Caladezi
newbie
The following message is posted on the Morritts owners site which outlines some of the reasons for the troubles at the resort. In a nutshell, what it says is that the develover, David Morritt, has not paid his maintenance fees or S.A. on the units he owns for a couple of years and is in debt to the associations and has put the resort in a critical position. Read the post . Trouble in Paradise
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This is difficult, but necessary. Difficult because of the fear and anxiety it might cause. Necessary, however, because it is only fair that Morritt’s owners and those who visit frequently know what is going on.
In April, as a routine matter, I requested copies of the 2008 audits for the Grand and Tortuga Club associations, which any of us can do as owners. I really didn’t think much of it other than I like to have a copy of this information. But before it came, I received a call from one of our owner reps; they had decided they would contact anyone requesting the audits before sending them out.
Before even seeing the audits, I was asked not to report about them on the forum as our owner reps sought to work through the problems those audits spelled out. I agreed to do this for a period of time, provided I at least be given some background on the situation and as long as it was deemed by them that progress was being made. The ultimate hope at the time was that David Morritt would agree to sell the resort to the associations (more on that later) and that an announcement would be forthcoming from Morritt’s management.
That was three months ago, and obviously this post is going up because nothing has been resolved.
The audits speak for themselves. As an owner at both resorts, I received the financial statements for 2008, both of which have a cover page explaining in clear detail that the developer owes the associations a hefty sum.
The total at the Tortuga Club was $1.8-million. The total at the Grand was $975,000. Our owner reps did not learn about this until the January 2009 board meeting and did not see the audits until March of this year. As far as I know, no payments have been made to either of the associations for 2009.
Is there a repayment plan in place? How long will it take? Will it mean that the 9,000 some owners will have to pay more in fees to make up for the shortfall?
I do not know how these debts accrued specifically. Is it due to unpaid maintenance fees on the unsold inventory? According to the audit, the developer owned 496.5 weeks at the Grand as of Dec. 31 and 2,112 at the Tortuga Club. Is it because he borrowed money from the associations – a common practice according to previous audits – and didn’t repay it yet? And what does it say about this year? And next?
I should add that I made this post available to our owner reps. After our initial conversation back in April, they have been unable to say much due to Cayman confidentiality laws as they have attempted to work through this very serious situation. And yet, if the developer had paid what he owed or worked out a viable plan for repayment, I feel confident I would have been informed so as not to have gone public.
Needless to say, this is a huge shortfall for our associations. From what I was told at the time, our owner reps repeatedly asked for a re-payment plan, putting forth deadlines that were postponed or ignored. Finally, they came up with a plan to buy the resort from the developer. That is complicated, and they could not share details with me. But they put forth parameters of a deal that would take over ownership of the resort from David Morritt because there is concern he will be unable to repay the associations. If that money is not received, the resort would face the possibility of closing, because it is difficult to believe that it can operate with such a shortfall. The feeling was, I believe, better to come up with the money and run it ourselves than have to come up with it to keep him in charge. Harsh, but so be it.
Recently our owner reps were required to sign a non-disclosure agreement preventing them from discussing details of the possible purchase of the resort and also to approve an announcement to the owners. There has been no confirmation that David Morritt has done the same. He appears to be holding out hope of keeping the resort running. While I admire his optimism, realism is another matter. Are there even enough time share sales in a year to cover his debt to us for 2008? We all know the state of the economy and the timeshare industry. What level of sales success would be necessary? Don’t we deserve answers to these questions before we pay another maintenance fee or have friends and family buy another week of ownership?
And all of this sort of makes the idea of rebuilding the other Seaside building seem rather remote, doesn’t it? Meanwhile, according to the audit, there are 1,612 weeks in Tortuga that are not operational (the unbuilt Seaside) and yet they say it is sold out. That means all of those people are paying a maintenance fee for a building that doesn’t exist.
Look at it this way: through our own maintenance fees, we are not only subsidizing the developer’s ability to live on property, but we are being put in the position of having to make up for the funds he has not paid. Either that, or there will need to be some serious cutbacks in amenities in order to function without such a huge part of our budget. Remember, if you or I are late with our maintenance fee payments, we get charged a fee and eventually repossession proceedings begin. The developer, meanwhile, gets to live on property with, so far, no repercussions and, apparently some 18 months later, no viable repayment plan.
