Annual Meeting information
2012 ANNUAL MEETING
CARRIAGE HOUSE TIMESHARE ASSOCIATION, INC.
Saturday, March 17, 2012
The Carriage House
105 E Harmon Ave
Las Vegas, NV 89119
Registration: 8:30AM - 9:30AM
Please let us know if you will need any special assistance during the meeting. Listening devices for the hearing impaired are available upon request.
Carriage House Timeshare Association
Annual Meeting Minutes*
9th Floor of the Carriage House
Las Vegas Nevada
March 17, 2012
The meeting was called to order by President Kriste Mencher at 9:30 am. President Mencher welcomed the members and thanked them for their attendance at the 26th Annual Meeting of the Carriage House Timeshare Association (CHTA). She introduced Directors, First Vice President, Mike Lincoln; Dotty Catanese, Second Vice President; Secretary, Robby Frank and Treasurer, John Blevins. She also introduced General Manager, Amy Lowell and OLS Hotels and Resorts Vice President Corporate Support, Rick Ball. A motion was made by CHTA Director Mr. Frank, seconded by CHTA member Mr. Catanese and unanimously approved by the membership to waive the reading of the 2011 Annual Meeting Minutes. A second motion was made by Mr. Frank, seconded by Mr. Catanese and unanimously passed by the membership to approve the 2012 Annual Meeting Minutes that were mailed to the members last June and also available on the CHTA website.
The first item on the agenda was the Election of Directors. The candidates were presented by nominating chairperson David Dean. Candidates introduced were owners David Neal Gray, Gloria Harpenau, Michael Lincoln, Rick Sanders, Stuart Sturm and Kathy Wheeler. Candidates James Borucki and Jay Koritzinsky were not in attendance but asked that their candidate’s statements be read. The candidates were each given the opportunity to address the group followed by an opportunity for the members to ask questions of the candidates. The ballots were then collected.
After the election, Ms. Mencher began my stating that it has been her pleasure to serve on the Board of Directors for the past four years and as President for the past two years. She commented on the obvious improvements to The Carriage House: the new entrance and sign on Harmon Avenue, the improved barbeque area, and award winning renovated rooms. She encouraged all members to see these beautiful rooms. She then commented on some of the “not so obvious” or “behind-the-scenes” activities by The Carriage House staff, which continues to keep our association strong and property in good condition. For example, in the past five years we have had two audits by the Internal Revenue Service. Both times there were no problems or exceptions noted and even better yet, no additional taxes owed. Last fall the CHTA was also audited by the State of Nevada Sales and Use Tax Department, and again there were no problems or exceptions noted and just a very small amount of additional tax owed. Due to the commitment to safety in the past several years, refunds have been received from the Workers’ Compensation carrier because of so few employee injuries. In the past 15 years there has only been one lawsuit brought against the association; and because proper safety measures and procedures were in place this lawsuit was won. There has also been very low employee turnover with many employees having over ten years of service in an industry where there is a very high turnover rate. She then congratulated Assistant General Manager Lenora Wilson on her 25th year of employment with The Carriage House. When there is a low turnover rate, there is money saved in training costs and there is continuity and stability in staffing. Another positive is that the Annual Maintenance Assessment collections for 2012 are slightly ahead of last year.
Also, despite the fact that ILX Resorts went into bankruptcy in 2010, which could have been a huge problem for the CHTA, Diamond Resorts International (DRI) bought certain assets out of the bankruptcy and has since paid the CHTA over $2,000,000 in maintenance fees over the last 2 years. The rental program is off to a great start for 2012 even though there is still tremendous competition in Las Vegas. Rental revenue for the first three months of this fiscal year is up by approximately $80,000 over the same period last year. She concluded her remarks by stating that everyone at The Carriage House works hard and the property continues to do very well both on the “outside and the inside.”
General Manager Amy Lowell gave her report beginning with a historical review and an explanation of the various companies involved with The Carriage House. She explained that in the mid 1970’s The Carriage House was built as a 99 unit apartment building. It was then taken over by a company called AIV which later evolved into a company called URI that subdivided the 99 apartments and began selling them as timeshares. URI was the developer and property manager from the late 1970’s until 1987. It was eventually determined that URI was not acting in the best interests of the owners and a lengthy and expensive legal battle ensued to have them removed. This battle was led by some of those owners here today including Ben and Dotty Catanese, Art and Kriste Mencher and Gloria and Leonard Harpenau. The end result was that URI was removed as the developer and property manager. The next step, and on the advice of the new homeowners’ association’s legal counsel, was to hire a professional management company to run the day to day operations. The decision was then made to hire a company now known as OLS Hotels and Resorts. Under the leadership of John Fitts, the President of OLS and the Board of Directors, The Carriage House started to rebuild and has had a 20 plus year relationship as the management company.
