More weather info for Hurricane Jimena

storm update

Legal clarification on common elements and owner responsibility for leaks

In May 2015,  the Board adopted a House Rule regarding moisture and water leaks.  Kiahuna has experienced water leaks and other moisture related events in the past couple of years. These cases of mold and water damage have been very expensive and traumatic for the Association and the owners that were effected.  In several of these cases there have been disputes as to liability between various homeowners, and between homeowners and the Association. 

In order to ensure that the Association is interpreting liability accurately and legally, the Board requested clarification from our outside legal counsel regarding the distinction between common elements, limited common elements, and individual beachhouse property. The clarification of elements and liability is attached for your review.

 The Board  is advising Owners of their obligations to maintain fixtures and lines in their units; and, their financial responsibility for any damages arising from leaks within the four walls of their units or from a limited common element appurtenant to their unit as explained in the attached legal opinion.

          We have made tremendous progress this past year in the remediation of several incidents of water and mold damage and this is a critical step toward preventing these types of problems from developing, and it will be very important for every owner to help us in our vigilance in keeping this in check.  Each owner is advised to be sure to check for the existence of moisture in your unit: under the sinks (kitchen and bathroom) as well as water lines for ice makers.  We recommend purchasing inexpensive rubbermaid bins to place under the sinks to ensure any water won't go any further than the bins.

          As part of the new House Rule, there will be annual inspections of each unit for the presence of moisture.  We also will be replacing toilet wax rings.  You will be notified of the results of the moisture testing in your unit.

          Here is the legal opinion from our counsel in Honolulu.  It basically lets owners know that you are responsible for any resulting damages that arise from leaks within your units.  That extends to your neighbors above and next door.  The AOBO will not mediate disputes between owners.  It is also critical that you are sure you have HO-6 insurance coverage which may provide insurance coverage for water and/or mold damage as well as loss of rents.

Any questions: Please direct them to me:

Randy@kiahuna39.com

I will direct your questions to the correct person.

Koi Pond update

If you have been to Kiahuna in the past year, you will have noticed that the koi ponds were emptied.  There were very serious leak problems and the ponds needed to be repaired before we could refill them.

That task has been accomplished!  The ponds have been redone and refilled.  Kudos go to Outrigger and the staff (especially Richard) for getting the job done.  Richard and his staff went to the Marriott and caught some of their extra koi to bring over to Kiahuna.  Thanks to the Marriott as well.

meeting information

Dear Kiahuna Homeowner,

The Quarterly Board of Director’s Meeting will be held as follows:

Saturday, August 15, 205 at 12:30pm (hosted lunch at 11:30am for all owners)

Doubletree Hotel San Francisco Airport

835 Airport Boulevard  Burlingame, CA  94010

650-344-5500  www.sanfranciscoairport.doubletree.com

ASSOCIATION OF BEACHHOUSE OWNERS OF KIAHUNA PLANTATION AUGUST 2015 SCHEDULE DOUBTREE HOTEL SAN FRANCISCO AIRPORT :

SATURDAY, AUGUST 15, 2015 
9:00 AM Castle Rental Owner Session 
9:00AM – 11:00AM Outrigger Rental Owner Session-906-9888 
11:30AM-12:30PM Homeowner Luncheon 
12:30PM – 5:00PM Quarterly Meeting of the AOBO Board of Directors 
5:00PM-6:00PM Complimentary Homeowner Reception 
Fruit & Cheese Display 

(2) Drink tickets for beer or wine

Payment of Association fees reminder

Association Fees Reminder:

Association monthly maintenance fees are due in advance and payable on the first day of the month. Payments received after the 15^th of the month are subject to a late fee. Lately we have been receiving many payments late, after the 15^th of the month. No one wants to assess or pay late fees and this requires more staff time to deal with. If you are mailing your Association (and/or Landlease payments) via USPS (United States Postal Service), there may be a need to adjust the date you mail the payment.  A lot of people are mailing their payments on the 12^th of the month and those payments routinely arrive late. Deliveries through the USPS are taking an extended period to reach the property. If you are on the West Coast, we suggest that you mail your payment by the 7^th of the month.  More time should be added for other locations.

