Board Statement re Flohrs,
Final March 25
The
AOBO has recently learned that Bill Flohrs is attempting to purchase most of
the assets of the Moana Corporation, including the sandwich leases for Phases
IIIA and IV, the building that houses the Plantation Gardens restaurant and the
Outrigger front desk, and several buildings which the Association rents. Please
refer to Mr. Flohrs’ statement regarding his Letter of Intent with Moana.
The
Board was concerned that his attempt to purchase Moana’s assets violated his
fiduciary responsibility as a Board member and sought a legal opinion from our
outside counsel. We received a legal
opinion that Mr. Flohrs does have a conflict and should therefore resign. (A
copy of the attorney’s opinion was provided to Mr. Flohrs and is attached) The
Board asked him to resign but he refused, citing legal advice he received from
his own counsel. He has said that he will resign from the Board if the proposed
purchase goes through. Mr. Flohrs has
said that he will recuse himself in matters that he feels he has a potential
conflict of interest. He has
recused himself twice thus far.
The
Board cannot force someone to resign. The
only way the By-Laws provide for removing a member of the board is by a
majority vote of the members of the Association (homeowners). The Board has therefore decided that a vote
should be taken at the annual meeting on whether Mr. Flohrs should be removed
because of his conflict of interest., If the homeowners vote for removal, the
By-Laws provide that a replacement be elected at that time via an election at
the annual meeting. The proxy materials you will receive for the annual meeting
will contain specific language regarding removal and the election of a
successor if appropriate.
There
are many Areas of potential conflict including the redetermination of the
master rent for Phases IIIA and IV (the sandwich lease receives an additional
25% of the master lease, that currently is approximately $130,000), the leasing
of buildings by the Association and other possible areas of development that
might be dependent on reaching an agreement with the Association. The value of
the assets that Mr. Flohrs is currently negotiating to acquire is directly
affected by transactions that the Board is engaged in, such as lease
redeterminations and rental agreements for the commercial buildings. If Mr.
Flohrs is successful in acquiring these assets, he then effectively becomes our
landlord.
We
are unaware if any of Mr. Flohrs actions have compromised his fiduciary
responsibility as a Board member, and it must be emphasized that this
disclosure is not an accusation of that. It is the feeling of the Board that we
must follow our attorneys’ advice regarding his status as a Board member and
allow the members the opportunity to vote for his removal. Regardless of
whatever the members decide, the Board wishes Mr. Flohrs success in his
endeavor, and looks forward to working with him whatever the outcome.
* * * * * * * * * * * * * * *
The following statement has
been provided to the Board of Directors of the Association of Beach House
Owners of Kiahuna Plantation (AOBHOKP) for distribution to all Kiahuna
Homeowners:
On January 30, 2017, my son,
Jason Flohrs, and I entered into a Letter of Intent with Moana to purchase the
Phase IIIA and IV sandwich leases. These leases include the 31 apartment leases
in Phase IIIA, the 18 apartment leases in Phase IV, Beachhouse A (Plantation
Gardens/Outrigger Front Desk building), Beachhouse B (Real Estate Building), Beachhouse
C (The Administration Building) and the Guest Laundry Building. The purchase
would also include the current restaurant (Plantation Gardens) and lease; the
AOBO facilities lease for Beachhouse A,B and C and the Guest Laundry Building;
and the lease with the real estate company (ReMax formerly Pacific Ocean
Properties).
We are in the process of doing
our due diligence and hope to have that completed by the end of 2017. When we
were reviewing the financial viability of all of the components of this
transaction, the long term viability of Plantation Gardens Restaurant has
become a considerable concern. The restaurant is only open limited hours on a
daily basis. Expanding the hours of the restaurant has been tried in the past,
but found to not be viable. We are exploring the idea of placing a resort size
pool in the area just to the west of Plantation Gardens (on the eastern side of
the Moir Cactus Garden). This would provide guests with food and beverages all
day long with a beautiful pool setting as the backdrop. We have retained an
architect, a historical architect, a historical archeologist, a local
historian, and a historical landscape consultant to help us determine what
steps, if any, need to be addressed in order for an expansion of Beachhouse A
and the addition of a resort pool to be completed. We hope to have some
preliminary answers by the Annual Meeting in May.
We have not entered into a
contract, and do not anticipate doing that for quite some time, but hopefully
by the end of 2017.
The Board has asked for my
resignation and at this time I see no need to resign from the AOBO Board of
Directors. I have abstained from any votes that represent a conflict of
interest and will continue to do so. If, and when, the transaction closes, I
will resign from the AOBO Board.
There are many hurdles facing
this transaction. In the meantime, I will continue to work hard for the
homeowners and represent them just as I have been doing over the past year.
If you have any questions,
please feel free to contact me by phone (913-681-2329) or email
(bflohrs@gmail.com).
Thank you,
Bill Flohrs
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