The next significant event in the history of The Carriage House was in 2001, when 600 weeks were sold to ILX Resorts, a vacation club based in Phoenix, Arizona for $870,000. From 2001-2007 ILX purchased 1700 additional Carriage Houses weeks for their vacation club from various sources, including CHTA foreclosure sales and directly from those Carriage House owners that wanted and/ or needed to sell their week.
Unfortunately, due to the down turn in the economy, in 2009, ILX filed for Chapter 11 Bankruptcy Protection. From the time of the original sale of 600 weeks until their bankruptcy in 2010, the relationship with ILX was financially beneficial for the Association and for many former members as well.
Had ILX not bought these weeks, they would have been left as unsold inventory and the association would not have received the Annual Maintenance Assessments.
In 2010 DRI, a large hospitality company with over 200 branded or affiliated resorts in 28 countries and 418,000 members purchased certain assets from ILX out of the bankruptcy. Since DRI took over the ILX Vacation Club they have paid over $2 million dollars in Annual Maintenance Assessments to the CHTA. Two other companies involved with The Carriage House are RCI and II. RCI and II are the two largest timeshare exchange companies. Ms. Lowell concluded her remarks by explaining that The Carriage House is affiliated with both of these companies, with the majority of members belonging to RCI. There are numerous smaller exchange companies that The Carriage House recognizes as well.
OLS Hotels and Resorts Vice President Corporate Support Rick Ball spoke on some of the improvements to the property as well as the rental program. In the opinion of OLS, the exterior improvements to the property were indeed a “homerun” and have definitely improved the ever so important “sense of arrival” when entering the property. As it relates to the rental program, the Average Daily Rate increased from $76.81 in 2010 to $85.54 in fiscal year 2011, an increase of $8.73. While this is a long way from the average daily rates earned in 2006 to 2008 of over $100, it represents a huge improvement year over year. Regarding occupancy for 2011, it was a very respectable 84.3%. Reservations bookings through the Internet continue to improve and there have been new improvements to The Carriage House website: www. carriagehouselasvegas.com. Regarding overall guest experience, The Carriage House continues to receive excellent guest comment card scores from owners and guests. Scores with RCI at the Gold Crown level and the scores on the OLS comment cards are consistently at 4.5 or above out of 5. Comments on www.tripadvisor.com, reviews written by actual Carriage House guests, are superb. Each month The Carriage House continues to rank within the top 15 properties out of the 281 properties listed in Las Vegas. At the end of February, The Carriage House was ranked 12th out of 281 properties that are regularly reviewed. These results reflect a total commitment to a quality guest experience from everyone of our team members.
Overall, Las Vegas showed a 10.7% increase in average rate, along with a 5.3% increase in occupancy. As good as the 2011 numbers were, there has been a dramatic improvement during the first quarter of 2012. Mr. Ball concluded his comments by stating that on behalf of the team at the OLS Hotels and Resorts Corporate office as well as The Carriage House team, led by Amy Lowell and Lenora Wilson, these indicators are very encouraging which, in turn, create a positive environment that not only impacts employees but, quite obviously, owners and guests.
The report of the officers began with First Vice President Mike Lincoln and an update on the investment strategy for The Carriage House funds used by the CHTA Board of Directors. The Directors meet three times a year in March, July and October. At each meeting, time is set aside time to review the Association’s investments and make adjustments if needed. The primary objectives of the investment strategy are: to insure the preservation of capital for all the financial assets of the CHTA; to maximize the rate of return on the investments while minimizing the potential for risk; to monitor the progress and assure that the goals are being managed properly and insuring that the needed cash flow for day to day operations as well as capital projects are available and to establish and maintain a relationship with a competent financial advisor who can make recommendations and help manage the funds. It is the fiduciary duty of the Directors to “act with care” including seeking advice from experts when appropriate.
At this time, 100% of the CHTA investments is fully insured or guaranteed by the US Government. The Directors have chosen to be conservative instead of aggressively chasing higher returns. Currently the investment portfolio includes the following: Certificates of Deposits with multiple banks; index market linked CD’s are FDIC insured on the principal with the opportunity to have higher annual yields; government money market funds and FDIC insured bank deposits and money market funds and government insured Ginnie Mae securities. Overall the investments are a “truly blue chip portfolio of security for the CHTA.” Mr. Lincoln concluded his remarks by stating that the CHTA Board of Directors takes their Fiduciary Duty very seriously and he was proud to be associated with such a quality team.
Second Vice President, Dotty Catanese then reported on some of the changes and upgrades that were made to The Carriage House in this past year. In 2011, $1.3 million dollars was spent in property renovations including the complete renovation of 17 one bedroom units, two of which were ADA accessible rooms. The renovations also included the redesign of the building entrance including a new wall along Harmon Avenue, landscaping, lighting, accessible walkways, paving and new landings both at the front and back of the hotel. Additionally $20,000 was spent on the heating and air conditioning system and $35,000 on improvements to the computer system and the installation of wireless internet. Going forward in 2012 17 more rooms will be remodeled bringing the total of renovated rooms to 61. Improvements will also be made to the air conditioning, computers and elevators.
