May 22, 2019
Increasing Property Value We are focused on Improving Reducing Operational Costs Owner Experience and Improving Revenue
In Introduc ductio ion • The building is 44 years old • Time and the Elements have taken their toll • Under funded Reserve Account • We experienced back to back Hurricanes; the worse in over 100 years
Hur Hurric icane M ane Mar aría ía
Hur Hurric icane M ane Mar aría ía
Hur Hurric icane M ane Mar aría ía
Insur Insuranc ance P e Projec ects t s to C Comple mplete • Common Area HVAC • Roof Ventilation and Membrane • Parking Structure • Hallways and Landings • Exterior Structure & Painting • Employee Facilities • Men’s Changing Rooms • Telephone System Switchboard and Units
Ch Challenges - Se Securit ity Security is important to us, What are you doing to improve it? • Installed over 95 state-of-the-art HD cameras throughout the building. 10-year warranty on equipment. • Added Command Center allows eyes all over the Building secure entry for employees and vendors. • There are issues/concerns like the Front Gate and, access points, parking garage and “blind zones”. This is an area of focus for management • New Security Check Point • When Jade opens, they will contribute to the road use and help pay for security. This will be discussed in detail later. Command Center
Challeng Challenges es - Ins Insur uranc ance I have submitted my claim and it has not been resolved, Why? Insurance Company has not paid out enough • to repair the damage including full owners Insurance Company is not acting in good faith • We are pursuing the best path for better • payout Time is limited by statue of limitations, must • act quickly Law firm engaged and carrier advised council • vote required prior to dispersing final funds
Insur Ins uranc ance T e Tim imeline eline Sept. 2019 Dec. March June Sept. Dec March June Sept. 2017 Statue of 2017 2018 2018 2018 2018 2019 2019 Hurricane Hits Limitation Submitted Claim on October 11, 2017 – Extended Claim to $9.8m on Nov. 14 th , 2017 Claim Interim payment of $4.8m on December 21, 2017 Working Claim with Insurance Company Final Claim – Submitted (Feb. 28 th , 2019) The Claim Submitted was within 30 days of the storm with no power Based on an assessment of the claim made and limited communication. Received interim payment within 60 days by a third party adjuster, and the legal of storm. Once we started work, we found significantly more damage analysis made a law firm, we expect to to the building and infrastructure and filled a supplemental claim. Our receive under the supplemental claim that insurer dragged their feet, and with the statue of limitation fast we filed with the insurance company approaching, we had to engage law firm to file suit. approximately $13.5M.
CAPEX This slide represents the amount of funds that have been injected in to the building since Keith St. Clair assumed management . The $4.7m is from Keith St. Clair, ESJ Inc and affiliates at no cost to the membership. The Assessment of $1.5m represents what has been received from the Timeshare assessment billings. The Insurance amount represents the first payment from the Insurance Company for the initial claim. Keith St. Clair $ 4,745,823.54 Assessment $ 1,576,786.47 Insurance $ 4,800,000.00 TOTAL $ 11,122,610.01
Funds R Funds Rec ecei eived ed INSURANCE FUNDS USES TO DATE Roof Windows • • Pool Building exterior • • Walkways Generators and parts • • Elevator Mechanical Fuel • • Landings Food during storms • • Hallways Transportation • • Roof (remediate) Engineer Roof • • Engineer Building Lanais rooms & hallways • • Engineer Lanais roof • •
As Assessment Update TIMESHARE ASSESSMENT SOURCES Total Project $5,000,000 ESJ, Inc. $2,000,000 Owners Collected $1,576,786 Owners Un-collected -$1,423,214 Curent Bad Debt -$1,423,214 TIMESHARE ASSESSMENT USES Total Project $5,000,000 FF&E $2,000,000 Floors 17-11 $1,576,786 Floors 11-1* $1,423,214 *Represents bad debt Original project was $5m, $3m to the members and $2m to the INC. The INC. Has funded their $2m with furniture, fixtures and electronics which are currently stored in Isla Verde. The $3m billed to the members, there is currently an amount of $1.4m that is uncollected. Construction has stopped on the lower floors until this amount is collected from the delinquent members or we receive the supplemental insurance proceeds.
Fut Futur ure e Insur Insuranc ance U e Uses ses Remaining Balance PROJECTED INSURANCE CLAIM $13,500,000 * $13,500,000 Priority of Distribution New Deductible $1,200,000 $12,300,000 Full Owners Provision $600,000 $11,700,000 Roof $1,200,000 $10,500,000 Corridors $500,000 $10,000,000 Building Exterior $4,900,000 $5,100,000 - Balconies, Paint, Concrete-rebar, Windows, AC’s, Sealant, common areas Fund Reserves (Deductible + ½ Ins.) $2,000,000 $3,100,000 Legal Reimburse $1,200,000 $1,900,000 Parking Garage $400,000 $1,400,000 INC and VO's $1,400,000 $0
Fu Futu ture Goals s - Ad Admin • Better maintained facilities • Fair maintenance fees • Transparency with BOD Semi-Annual Meetings to over performance • and approve management of ESJ • Clarity on Rules and Regulations
Ne New Projects ts Inc ncreas ased d Revenue nue to Membe mbers REVENUE OPPORTUNITY #1: BEACH LEVEL RESTAURANT & BAR A Successful Business benefits all of us. For example: We are lacking F&B facilities to serve the Beach Front. The INC., if agreed by the council members, would invest over $1m in a new Beach Bar Restaurant located at the North side of the building. Currently there is rubble on that area that will be used for flooring if approved. Beach Level Restaurant & Bar • Beach Level Restrooms • Beach Level Pool • In exchange for use of the land, the INC. • will pay the HOA increased rent.
Ne New Projects ts Inc ncreas ased d Revenue nue to Membe mbers REVENUE OPPORTUNITY #2: ENERGY CO-GENERATION FOR ESJ, How to Fix our $560,000 problem? The only increase members have seen in 4 years is the $560,000 increase in Insurance. It is our goal to eliminate this increase in 4 years by providing an energy solution that saves us that or more. The INC. is willing to invest $6.4m to provide full off-grid power to ESJ. The INC and KSC are prepared to pay that and provide the energy at a discount to our members. Through the energy savings that this will provide the increased • insurance premium could be offset within 4 years. We will be off-grid with full power. No Hurricane impact and • significant increase in property value.
Ne New Projects ts REVENUE OPPORTUNITY #3: JADE AND THE ACCESS ROAD When Jade opens, their on-site parking will be more than is needed, since there are no residents and only hotel and timeshare guests. With the extra spots we will free spaces in • the ESJ Tower for the benefit of Owners and Visitors. ESJ HOA will contract with Jade for a use fee • for the road. Than revenue will be used to offset HOA costs at ESJ.
Bu Budget 2020
Comparative Budget by Year • No increases in the past 5 years • Our strategy is to manage the budget with no increases and possible decreases for the next 4 years through the revenue opportunities discussed in this presentation.
Th Thank k You!
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