The next Board of Directors meeting of the Ilikai AOAO is scheduled for Thursday, January 28, 2010, at 3 PM in Kauai Room on the 2nd floor.  Ilikai owners are encouraged to attend.

As you know, the Ilikai Hotel – i.e., its current owner, iStar – has ZERO representation on the current Board.  Not even one Director (of the nine Directors total).  Is it fair?  This is despite the fact that the Hotel/iStar’s stake at the Ilikai amounts to 28%.  Not only that, but our Hotel is so important to all of us, since so many of us chose the Ilikai precisely because of the presence of the Hotel with its hotel atmosphere.  For those owners who rent their units, the presence of the Hotel and its hotel atmosphere is believed to contribute positively to the rental income.

iStar did try to get one person, Leslie Love (who is iStar’s Senior Vice President), elected to the Board.  In the fall (of 2009), there were vacancies in our Board of Directors.  To fill those vacancies, the remaining Board Directors were the ones to vote.  Leslie Love attended the meeting, talked about iStar, presented her case. The Board voted Leslie Love down.  Instead, they chose Lavonne West and Bill Lawrence to fill those Director vacancies.  Is it fair?  It was like a massive slap in the face of iStar and our Hotel.  What were they thinking?  Parenthetically, Lavonne West then left on a cruise for over two months and wasn’t even here to contribute.  The current Board Directors would claim that they did so so that they have “votes” for key Board decisions.  But what have they accomplished or even try to accomplish since then? - Nothing.

What is my point?  My point is that the current Board failed to be supportive of the Hotel and failed to show good will towards our Hotel and iStar.  In fact, their refusal to allow even one iStar representative on the Board (despite iStar’s 28% stake at the Ilikai) most likely had a negative effect on the relationship between the AOAO and iStar.  It is not fair to treat people like that.

Well, the process for the elections for the Board of Directors to be conducted at the upcoming Ilikai AOAO Annual Meeting on March 2, 2010 has just started.  But there are already problems brewing.  If you are an Ilikai owner, then by now you should have received a proxy package containing proxy forms, a meeting notice, and personal statements of several people (incl. me) who want to get elected to the Board of Directors.  This package was mailed out by the AOAO Office, and instructions direct to send the proxies back to the AOAO Office.  Historically, it is the management company (Hawaii First now, Hawaiiana prior to them) that does this and collects and counts the proxies.  This year, it is the AOAO office that mailed those.  Then out of a blue, another piece of mail arrived.  This one contained personal statements and proxy solicitations from two iStar representatives (Steve Stinson and Leslie Love).  This was mailed out by Hawaii First.  What’s up with that?  (Hint: don’t be naïve.)  There have already been other irregularities as well, but I’ll leave those aside, at least for now.

Now, if the elections go peacefully – let’s hope – and all those involved get what they wish, then this may work out fine.  If not, then it is no rocket science to see that the above arrangement is setting the stage for contesting the election results.  Why?

It is no rocket science to see that certain Board Directors are really eager to get re-elected.  Why is another story.  (Hint: don’t be naïve.)  The Ilikai AOAO manager, John Popovich, also has a strong vested interest in the outcomes of the elections, as some claim that his job as the AOAO manager could be at stake (I really doubt this though).  I.e., letting the AOAO office handle the proxies could be interpreted by some as akin to letting a fox guard hens in a hen house.  (Those of you attending Board meetings: Do you remember how the Directors on the current Board decided to vote and voted to have the AOAO reimburse over $65K to a group of owners for the really ill-conceived and poorly handled, and dismissed Anekona-related lawsuit, even though Anekona was well on their way out at the time because they were in the middle of the foreclosure?  I am NOT discussing the $65K+ itself etc here, that is a whole other issue (Parenthetically, I would have no reservations to express directly to the attorney retained by those owners, Mr. Zalewski, as there are serious questions about his actions).  I am talking here specifically about the voting by the Board.  Do you remember that voting?  That was back in April.  I cannot describe it by any word other than rigging – and it was blatantly, in front of dozens of people in the room witnessing this circus.)  P.S.: The end does not justify the means, in my opinion.  We must act ethically.  And yes, I did stand up and voiced concerns about this at that meeting and also in writing to the Board afterwards.

Likewise, Richard Emery and his company, Hawaii First, also have a vested interest in the outcomes of the elections.  This is because Hawaii First’s contract with the Ilikai could be at stake.  Not to mention that some Ilikai owners have the idea of looking into exactly how the AOAO ended up with over $1M+ in delinquencies during Hawaii First’s tenure here, Lyle Hosoda’s fees in the amount of $125K-$135K (according to what Richard Emery stated), and other queries.  I.e., letting Hawaii First handle the proxies could be interpreted by some as akin to letting a fox guard hens in a hen house.

I am NOT saying anyone will behave inappropriately.  But why create room for somebody to be able to allege inappropriateness?  What they – the Board of Directors that is – should have done is this: Get an independent contractor to handle the proxies.  It is NOT that expensive.  But they didn’t.  And this is asking for trouble, if some of the people involved do not have the chips fall their way.  It is not rocket science.  What were they thinking?

What is my point?  I have two points to make here: (a) this shows the usual shortsightedness and clumsiness of the people on the current Board (and my point with that is: these individuals should NOT run for re-election considering numerous issues with their performance as Directors); and (b) I appeal to all those involved, incl. those handling proxies, to conduct themselves in a professional, ethical, and honest manner; because if not, expect trouble, because already now there are items in the election process that could easily be challenged.

