WHAT DOES THE FUTURE HOLD??

When Sue & I woke up on June 24 and saw the news about the Surfside condo collapse, we both had the same initial thoughts: “That could have been the Hawks Nest!” “That could have been us!”

Almost certainly, a major component of the Surfside disaster was spalling, a condition with which we are all intimately familiar. Their board of directors had commissioned a report three years ago which discovered serious spalling issues and poor waterproofing of the building. Sound familiar?

Sue and I and several other Hawks Nest owners toured the Hawks Nest in February 2020, and I can tell you that the condition of the concrete in the Hawks Nest is MUCH worse than the photos that were shown on TV of the damage report received by the Surfside property’s board.

While I am no engineer, and do not pretend to be one, I spent over 40 years in the real estate industry, mostly as an appraiser, which included interior and exterior inspections of the subject properties. I have never seen concrete in worse condition than that in our building. Ever.

For better or worse, the Surfside collapse will make it much more difficult to obtain permission to repair the Hawks Nest. There will be heightened scrutiny on older concrete buildings such as ours, and on the local officials who grant permits for their repair or alterations. There was a local official in Surfside who addressed the condo board, and after reading the report about the spalling and water infiltration damage, told them that their building was just fine, that there was no danger. This guy is in a lot of trouble, and city and county officials around Florida are looking at his situation and are making sure this does not happen to them.

The Hawks Nest is now asking us to decide whether or not we want to pay for a $13± million project to repair or rebuild our building. This would require an estimated $6,850 special assessment Per week owned added to the insurance proceeds we have been paid so far, and our other cash on hand. The amount of the special assessment is based on assumption of the participation of every single owner. No one, including the board, believes that every owner will pay.

So what will happen?

Well, first there will be the vote. Some people will vote “Yes”, hoping to return the Hawks Nest to its former glory, and willing to pay for it. Some will vote “No”, either because they can’t or won’t pay what is required to accomplish that goal. In any case, most, if not all of the latter will either give their weeks back, or will have them taken away by foreclosure if they don’t pay the special assessment once it is billed.

After this, the population of owners has gotten smaller, which means that the assessment will have to be larger, maybe much larger. If that’s the case, it’s likely that more will drop out, necessitating a still larger assessment, and on and on. I and many other owners believe that this is not sustainable, and will result in the eventual liquidation of the property regardless of the vote we take this month. The only difference will be that the number of owners left to share the proceeds will be smaller, resulting in larger payouts for them, and no payout for the rest of the by-then former owners.

NOTE: THE FOLLOWING EXAMPLES OF THE POSSIBLE VOTE RESULTS AND THE NUMBERS OF OWNERS DROPPING OUT OR BEING FORECLOSED ON ARE ENTIRELY HYPOTHETICAL. They are for illustrative purposes only. I think they are conservative, but others may disagree.

For instance: suppose the proposal currently in front of us is passed 60% to 40% of the voting interests. If the 40% don’t pay the assessment and lose their weeks, $6,850 is no longer sufficient to pay the freight. The assessment would have to be raised to $11,400 for each of the 835 voting interests remaining. That increase would almost certainly cause more to drop out. If that number is 30% of the remainder, voting interests would fall to 585, requiring a new assessment of over $16,000 per week. You can see where this is heading, with every increase in the assessment, there will be a corresponding decrease in the number of owners willing to pay it.

Additionally, we are being asked to vote for three board positions. Three current board members, President Gary Tucker, Vice President Rosemary Smith, and Marty Shapiro, are running as well as four challengers, Michelle Frigola, Jason Moos, Alex Stanich, and Steven Vereen. It is refreshing to see challengers despite Gary Tucker’s statements discouraging potential challengers for the third year in a row.

Editorial Notes:

I don’t have a problem with people who have given up on the Hawks Nest and signed over their weeks over the years losing out on the liquidation. Nor do I have a problem if people drop out because they can’t or don’t want to pay for rebuilding losing out if the building is actually rebuilt.

My problem is, that I and many others believe that liquidation is an inevitability, and if that is true, it is not fair to ask people to pay an assessment that cannot reasonably be expected to be sufficient to restore the Hawks Nest, only to later add another assessment and hope more won’t drop out.

IT IS VERY IMPORTANT TO ATTEND THE INFORMATIONAL MEETING ON JULY 7 AND GET ANSWERS TO THESE CONCERNS. The call-in number is (605) 313-4178, and the meeting code is 777053#. This is different from previous meetings.

With regard to the board, we need new blood. I take no joy in saying that I do not believe that any of the three incumbents currently running are equipped to handle the enormous tasks of overseeing either the reconstruction or liquidation of the Hawks Nest.

Finally:
The decision we all make will be an existential one. It will determine whether or not the Hawks Nest continues or not. EITHER WAY, YOUR VOTE IS VERY IMPORTANT. According to Mike Oostmeyer, our Treasurer, and the most knowledgeable and thoughtful member of our board, it will take a majority of the voting interests to either continue or liquidate the timeshare, NOT just a majority of those voting. If there is no absolute majority either way, we will be in limbo, which would probably would require some sort of court action to resolve which could take years even before any other action could be commenced.

Mike has asked me to tell you that if anyone has any questions about the status or the process, that you are free to call him at (231) 745-7870.

PLEASE VOTE!

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