Unpaid dues rock Walley's time-shares

As much as 40 percent of David Walley's Hot Springs Resort & Spa's 6,600 time-share owners have not paid their dues for 2010, according to Gary Grottke, treasurer of the Walley's Property Owners Association and president of Quintus Resorts.

The shortage is putting financial strain on those owners who have paid their dues, and, if not rectified, could mean closure of the time-share property.

"It is true that the level of nonpayment of dues has risen dramatically in the last three years," Grottke said Tuesday. "It's an industry-wide problem. I can't tell if our dues collection is better or worse than the industry."

Grottke said Florida-based Celebrity Resorts, which bought most of Walley's real estate and management contract in 2008, held a meeting on Sunday to discuss a "special assessment" ranging from $494-$939 that owners are being asked to pay, on top of their annual dues. He said about 400 people showed up.

"There has been a high level of frustration among the board on the timing of the whole thing," Grottke said. "At the same time, the board recognizes that we are short of cash, and that a certain amount of cash is needed to keep us going. The board thinks a better job could have been done in communicating and explaining the need, and starting earlier to explain the potential problems."

According to a meeting notice distributed to time-share owners in January, signed by board secretary Craig Lewis, the "operating funds are depleted, and in order to continue operations, a special assessment is necessary."

"Ultimately, if the special assessment does not get approved, it is anticipated that the 2010 operating expenses will deplete your Association's assets within the first quarter of 2010," the notice read. "In order to accurately identify the amount necessary to correct the deficit and replenish the reserve and operating funds, measures were first taken to reduce operating expenses and correct the operating budget. With a positive collection of the special assessment, the Association can eliminate the deficit and move forward with operations."

Grottke said he has a fiduciary responsibility to the owners association as a board member, but also a vested interest in seeing the resort succeed, as Quintus still owns more than 500 time-share weeks.

"The board is committed to finding a way to keep the resort open and operating, even if at a reduced level, until we can get the financial situation straightened out," he said.

Grottke said because there were not enough proxy votes on Sunday to meet quorum requirements, a new meeting on the special assessment was scheduled for Saturday.

"Ultimately, it's an ownership vote," Grottke said. "If the vote comes back no, we need to exhaust every single option. We can increase the effort to collect that money, cut expenses, whatever allows us to continue operations and to get people the vacations they paid for."

Association President Marlena Forst, of Nipomo, Calif., agreed with Grottke that there was not enough communication between Celebrity and the time-share owners.

"We, as a board, haven't been given enough information," she said.

Forst said that unfortunately, in her experience with time-shares, owners usually have to compensate for "bad debt."

"If they gave us more information, if we understood a little more, we may see the assessment is necessary, though the amount they're proposing may not be," she said. "Yes, sure there is bad debt, but there's bad debt with every time-share. It's whether we are at the point of shortage where the owners have to make up the difference or there is something else we can do."

Forst the board is looking at other options and has scaled back the special assessment costs closer to $500.

"It's a bad situation, and we hope it gets resolved on Saturday," she said.

Minden resident Karen Davis, part-owner since 2007, said she felt like she was being punished for being responsible and paying her dues.

"The annual assessment has been going up quite dramatically," she said. "Every year, it helps pay for the upkeep of the facility."

But now, Davis said, the owners are being asked to save the property.

"Those of us who did pay ended up getting another bill," she said. "Now, they're saying there is no money left, and they'll have to close the timeshare portion of the facility."

In April 2009, Douglas County commissioners approved modification of the resort's special use permit, allowing another 190 time-share units to be built on the historic property south of Genoa.

The resort's original permit, issued in 1997, allowed for 150 timeshares. Since then, 112 have been built on the east side of Foothill Road. New plans are for 12 more units on the east side and 216 new units on the west side of Foothill Road for a grand total of 340 timeshares.

Commissioners also approved up to $90,000 in redevelopment money for an underground tunnel beneath Foothill Road to connect both sides of the resort.