By the way, as a general comment: rigging homeowners associations’ election results is easy.  I mean, EASY.  You would be surprised how common it is.  As a quote attributed to Stalin goes, “It is not the people who vote that count; it is the people who count the votes.”

The longer I live at the Ilikai, the more cynical I get.

If you have never received any e-mails from me, then this means you are not on my e-mail list.  Take a moment to e-mail me to olga@ilikaiowners.com and indicate that you would like to be added to the list.  You do not need to be an Ilikai owner for the list.  My list includes other interested individuals.  I will be e-mailing various updates.  So now is a good time to sign up.

This is not Ilikai news.  But a lot can be learned from other condominium associations, about possible problems and solutions.  Here is how another association – Waipouli Beach Resort, on Kauai – showed leadership in addressing what some owners alleged were inappropriate, if not illegal, financial activities.  Take a look at this article in the Star Bulletin.  They got a forensic accountant to audit their records and contacted the Kauai prosecuting attorney and the state Regulated Industries Complaint Office.  Their new, owners’-controlled Board did not hide their head in the sand or sweep problems under the rug.  They showed leadership.

Interestingly, it involves some people and entities that we know.  The developer, Chris Singleton, just recently turned his share of the property to the bank, – and the bank happens to be iStar (he initially borrowed from Fremont, then iStar ended up with that loan, i.e., similarly to what happened to the Anekona’s loan at the Ilikai).  It is to be seen what iStar will do there.

They also used to have Sue Savio and her Insurance Associates company, as their insurance carrier.  Again, the new, owners’-controlled Board showed leadership, they proactively opened it to competitive bidding, and got a new insurance provider, saving the Association over $300K a year in insurance premiums. (You may recall the fiasco several months ago with our insurance, click here to read, how frustrating, it’s a lot of money.)

The Waipouli saga also offers a lot of insight into problems that are likely to occur when the same entity – it was Outrigger in their case – wears several hats (the AOAO managing agent, hotel operator etc).

A reader wrote to me asking about plans, if any, for the Ilikai tennis court (located on the Lagoon side of the building).  I am not aware of any plans, the court looks rather neglected (but clean).  Anyone knows?

Several people have asked me if I am planning to run for the Board.  YES, ABSOLUTELY, I AM PLANNING TO RUN FOR THE BOARD.  I am switching gears in that direction.  Stay tuned.

In response to some who question whether the Ilikai was developed as a mixed-use project: YES, it was.  We have the whole history, with documents on file. In fact, the Ilikai was initially planned as a co-op.  Then Chinn Ho decided to change to all condos.  Then Chinn Ho changed it to a mixed-use complex, with condos and a full-service hotel under the same roof.  We have documents.  Bill Moore may be referring to a all-condo promotional brochure.  We have those old brochures, too.  Those do not matter because it was during the preliminary stage.  What matters is the final product, which was mixed-use, with condos and a hotel in one project.  The final product that Chinn Ho finalized was the mixed-use, with the hotel.

Also the following: When I and others bought our units, we bought into a mixed-use project consisting of individually owned condos and a hotel, and no timeshare.  The presence of the hotel (and no timeshare) was the main reason I and many others chose the Ilikai.  Those individuals who seem to be dreaming up getting rid of the hotel should be made aware that this would constitute material change.  These individuals should be aware that should they continue with these ideas, they may very likely sink the Ilikai (and themselves) into a yet another lawsuit.  It gets to a point when enough is enough.  Leave the Ilikai the way it was for decades, with private condos and the hotel, and get rid of Shell and timeshare.

It may be of interest to note that some of these same people on the current Board, incl. Bill Moore, were on the Board that let Shell timeshare in here to begin with.  Not only that, but the current Board, of all the attorneys in this town, chose to bring Milton Motooka back here, who was here when Shell got here, with still unanswered questions about his role in this disaster.

This is a really interesting article.  The Wall Street Journal of Dec. 9, 2009 reports on another ill-conceived and ill-fated hotel to condotel conversion project.  This is a project called Hotel 71, located in Chicago.  The firm that purchased the property announced that they are ditching the condotel conversion plans and will operate the property as a traditional hotel instead.

The article goes on to say: “The history and sale of Hotel 71 shines additional light on the busted business model of condo-hotels, which typically allows unit owners to rent rooms when they aren’t using them.  At the peak of the real-estate boom, many small investors snapped up condo-hotel units.  But the economic collapse, which has hit the hotel and condo markets the hardest of any commercial-property class, naturally hasn’t been kind to the hybrid property type.  Canyon plans to complete the renovation Mr. Falor started but has no intention of pursuing his condo-hotel strategy.  Rather, the property will be operated as a traditional hotel, according to people familiar with the deal.”

AS A REMINDER: The Ilikai is NOT a condotel.  Instead the Ilikai is a mixed-use property that combines condominiums and traditional hotel under the same roof in the same complex.  Mixed-use is a different model that the “condotel,” also called “condo hotel,” model.  Anekona had ideas to convert our hotel into a condotel.  We all know the resulting fiasco.  Let’s all learn from this.  I am saying this because apparently there are still some individuals who are nursing condotel conversion ideas – with personal agendas in mind.  The Ilikai has been a mixed-use property combining private condominiums and a traditional hotel in one property since Chinn Ho built it this way.  Leave it that way.  Many of us have purchased our units precisely because of this mix-use nature, with the traditional hotel.  We did not buy into some condotel or timeshare joint.

Well, it’s Holidays season!  As customarily around this time, our Ilikai got now all decorated for Christmas and New Year.  It looks so beautiful!  Thanks to resident owners who took the time to help decorating!  Here are some pictures of our Christmas decorated Ilikai, courtesy of the AOAO office.