Remember, payments that are received after the 15th of the month will result in late fees. For your convenience, we suggest that you enroll in the Electronic Funds Transfer (EFT). Please contact Marianne Thesken to enroll.

tropical weather update

Pool status updated report August 5, 2015

Kiahuna Plantation

Association of Beachhouse Owners (AOBO)

Pool/Fitness Center Status Report

Aloha Fellow Beachhouse Owners:

As you are aware, the Association has been attempting to move forward with our project to build a new onsite pool/fitness center and to complete the much needed improvements to our maintenance yard. The onsite pool received historic approval from the majority of Beachhouse Owners last year as well as a bank commitment to lend us funds for construction. An important part of this process is obtaining the consent of the landowners (Knudsen Trust) for the necessary construction activities. The terms of our master land lease require that we obtain this consent, and that we pay for any reasonable legal fees and costs incurred by the landowners as necessary for them to provide the required consent.

In October of last year, we received a “Cease and desist” order from the landowners’ attorney directing us to stop all activity on this project until they have completed their review and given us consent to proceed. Consequently, the project has been idle for approximately 10 months.

The process of the landowners conducting their due diligence will probably become quite costly and be very time consuming. They have indicated that in addition to their legal counsel, they will require a number of consultants to review all of the documentation we have provided and will probably require additional information from us.

At this point, they do not like the location we have selected for the pool and it seems unlikely that we will be successful in obtaining their consent without resorting to litigation. This litigation will be very expensive and most likely take several years to resolve.

In January of this year, John Horwitz representing the Knudsen Trust and I began to discuss potential alternatives that would allow us to avoid the lengthy and expensive legal battle. John has offered the Association a long-term agreement for membership to the Poipu Beach Athletic Club (PBAC) as an alternative to our building of our own onsite pool in the Baseyard. The Board of Directors has been working with John for several months to make this PBAC offer as attractive and risk-free as possible for the homeowners.

The terms of the PBAC proposal are as follows:

1.     The agreement would be between the AOBO and PBAC and would supersede the current agreement that is in place with the two major rental programs;

2.     The agreement will provide a long-term contract (three years with repeating three-year options) for the duration of our land lease;

3.     The agreement will provide for a specified dues amount  ($175 for three years and 2% annual increase after that)over the term of the agreement;

4.     The agreement will remain in force if PBAC is sold or taken over by another operator.

5.     If we enter into this agreement the landowners will provide consent for us to continue our project to improve the baseyard without including the pool component;

6.     If we enter into this agreement we will also withdraw our request for consent to build a pool onsite and table the pool portion of the project indefinitely.

Some things that the Board is concerned about if we elect to enter into this agreement are:

1.     This will be more expensive than the current projected cost for our onsite pool. Using the rates in the agreement and the current onsite pool estimates, it is projected that the PBAC agreement will cost approximately $1.1 million more over the first 10 years. This equates to approximately $30 per month per unit.

2.     Entering into this agreement will require us to still be dependent on a third party operator to provide our pool and fitness amenity. This will leave us susceptible to the PBAC going out of business, being sold to other operators who may have different business priorities that conflict with ours, and other issues such as deteriorating quality of the facilities, etc.

3.     This will still require our guests to cross Poipu Rd to use a pool.

We are now at the point where the Board needs to make a decision as to what course of action we are going to take. The alternatives we have along with their respective pros and cons is as follows:

1.     On-site Pool/Baseyard Project - Continue with our attempt to obtain the landowners’ consent to build the Pool/Baseyard Project as it is current designed and has been approved by the vote of the homeowners;

a.     Pros –

                                               i.     Location - This alternative will give Kiahuna homeowners a pool and fitness center on the property;

                                             ii.     Operational control - We will not be dependent on a third party operator to maintain the quality of the facility and we will have control over things like hours of operation, staffing levels, amenities, etc.

                                            iii.     Cost - This alternative is estimated to be less expensive than the PBAC alternative over time. The projected cost savings over the first 10 years are in the range of $700,000 - $1 million (including costs of legal process to obtain landowners’ consent).

