Update from WSJ VGV BOD (Phil and Bob)
November 7, 2012
Dear Fellow Virgin Grand Villas Owner:
We are happy to report to you that maintenance fees are going down for the third year in a row, as reflected in the proposed budget that you have just received. This decrease comes despite a 19% increase (to 56 cents per kilowatt hour) in what we have to pay the local power company, and a 12% increase in what we have to pay for insurance (a rate increase that is based on insurance losses in all of North America, not something specific to Virgin Grand or St. John). Most of the savings have resulted from certain reduced operating costs, particularly less use of electricity as a result of the better insulation and other energy-saving features of our newly refurbished units. Some of it results from sound conservation practices by owners, such as turning off the air conditioning while you are at the pool or the beach. Click here to view a chart showing a five year comparison of the average maintenance fees {note: not linked here - look below at next post, DnR}
During the budget workshop in which we recently participated, we particularly discussed ways in which we might further reduce the cost of energy, as it is a significant element of the annual maintenance fee and could rise higher in the future. (For purposes of comparison with the 56 cent per kilowatt hour rate that we must pay in St. John, residential rates for electricity are generally under 15 cents per kilowatt hour on the East Coast). As you know, ever since we joined the Board of Directors, we have strongly supported the installation of photo-voltaic (solar) cells so that we could generate our own electricity.
The first phase of the installation of these cells is almost complete; cells on the flat portion of the roofs of buildings 41, 43 and 44 are already generating power, and the installation on the roof of building 42 will be complete soon. These cells will save us about $13,000 per year. The next phase of installation, to be paid for by funds from the 2012 budget, will occur during the next few months and will save almost as much money.
For 2013, we approved a third phase of installation of these cells in other areas of the property, such as parts of the roofs of the hillside buildings. We also discussed the possibility of installing additional solar panels on the ground, and of supplementing our solar energy with some small, quiet turbine generators of a type that the Board of Directors of the SVO resort in Kauai recently decided to install there. But we postponed any decisions on a fourth phase until next year, pending further study and more experience with the solar panels that we have already ordered and installed.
To reduce energy consumption, we continue to move in the direction of using LED rather than incandescent lighting. Each of the pool villa units has 47 overhead light bulbs! In buildings 43 and 44 the incandescent bulbs will be replaced with LED bulbs during the next few months.
Our budget for 2013 includes no increase over 2012 in the replacement reserve budget and no increase over 2012 in the special contingency fund that we created last year to pay the approximately $1.5 million deductible, should it ever be required, on the policy that insures us against major damage from a hurricane. You may recall that we began this contingency fund to protect us against a sudden need for a special assessment if a hurricane causes enormous damage to our property.
By the end of 2013, this fund will have accrued approximately $565,000. Last year we commissioned a special one-time evaluation of our replacement reserve requirements from an outside consulting firm that specializes in replacement reserve studies. We recently received that report and are studying it. Our preliminary analysis is that it will require, at most, fairly minor adjustments in our replacement reserve funding. In many respects, our management company's projections of future costs were more conservative than those from the outside consultant (and reasonably so), because our management company had better information about the greater cost of replacing furniture and equipment in St. John compared to replacement costs in the continental United States.
The poor economy continues to affect our collection of maintenance fees. A little more than 5% of owners have been prevented from using their units because they have not paid their maintenance fees. Our attorneys are in the process of foreclosing on these units so that we can resell them to new owners who will pay the annual fees, thereby keeping those fees down for the rest of us (who have been required to pay their share of the operating expenses in the meantime). Approximately 30 owners have avoided the costs of foreclosure proceedings by relinquishing their deeds to the association. We resold some units last year and will sell more units when we have accumulated a critical mass.
If you can no longer afford to pay the maintenance fee and want to relinquish your unit to avoid foreclosure proceedings, please contact one of us and we will put you in touch with the people at SVO who can tell you whether you are eligible to do so.
Improvements in the resort continue to be made, many of them as a result of suggestions that we have received from owners:
•The wireless internet system has been upgraded. Bandwidth is now 2000% greater than it was before the refurbishments!
•Shelving is being installed in the linen closets in the hillside buildings.
•Additional towel hooks will soon be installed in bathrooms that currently have only one hook.
•To deter owners from using pool chairs as additional balcony seating, a high-quality folding chair, suitable for balcony use, will be placed in the closet of each two-bedroom unit during 2013. (Please DO NOT remove these chairs from the unit.)
•A portion of each of the hillside decks will be outfitted with a type of awning to provide shade, and additional seating has already been placed on these pool decks.
•A lock will be installed on the freecycling shed, which your room key will open. This feature may increase the amount of free material that is housed in the shed. Incidentally, we have heard from some owners that they have found many useful items in the shed, including beach toys and beach chairs, and from other owners that the inventory has been sparse whenever they checked the shed. The amount of equipment in the shed seems to rise and decline precipitously during weekends, so our best advice, if you want to find books, equipment, or unopened food or beverages in the shed, is to check it as soon as you arrive and again at other times.
•New kitchen appliances will be installed by year end in buildings 43 and 44 (except unit 4415).
•Some electrical outlets in the studio and one-bedroom units will be outfitted to accommodate four rather than two plugs, because owners have asked for more outlets for laptops and other electronic devices.
•Trees will be trimmed to improve the views from the balconies of the hillside buildings.
As you know, the management company has been working for several months to create a website that will give us both an online voluntary owners’ directory and a bulletin board on which owners can list their units for possible sale, rental, or exchange (as well as purchases and rentals that they desire). The project has moved forward, but the vendor has moved more slowly than we had hoped. We continue to monitor progress and expect that the bulletin board will be online early in 2013 if not by the end of 2012.
Finally, here is an update on the two lawsuits on which we reported in June:
•In the case filed by the contractor who had worked on some of the refurbishments, the attorneys for the Association and the contractor are discussing settlement. The Association has filed its response and counterclaims against the contractor in the court proceedings. The lien filed by the contractor has been bonded and no longer burdens the condominium property.
•In the case that dissatisfied owners brought, Starwood moved to dismiss the complaint, the court ordered the plaintiffs to file an amended complaint. They did file an amended complaint, and Starwood has moved to dismiss the amended complaint. That motion remains before the court.
We hope that like us you will continue to enjoy our newly refurbished resort.
Sincerely,
Philip G. Schrag
phil.schrag@gmail.com
Bob Werbel
robert.werbel@yahoo.com
