The Tuesday morning was surprisingly cool for July in
the Sonoran Desert just north of Phoenix, Arizona as they began to assemble. A continental breakfast had been in
place by 7:00 AM and most of the next hour was spent networking with folks from such far-flung places as: Indianapolis,
Indiana - Vancouver BC, Canada - San Diego, California - Fort Meyers, Florida - Parsippany, New York - Avon, Colorado
- Newport News, Virginia - Northbrook, Illinois - Minneapolis, Minnesota - Bellvue, Washington - Washington, DC
- Crossville, Tennessee, as well as locals from Utah, New Mexico, Nevada, and right here in Arizona. By 8:10, most
had satisfied their need for coffee, juice and other goodies and had taken their seats in the conference center.
On center stage were four individuals who had met as a group for the first time within the last hour.
Let me introduce them to you. Seated on the extreme left was Jack Taylor who had recently retired as comptroller
of Direct Power and Water Corporation in Albuquerque, NM. Prior to holding that position Jack had been Senior VP
of the Park Ridge Center for the Study of Health, Faith & Ethics in Chicago and the President and CEO of Aquinas
Institute of Theology in St. Louis, Mo. Next to him sat Fred Soufal, a retired executive from Stewart Warner of
Chicago, Illinois. Since that retirement, Fred had served as a consultant for the Small Business Administration
and the Service Corps of Retired Executives and currently spends most mornings managing his stock portfolio and
options trading. On Fred's right sat attorney Gary Kujawski of Denver, Colorado where he has practiced in the area
of real estate, small business development, bankruptcy and estate/probate. On the side, Gary works for Title America
in Denver. Standing at the podium getting ready to act as the moderator for this panel was Susan C. Kelley, the
Senior VP of Shell Hospitality Group of Northbrook, Ill. Prior to her 12 year stint with Shell she spent 10 years
with BriLyn Inc of Indiana overseeing their resort operation as well as sales and marketing. Sue began her hospitality
career in 1967 at the Pick Congress Hotel in Chicago, 9 years later she moved to Florida and spent 11 years there
managing full service hotels, resorts and subsequently formed her own Management firm. It is obvious, that a group
of professionals were about to begin their presentation. What possible subject could this Theologian/Accountant.
Attorney, Engineer/Salesman and Hospitality expert have in common? Why would the 125+ assembled be eagerly awaiting
this presentation?
With a quick tap to assure that the sound system was working, Ms. Kelley cleared her throat and instantly commanded
the attention of those assembled. Good Morning, she began, Welcome to a Golden Opportunity to Achieve Board Due-Diligence.
On my left are three gentlemen ready to share with you their firsthand experiences as members of the Board of Directors
of: the Christie Lodge Owners Association, Avon, Co, Scottsdale Camelback Resort Association, Scottsdale, AZ, and
the Sunterra Villa de Sante Fe Homeowners Association, Sante Fe, NM. During the last 30 or so years, I have sat
in on a few Timeshare Board meeting myself… Over the next 75 minutes, these good people did just that, shared their
collective experiences and thoughts on achieving due-diligence and how resort management types assisted them in
that endeavor.
Ms. Kelley began with a question. "What are the expectations of the management company?' Then she began to,
one-by-one, go over The Basics, the training of the Management Staff and Board Members, Critical Management Responsibilities
and then these final points:
- Management's fiduciary obligation is to the Association.
- The Board represents the Association.
- The Board is Managements customer.
- Management is the key to a successful Association/Board/Management relationship.
- Management is the support staff and professional advisor.
Mr. Kujawski followed with this question: "What exactly is due-diligence and why is it important?"
In an attempt to answer this question, Gary provided the following:
- Due diligence (also known as due care) is the effort made by an ordinarily prudent or reasonable party to avoid
harm to another party or himself. Failure to make this effort is considered negligence.
Mr. Kujawski pointed out that the trend in the law is to place more liability upon Board members, which in turn,
means that the Board members need to be more responsible, and need to seek out more information. He then ended
with what due-diligence didn't mean:
- Does not mean "rocking the boat".
- Does not mean that management is not being trusted.
- Does not mean that management's decisions are being questioned.
- Does not mean that the Board wants to manage.
Gary added, IT DOES mean that the Board is interested in doing what is best for the owners that it represents,
together with management.
Mr. Soufal then talked about the matrix which contained a threesome made up of the Association, Management, and
the Board. He then pointed out what he, as a Board member, needed/wanted to know and what he expected from management.
Fred indicated one of the major desires was for a well established and functioning decision making process to be
in place for the board to work within. He emphasized the following additional ongoing needs/wants below:
- What issue needs to be addressed?
- When a decision will be necessary?
- What professional advice will be forthcoming or necessary?
- That support documentation was in place.
- That management will present both sides of the issue in an unbiased manner.
- That ample opportunity for discussion and consideration will exist.
Mr. Taylor pointed out the necessity for training new board members and went into detail about the two Sunterra
sessions he attended. He then indicated that without that training, he would have wasted at least one-third of
his initial term in a learning process. Jack recognizing that other resort boards may not have the same opportunity
that he had because of Sunterra. That said, he then made a strong recommendation that ARDA develop and distribute
a standard HOA Board member guide. Mr. Taylor then added that by working with the two major exchange firms more
HOA Board members could be made aware of the ARDA-ROC scholarship program for attendance at the various Regional
Management Seminars such as the one he was attending. In closing, he reiterated some of the previous wants and
needs in order to be an effective Board member.
- Information, information, information……..
- Enough time to get educated on the issues.
- Enough time to consider the possible ramifications.
- Access to management and other professionals such as: attorneys, accountants, appraisers, investigators, insurance
agents, etc.
Following their formal presentations, the panel members spent approximately 25 minutes answering various questions
from audience members.
FINAL THOUGHT
In addition to the session reported above, a session entitled Golden Opportunity to Achieve Professionalism was
presented. In that session, reference was made to the Attitude Impacts Outcome Graph from CompuServe's Our World
web site. That Graph depicted the scale of attitude as follows:
~ 0% Positive attitude I won't
~10% Positive attitude I can't
~20% Positive attitude I don't know how
~30% Positive attitude I wish I could
~40% Positive attitude I want to
~50% Positive attitude I think I might
~60% Positive attitude I might
~70% Positive attitude I think I can
~80% Positive attitude I can
~90% Positive attitude I will
~100% Positive attitude I did
It occurred to me that Timeshare Owners Association Board members Gary, Fred and Jack came at that voluntary
calling at about the 60% level (I might), and rapidly went up the scale to the 100% (I did) status and have maintained
that attitude. Far too many Association members remain at a level that must be about 15% (I don't care). Jack's
point about Board member training was to help owners get past the 20% level and rapidly up to at least 40% (I want
to).
Including the three members on the panel, an additional four Association Board Members were present at the Southwest
Conference. Assuming that there are 50 resorts in Arizona and each has at least five Board members, somewhere north
of two-hundred individuals missed this 'Golden Opportunity'.
One wonders what the future holds for the owners of the (over 1,000) resorts in the USA that are currently controlled
by Owner Associations, if these percentages hold all across America. I think that my answer might be at the 20%
level, I don't know… On second thought, I do know that there are a lot of good people out there and when the best
of you get together you can accomplish great deeds.
JS 08/06