Now maybe you can see why Morritt’s has resorted to some of the things that have been complained about on this forum, such as the $2 drink coupons at the welcome party; or the hard-line on owner 10 percent discounts and the deadline to use certificates or maybe why the grounds don’t look as nice as you might have recalled. Remember last year after Hurricane Paloma? Someone wondered why they were going through the laborious task of having Morritt’s maintenance staff shovel sand out of the Grand pool without draining it, why they didn’t hire someone to come in and more quickly take care of the matter. Most likely, they couldn’t afford it. Frankly, it is by some miracle that the place remains open. They tell us all the time how tight our budget is, and yet well into our second year, we are functioning with approximately 20 percent less than what was budgeted.
All of this made the annual owner’s meeting in October and the subsequent approval of the 2009 budget a farce, because unbeknownst to any of us at the time, including our owner reps, the developer had not paid his 2008 fees/assessments/loans. As an aside, and with hindsight, I am very distressed about the huge assessment Grand owners got in 2008. At the time, it was sold to us under the guise that this would be a hardship on the developer because he would be responsible for the same assessment on all of his unsold weeks. All the while, the developer sat in on meetings to approve this hefty assessment knowing he probably would not be able to pay it himself.
I recognize that this post can create potential problems, which is why I have not said anything since I became aware of the information in the audits. But I understand why it was important to keep this quiet for the last several months. Lots of stuff going on that the owner reps wanted to work through without causing unnecessary fear. It made sense to see if things could be worked out.
But an offer to buy the resort from the developer has been on the table since April, and as of this writing, after first saying he would do it, he has evidently decided to stick it out. So it is only fair that those who frequent this forum be made aware of the dire circumstances.
Now, of course, I know what is coming. The typical “shoot the messenger’’ response that has become all too prevalent in negative matters that pertain to Morritt’s. I will likely be attacked for bringing this out and “hurting’’ the resort. My answer is this: the resort has been hurting for a long time and the people who support it deserve to know. It was made very, very clear in the audits – a separate letter on the cover page for each resort spelled out the problem in great detail. I simply started pushing for answers, pushing for full disclosure. I agreed to wait while our owner reps hoped this could be resolved in private without creating unnecessary issues. At this time, unless the developer has written a check for several million dollars, that does not appear to be the case.
I would also like to add that our owner reps have been faced with far more than they signed up for. This has become akin to a full-time job. They – along with Dutch Hoffmann, the resort general manager – have been trying to figure out ways to stretch our dollars as best as possible. They have had to deal with numerous legal and government issues when it comes to the idea of trying to buy the resort. And again, they are going to be limited in what they can say, but obviously it appears that we are at a crucial time right now.
Maybe Mr. Morritt would like to hear from some of his 10,000 “friends’’ on how they feel about what is happening.
--------------------------------------------------------------------------------
This is difficult, but necessary. Difficult because of the fear and anxiety it might cause. Necessary, however, because it is only fair that Morritt’s owners and those who visit frequently know what is going on.
In April, as a routine matter, I requested copies of the 2008 audits for the Grand and Tortuga Club associations, which any of us can do as owners. I really didn’t think much of it other than I like to have a copy of this information. But before it came, I received a call from one of our owner reps; they had decided they would contact anyone requesting the audits before sending them out.
Before even seeing the audits, I was asked not to report about them on the forum as our owner reps sought to work through the problems those audits spelled out. I agreed to do this for a period of time, provided I at least be given some background on the situation and as long as it was deemed by them that progress was being made. The ultimate hope at the time was that David Morritt would agree to sell the resort to the associations (more on that later) and that an announcement would be forthcoming from Morritt’s management.
That was three months ago, and obviously this post is going up because nothing has been resolved.
The audits speak for themselves. As an owner at both resorts, I received the financial statements for 2008, both of which have a cover page explaining in clear detail that the developer owes the associations a hefty sum.
The total at the Tortuga Club was $1.8-million. The total at the Grand was $975,000. Our owner reps did not learn about this until the January 2009 board meeting and did not see the audits until March of this year. As far as I know, no payments have been made to either of the associations for 2009.
Is there a repayment plan in place? How long will it take? Will it mean that the 9,000 some owners will have to pay more in fees to make up for the shortfall?
I do not know how these debts accrued specifically. Is it due to unpaid maintenance fees on the unsold inventory? According to the audit, the developer owned 496.5 weeks at the Grand as of Dec. 31 and 2,112 at the Tortuga Club. Is it because he borrowed money from the associations – a common practice according to previous audits – and didn’t repay it yet? And what does it say about this year? And next?
I should add that I made this post available to our owner reps. After our initial conversation back in April, they have been unable to say much due to Cayman confidentiality laws as they have attempted to work through this very serious situation. And yet, if the developer had paid what he owed or worked out a viable plan for repayment, I feel confident I would have been informed so as not to have gone public.