                                            iv.     Exclusivity - An onsite facility would be for the use of only Kiahuna owners and guests. The PBAC will be open to entire Poipu community. This may result in issues of capacity and/or conflicting priorities.

b.     Cons –

                                               i.     Initial Cost - This alternative will probably require the AOBO to enter into a lengthy and expensive legal process to obtain landowner consent. This process will likely take several years and will costs several hundred thousand dollars in legal fees and other related costs. The legal fees are factored into the potential costs savings listed as a pro above;

                                             ii.     Risk - There is significant risk associated with the legal process. There is no guarantee that we will prevail. Our legal counsel has advised us that they think we have a strong case, but there is no legal precedent for this type of case in Hawaii, and the courts can be very unpredictable. If we do not prevail in court, we will have incurred the full legal costs (both ours and the landowners') and will be in the same position we are in today.

                                            iii.     Time – The legal process could take several years. We will not be able to resume construction of our onsite project until the legal process has been concluded. If we opt for this alternative and prevail in court, it may still be as long as five (5) years before we actually have an onsite pool in operation;

                                            iv.     Quality of Facility - Our onsite facility will probably not have as many amenities as the PBAC currently has.

2.     PBAC Agreement - Enter into an agreement between the AOBO and the PBAC and table our pursuit of the onsite pool;

a.     Pros –

                                               i.     Time – This alternative can be implemented quickly.

                                             ii.     Baseyard approval – The landowners have indicated that if we opt for this alternative, that they will support our effort to complete the improvements in the baseyard;

                                            iii.     Cost – While more expensive over time, this alternative will be less expensive over the first several years. Also, with the stipulation of a 2% annual dues increase at PBAC, the costs are planned and predictable;

                                            iv.     Quality of facility – The current PBAC facility is larger and provides more amenities than the onsite facility is planned to provide. It has received a positive response from the owners and guests that have used it;

                                              v.     Option to resume pursuit of onsite pool if necessary – If we opt for this alternative, we are electing to “Table” our pursuit of the onsite pool. We are not agreeing to abandon it forever. The landowners understand that if conditions change in the future we may act to resurrect the effort to build a pool onsite.

b.     Cons –

                                               i.     Cost – While less expensive initially, this alternative is projected to be much more expensive over the longer term by an amount projected to be in the range of $700,000 - $1 million over the first 10 years, and dramatically more expensive after that as the onsite pool financing becomes paid off;

                                             ii.     Dependency on the third part operator – With this alternative we will still be dependent on a third party to provide the pool/fitness amenity for us. This has been a significant problem for the Kiahuna owners in the past and has resulted in the loss of the amenity on more than one occasion;

                                            iii.     Availability – The current PBAC business strategy includes hosting multiple special events during which some or all of the club facilities will be unavailable for Kiahuna owners and guests. The exact number of these events, and their restrictions on Kiahuna use is unknown at this time, but it could be substantial;

                                            iv.     Sale of PBAC – While the intent of an agreement between the AOBO and the PBAC is to stipulate that the agreement will remain binding upon any new operators for the PBAC is sold or otherwise transferred, there is an element of risk associated with the changes that may occur over the longer term. Things like future real estate development adjacent to the PBAC may greatly impact the tenor and quality of the experience at PBAC for Kiahuna owners and guests;

                                              v.     Location – Electing to go with this alternative will still require our guests to cross Poipu Rd for access to the pool amenity. Poipu Rd. is getting busier every year and the increased real estate development in the immediate area will only make this situation worse.

3.     Maintain Status Quo – As with most choices, there is always the option to do nothing;

a.     Pros;

                                               i.     No action required on the part of the AOBO. The PBAC access remains under the purview of the rental agents and we continue with what we have;

b.     Cons;

                                               i.     Cost – No contractual cap on costs of PBAC;

                                             ii.     Dependency on rental agents – The current PBAC access is provided by agreements between PBAC and the rental agents. Neither of those parties acts solely in the interest of the homeowners and by necessity the rental agents’ decisions are driven by the profitability of their rental operations. Recent history has shown that the rental agents have used PBAC as a competitive tool to gain a competitive edge over other Kiahuna rental programs and this has resulted in a divisive rental market and negatively impacted rental performance on the property.

It is critical that any decision the Board makes reflects the priorities of the majority of the AOBO members. Therefore, you will be receiving an online survey similar to the one that was used recently for the property management procurement in an effort to capture your preferences and priorities for this decision. When you receive this survey, please take a few minutes to respond so that we can be sure to include your response as we make this important decision.

Aloha,

Your Board of Directors

Posted by Randy Danto Nordstrom