Tim Blum, Director of Security to send reports to Hart.
Discussion followed about the baseyard conditions. Miller said he will mention the necessary baseyard upgrade to the Trust.
Hart reported that the Insurance Committee and our insurance agent recommended an increase in Liability Umbrella coverage to $15M from the current $10M with our annual renewal on November 1. The incremental cost is $6000. This umbrella sits over all of Kiahuna’s policies that involve liability and would protect owners from effects of a large law suit.
Motion: The Insurance Committee moved that the Board approve the increase in Liability coverage from $10M to $15M. Motion passed unanimously.
Falkenhainer suggested that each owner provide a copy of their Declaration page. Miller said that there is nothing in the By-Laws for the Board to require that information.
Action: Hart will suggest that owners submit a copy of their Declaration page when he sends out the annual insurance letter in November.
LEGAL
Carey suggested that each Board member examine their communications prior to sending. She said blanket emails turn out to be discoverable. Carey suggested that email communication stay between committee members and be reported at Board meetings. Miller said he has tried not to include Outrigger (the Managing Agent) on most emails.
James said he has sent emails to the Board because he does not have a committee. He said he feels he is the only one concerned about the massive financial catastrophe.
Miller called for a break. The meeting resumed at 10:36 AM
Resort Fee
Miller said that the ROC discussed the implementation of a resort fee or possibly calling it a parking fee effective January 1, 2014. He noted that owners would not need to pay the fee and existing reservations would not be subject to the fee either. Discussion followed about whether the Association had the authority to impose a fee on rental guests and how they could collect from smaller agents. B. Schneider recommended calling it a parking fee. Discussion followed about tax implications. James said he would like a legal opinion.
Discussion continued about resort amenities. Mullenhour presented fees charged by neighboring resorts.
Mullenhour made a motion to get a legal opinion regarding the tax consequences of imposing a parking fee. He amended the motion to approve a $10 parking fee subject to a legal opinion regarding the tax consequences. He subsequently withdrew the motion.
Motion: Carey moved, Nordstrom seconded a motion to for the AOBO to adopt a policy to charge a $10.00 + tax per day per guest parking fee effective January 1, 2014. Existing reservations booked prior to October 1 2013 will not be subject to the fee for arrival dates prior to June 1, 2014. Motion passed unanimously.
Motion: James moved, Falkenhainer seconded a motion to seek a legal opinion regarding tax consequences and the legal authority of the AOBO to impose a parking and/or any fee for specific amenities or a resort fee. Motion passed unanimously
Miller said the Board would discuss which attorney should give the legal opinion in the Executive Session.
EMERGENCY PLANNING
Mullenhour said he plans to meet with Bonilla in October to discuss the emergency planning.
PLANNING & POLICY
Hart said he met with the Committee on Friday. He said the Committee discussed Board operations, not micro managing the Agent or projects, prioritizing projects and methods to manage larger projects.
Discussion followed about House Rules. Nordstrom said she thinks some House Rules contradict the By-Laws.
Action: Nordstrom to give examples to Carey.
ADJOURNMENT
Motion: James moved, Carey seconded a motion to adjourn to Executive Session at 11:48 AM and return to the Board Meeting following a brief discussion.
Motion passed unanimously.
RECONVENEMENT
The meeting was reconvened and Miller reported that he Board discussed John James proposal regarding a Kiahuna business model.
GENERAL MANAGER’S REPORT
Koa Pond Repair & Plantation Gardens Water
Gampon reported that the Koa pond repairs are on hold. He noted that the ponds in front of and behind the Plantation Gardens’ building are within the responsibility of Moana/Plantation Gardens.
Gampon said he submitted a complete analysis and proposed to Moana, that the water meter account be transferred into their name. Currently, the AOBO holds the meter account. Moana remits 22.5% of the cost of the meter to the AOBO. Analysis shows that more than 90% of the audited use is related to Moana areas. The balance is used for irrigation purposes in AOBO areas, or by the Front Desk bathroom plumbing (toilet and wash basin). Gampon noted that he had an initial conversation with Grant Harmon at Moana but nothing has been resolved.
Infrared Study
Gampon reported that the in-room infrared study has been completed. He said he included a sample of audits in the Board packet. Discussion followed about how to follow up with discrepancies that need attention.
Motion: Nordstrom moved, James seconded a motion to distribute individual room audits to the appropriate rental program immediately and to the owners 30 days later with a cover letter asking owners to get in touch with their rental agents. The letter should be approved by the Building & Grounds Committee. Motion passed unanimously.
Discussion followed about the cover letter. Hart suggested an interpretation of the check list. Mullenhour said that the owners should be aware that the audits were done for safety reasons
Security
Gampon reported that all Security Officers are in compliance with Act 208.
OLD/NEW BUSINESS
Blog
Nordstrom proposed that the Board create a Blog for owners. She said this will provide better communication than the current website which she finds hard to navigate. Nordstrom said the Communication Committee would be owners of the Blog. Discussion followed about neutral posts.
Motion: Nordstrom moved, Price seconded a motion that the Board authorize the creation of a Board blog to share Association information and provide better communication between the Board and the owners. Motion passed unanimously.
Action: Thesken to send email blast to owners to inform them when the blog is created.
Washer/Dryers
Falkenhainer asked how the Board can monitor whether owners use their dryers. Miller said he did not think it could be monitored.
Parking
Mullenhour reported that Castle employees are parking outside Building 8. Miller said he discussed it with Thompson. Gampon said that Castle has offices at the Sheraton and believes that staff parks at Kiahuna and walks over. Gampon said Castle employees can park at the top of the property and Security will transport those who work late at night.
ADJOURNMENT
Motion: A motion to adjourn the meeting at 1:36 PM and reconvene following the Executive Session was made and seconded.
RECONVENEMENT
The meeting was reconvened on Sunday, August 11, 2013 at 2:15 PM. Miller reported that during the Executive Session, the Board discussed delinquencies and requesting a legal counsel on parking fee\resort fees.
ADJOURNMENT
Motion: A motion to adjourn the meeting at 2:13 PM was made and seconded.
Minutes submitted by:
Marianne Thesken, Recording Secretary
Attached: Action List dated 10/11/13
Minutes were approved by the Board.
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