Needless to say, this is a huge shortfall for our associations. From what I was told at the time, our owner reps repeatedly asked for a re-payment plan, putting forth deadlines that were postponed or ignored. Finally, they came up with a plan to buy the resort from the developer. That is complicated, and they could not share details with me. But they put forth parameters of a deal that would take over ownership of the resort from David Morritt because there is concern he will be unable to repay the associations. If that money is not received, the resort would face the possibility of closing, because it is difficult to believe that it can operate with such a shortfall. The feeling was, I believe, better to come up with the money and run it ourselves than have to come up with it to keep him in charge. Harsh, but so be it.
Recently our owner reps were required to sign a non-disclosure agreement preventing them from discussing details of the possible purchase of the resort and also to approve an announcement to the owners. There has been no confirmation that David Morritt has done the same. He appears to be holding out hope of keeping the resort running. While I admire his optimism, realism is another matter. Are there even enough time share sales in a year to cover his debt to us for 2008? We all know the state of the economy and the timeshare industry. What level of sales success would be necessary? Don’t we deserve answers to these questions before we pay another maintenance fee or have friends and family buy another week of ownership?
And all of this sort of makes the idea of rebuilding the other Seaside building seem rather remote, doesn’t it? Meanwhile, according to the audit, there are 1,612 weeks in Tortuga that are not operational (the unbuilt Seaside) and yet they say it is sold out. That means all of those people are paying a maintenance fee for a building that doesn’t exist.
Look at it this way: through our own maintenance fees, we are not only subsidizing the developer’s ability to live on property, but we are being put in the position of having to make up for the funds he has not paid. Either that, or there will need to be some serious cutbacks in amenities in order to function without such a huge part of our budget. Remember, if you or I are late with our maintenance fee payments, we get charged a fee and eventually repossession proceedings begin. The developer, meanwhile, gets to live on property with, so far, no repercussions and, apparently some 18 months later, no viable repayment plan.
Now maybe you can see why Morritt’s has resorted to some of the things that have been complained about on this forum, such as the $2 drink coupons at the welcome party; or the hard-line on owner 10 percent discounts and the deadline to use certificates or maybe why the grounds don’t look as nice as you might have recalled. Remember last year after Hurricane Paloma? Someone wondered why they were going through the laborious task of having Morritt’s maintenance staff shovel sand out of the Grand pool without draining it, why they didn’t hire someone to come in and more quickly take care of the matter. Most likely, they couldn’t afford it. Frankly, it is by some miracle that the place remains open. They tell us all the time how tight our budget is, and yet well into our second year, we are functioning with approximately 20 percent less than what was budgeted.
All of this made the annual owner’s meeting in October and the subsequent approval of the 2009 budget a farce, because unbeknownst to any of us at the time, including our owner reps, the developer had not paid his 2008 fees/assessments/loans. As an aside, and with hindsight, I am very distressed about the huge assessment Grand owners got in 2008. At the time, it was sold to us under the guise that this would be a hardship on the developer because he would be responsible for the same assessment on all of his unsold weeks. All the while, the developer sat in on meetings to approve this hefty assessment knowing he probably would not be able to pay it himself.
I recognize that this post can create potential problems, which is why I have not said anything since I became aware of the information in the audits. But I understand why it was important to keep this quiet for the last several months. Lots of stuff going on that the owner reps wanted to work through without causing unnecessary fear. It made sense to see if things could be worked out.
But an offer to buy the resort from the developer has been on the table since April, and as of this writing, after first saying he would do it, he has evidently decided to stick it out. So it is only fair that those who frequent this forum be made aware of the dire circumstances.
Now, of course, I know what is coming. The typical “shoot the messenger’’ response that has become all too prevalent in negative matters that pertain to Morritt’s. I will likely be attacked for bringing this out and “hurting’’ the resort. My answer is this: the resort has been hurting for a long time and the people who support it deserve to know. It was made very, very clear in the audits – a separate letter on the cover page for each resort spelled out the problem in great detail. I simply started pushing for answers, pushing for full disclosure. I agreed to wait while our owner reps hoped this could be resolved in private without creating unnecessary issues. At this time, unless the developer has written a check for several million dollars, that does not appear to be the case.
I would also like to add that our owner reps have been faced with far more than they signed up for. This has become akin to a full-time job. They – along with Dutch Hoffmann, the resort general manager – have been trying to figure out ways to stretch our dollars as best as possible. They have had to deal with numerous legal and government issues when it comes to the idea of trying to buy the resort. And again, they are going to be limited in what they can say, but obviously it appears that we are at a crucial time right now.
Maybe Mr. Morritt would like to hear from some of his 10,000 “friends’’ on how they feel about what is happening.