Ms. Catanese concluded her remarks by stating that the goal is to keep the property in outstanding condition for the enjoyment of the owners . At the same time, these improvements help the rental program be more successful. She then thanked Amy Lowell and the staff for their hard work.
Secretary Robby Frank then spoke on the business activity on the 9th floor. Over the years the CHTA has earned money from various companies leasing space on the 9th floor. There have been two restaurants and also several companies that sold
timeshares. In most cases the timeshare companies such as Warren Church Realty and ILX Resorts were selling either CHTA weeks or weeks in their vacation club.
Last year an agreement was entered into with Preferred HOA Solutions. They continue leasing the Capri Suite and a portion of the former lounge to sell Carriage House weeks, a vacation club and an internet shopping discount program. They are also allowed to staff the concierge desk in the lobby to encourage guests and owners to come listen to their 60 minute presentation on the products they are selling.
In exchange, The Carriage House receives rent for this space as well as a percentage of their sales. Most importantly is that they are selling unsold Carriage House weeks.
In the past, there have always been a small number of owners each year that can no longer pay their maintenance fees. Their week comes back to the CHTA in the form of a deed back or through a foreclosure action. Over the past few years, due to the current economic situation there has been an increase in weeks coming back to the association. To continue to be a successful HOA, these weeks must be resold as soon as possible to a new dues paying owner. Preferred HOA Solutions continues to be confident that they will be able to continue selling Carriage House weeks and help the association stay financially sound.
Treasurer John Blevins then gave the Financial Report. The Carriage House ended 2011 in sound financial condition. Two separate accounts are used to fund all of the expenses of The Carriage House: The Capital Reserve Account and the Operating Account. The Capital Reserve account is used exclusively for making repairs and improvements to the property. It is funded entirely by a portion of the Annual Maintenance Assessments, approximately 25% of the total, and is listed as a separate line item on the owners’ bills each year. At fiscal year-end 2011, the Capital Reserve Account balance was over $2,000,000, even after spending over $1,300,000 on significant improvements this past year to the property. The Operating Account covers the expenses that keep The Carriage House up and running on a day-to-day basis. This includes salaries, office supplies, equipment, taxes, insurance, utilities, building and grounds maintenance. Operating revenue comes from several sources, the two main sources being the Annual Maintenance Assessments and the hotel rental revenue from rooms not occupied by owners. While The Carriage House has seen continuing increases in energy costs, property taxes, and insurance premiums, the Board of Directors and Management Team have been able to control expenses and increased the Annual Maintenance Assessments for 2012 by a modest 4%. As business is improving in Las Vegas, it is anticipated that improvements in the rental market will help to improve the finances for The Carriage House in 2012.
Each month, the Board of Directors and OLS review the financial reports for the previous month and keep a close eye on revenues and expenses to see that they conform to the approved budget. A review of the financial situation for the current year is conducted during the fall Board meeting giving the Board a foundation from which to budget for the coming year. A copy of the 2012 budget was included in the Annual Maintenance Assessment billing which was mailed in December 2011. Additionally, the Board of Directors hires an outside accounting firm to conduct an annual audit of the financial operations. On Thursday, the Directors received an “unqualified opinion” from the auditors for the Fiscal Year End November 2011 which means that no exceptions were found and the accounting practices are sound and the Financial Statements fairly represent in all material aspects the financial position of the CHTA as of November 30, 2011. A copy of the Audit Report is available from Ms. Lowell for your review. On an annual basis the Board and the Management Team also update the Long Term Capital Reserve Study. This study is conducted by an outside firm that specializes in forecasting improvements that will need to be made over the next 20 years. The 2012 Operating Budget, and the 2012 Long Term Capital Reserve Study, as well as the Investment Policy were all reviewed and approved by the Carriage House Timeshare Association Board of Directors. Article 4, Section 16c, of the Bylaws require that these three important documents be ratified by the membership. A motion was made by Mr. Blevins to ratify the 2012 Operating Budget, the 2012 Long Term Capital Reserve Study and the Investment Policy. The motion was seconded by CHTA member Mr. Brown and unanimously approved by the membership.
Mr. Dean then announced the election results. The winners of the election were Ms. Harpenau with 1200 votes and Mr. Lincoln with 999 votes. Mr. Koritzinsky may serve as an alternate director with 296 votes.
There was no Old Business to address so the agenda moved to New Business with a question and answer period. Ms. Mencher then thanked Mr. Blevins for his many years as a CHTA Director. In appreciation of his service he was given a seven night stay at an RCI resort of his choice. A drawing was held for a complimentary seven night stay in a One Bedroom Suite at The Carriage House. The winner from the meeting was Betty and Wayne Davis and the member that won from the Mail-In Ballots was Charles Hackenbract. There being no further business to discuss, the meeting was adjourned at 11:15am. The members were invited to enjoy a box lunch and meet with the Directors and Carriage House and OLS staff.
*Minutes to be approved by the CHTA members at the 2013 Annual Meeting.