Because several owners have contacted the AOBO regarding the Poipu Beach Athletic Club (PBAC) contract renewal, we wanted to provide all owners more context regarding the pool/tennis facilities over the last years. Whether you’re a relatively new owner at Kiahuna or owned for many years, you should find it informative. Some of the questions this article answers are:
- What is the history of the PBAC over the last few years?
- Why don’t we build our own on-property pool?
- Have we considered contracting for pool access with neighboring resorts instead?
- What would happen if the AOBO decides to cancel its contract with PBAC?
- Why isn’t the contract renewal a decision all owners vote on?
- How often is the PBAC contract up for renewal?
Read on to get answers to these and other questions you may have.
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HISTORY OF PBAC and AOBO
The Board made a decision to extend the PBAC contract at the last meeting. For those of you who are new to Kiahuna, a little history may help understand why the Board reached this decision.
In 2014, the Kiahuna Swim and Tennis Club, (KTSC) which was available to all Kiahuna owners and guests, closed suddenly. All the owners and guests at Kiahuna were left without a pool and tennis facility. Many owners were very upset about this. Our guests were very disappointed. At the time, there was a house rule that required all owners to have a pool contract available for their guests. The KTSC was on land owned by the Knudsen Trust, although operated by a private party. The owners of the Trust made a decision to remodel and re-open the facility under the name of the Poipu Beach Athletic Club.
When that was done, Castle Resorts entered into a contract with PBAC for access to the club for its owners. At the time Outrigger Rental Committee (ORC) made a decision not to enter into a contract with PBAC. This created a very difficult and divisive situation on property – – some owners and guests had access to a pool and tennis facility while others did not. Some months later, the ORC decided to enter into a contract with PBAC also. The new PBAC facility was a substantial upgrade from the KSTC with redone tennis courts, new fitness facility and a redone pool and bar/restaurant area.
Because nothing is ever simple at Kiahuna, at the same time, the AOBO was developing a project for a pool on property to be located in the baseyard area. Unfortunately, it became obvious that the Knudsen Trust was not going to consent to build a pool in the baseyard area. Under the terms of our leases, consent of the landowners is required to make modifications on the property. Also, the terms require that we pay for all the expenses incurred by the Trust to make a decision to consent or not. It became clear that the Trust would likely incur substantial expenses in making this decision, all of which we would have to pay for whether they consented or not. We would have had to sue them to have even a possibility to be allowed to construct a pool on property. There were strong feelings both ways on whether to engage in a lawsuit to try to build the pool, or instead to enter into a long-term contract with the PBAC for our pool and fitness facilities access.
After much discussion and deliberation, the Board made the decision to go forward with a long-term contract with PBAC. It was determined at that time that the best interest of the property/owners was to forgo the baseyard pool project and the expenses that would necessarily have been incurred to litigate the issue, and move forward with a solution that would allow all the property owners to have the same access to a pool. To that end, the PBAC contract was signed with the AOBO in December 2015. It was also clear at that time that if the AOBO did not enter into a contract with the PBAC for the athletic club services, then one of the many rental agents was going to do so separately and we would be back in the same position of having different services on the property for different owners and guests. This decision was not required to be, and was not subject to a homeowner vote. It was a unanimous decision by the Board. Even many of those who were staunch supporters of a pool on the property were happy with the decision and the amenities provided by the PBAC.
The PBAC contract had a provision for extension of the terms of the agreement every three years for the length of the landleases. This was critical because, after having made a decision to forgo building a pool on property, we wanted a guarantee that we could have access to the PBAC amenities and not be without a pool for as long as we felt necessary.
The Board extended the 2015 contract at the end of 2018 to a new three-year term. Prior to the renewal, the Board investigated options other than PBAC for use of a pool and fitness facilities. Other resorts were contacted, such as the Sheraton and the Koa Kea, to see if Kiahuna guests could use their pool facilities for a fee. No reasonable arrangements could be reached. Rather than be without pool access to all owners, or the divisiveness that different owners with different amenities could bring, the Board decided to extend the agreement. The same situation exists now. If we decided not to extend the agreement, then we would be in a position a year from now not to have pool facilities available to our guests. No doubt the rental agents would enter into their own individual agreements with PBAC, thereby making the pool access very inconsistent across the property. Remember, Castle Resorts also represents Phase I, which is not a part of our organization, and Phase I AOAO has made it clear that it wants access to the PBAC’s pool facility for its owners and guests.
This decision was not put to a vote of the owners either in 2015, 2018 or now. It is one of the many decisions that the Board is empowered to make on behalf of the owners. The Board is permitted to enter into contracts on behalf of the Association and for the benefit of the owners. The Board has attempted to make the best decision for the property and the owners. We don’t expect always to have unanimous agreement for our decisions, but we do try to make decisions consistent with the best interests of the majority of the owners.
The majority of the current Board were owners during the divisive and difficult times of the pool decision back in 2015. We didn’t want to go through that again. We will have the option to extend the PBAC agreement every three years for the life of the agreement, and therefore will go through this process each time. Had this year not being so unsettled with Covid, the Board would have realized that this issue should have been on the agenda at the November meeting prior to the contract extension so that the owners would be aware of the issue, knowledgeable of the facts, and able to have input before the decision was made.
We apologize for that oversight, and will strive to insure that owners are aware of all important decisions on property. PBAC extension clearly qualifies as one of those. This is particularly true since we have so many new owners on property since 2015. That said, the decision by the Board, which includes two members who were not owners in 2015, was unanimous as it was in 2015 and 2018. The Board recognizes that having a pool on property is an important and necessary amenity for a resort such as ours. We can’t be competitive in the market without it. Once the property reopens, having the pool available for our guests will be essential.
