David Holland condo owners say they’re loyal
May 15, 2009
A variety of strategies have been set in motion by a variety of parties seeking a positive resolution to the vacation rental problems plaguing Park City this spring. It is not yet clear which, if any, will be successful.
David Holland Resort Lodging sent a letter to owners last week announcing that the company was in negotiation with lenders, but that the lenders were seeking a three-year contract from owners.
As part of that contract, half of all net nightly rental advance deposits would be deposited in a trust account. Total transparency and quarterly reporting of all rental expenses would be required. Owners would be paid 25 percent of the money owed for February, March and April rentals. Then on March 31 of each subsequent year of the three years 25 percent of the remaining money would be paid until all 2009 revenues were disbursed to each owner. Each payment would be accompanied by an interest rate of 6 percent.
Thomas Mccausland, a homeowner association president for condos near the base of PCMR said he’s supportive of the plan.
"David Zatz has managed that property for 20 years. Myself and a lot of other people have been very satisfied and were for the last 20 years," he said. "I feel strongly that David Holland Resort Lodging is trying to put together a plan and stay in business. And that’s the feeling of a large population of the owners."
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He believes Zatz will have some convincing to do to get enough people to sign the three-year contract, but he hopes they do.
"I think most people would give him a chance. Clearly, it’s the most likely way for everyone to get their money back," he said.
Affected condo owner John Belbute said the same thing. He wishes there was an alternative he could choose, but he said he’ll agree to whatever he needs to to get his money.
"I’m not really thrilled. I want David to succeed," he said. "I think they got into this trying to do the right thing for the owners."
Most of his neighbors are saying the same things, he said. They’re all disappointed about not getting their money, they wish there was a better way out, but they’re waiting to see what Zatz does.
"When you deal with someone for a number of years and they fall on hard times, you don’t want to abandon them right away," Belbute said.
The Park City Police Department confirmed that on May 8 they received two criminal complaints from condominium owners against David Holland Resort Lodging. One was a theft complaint; the other was a fraud complaint.
Captain Rick Ryan, department spokesperson, said detectives are gathering information and analyzing accompanying documents. His department will not make a decision about the validity of the complaints, he said. That is for the Summit County Attorney’s office to decide.
David Brickey, county attorney, said he hasn’t made a decision yet because he hasn’t seen the report from the detectives. Speaking hypothetically, if contracts between the company and owners stipulated that funds would be managed in a certain way, and the problem has arisen because the funds were not handled that way, it conceivably could be a case of fraud.
"Breaking fiduciary obligations could be a criminal act," he said.
But if the contracts reveal that the company had the right to do with the money as they saw fit, then it’s a not a criminal matter.
"It’s a very fact intensive process: what is the contract and what has the business practice been," he said.
Mccausland is upset that owners in his association have taken this action.
"I think that’s an irresponsible act that could jeopardize the home owner association’s ability to collect the money," he said. "The board has an attorney representing us. It’s not clear to us any criminal activity has occurred."
The company staying in operation is the best chance of owners recovering their money, he said.
David Holland Resort Lodging did not respond for an interview request by deadline.
The signing bonus
Jason Schnaitter, general manager of ResortQuest Park City, has issued an offer to compensate certain owners with Deer Valley Lodging and David Holland Resort Lodging as a sort of signing bonus for switching to ResortQuest.
Like David Zatz’s offer, ResortQuest would offer 20 percent of owed money to an owner up front, and then compensate them in installments over three years.
Schnaitter said they’re seeking to add units that meet a quality standard and have good potential for generating revenue.
ResortQuest is not a property management firm, they only do vacation rentals.
Belbute said he isn’t familiar with ResortQuest, but said he’d prefer to stay with David Zatz if it works out.
"I’ve been in Park City for 20 plus years. I’ve worked with a number of different companies and I’ve been more pleased with Holland than the others I’ve been with. The people I know have not switched. They’re waiting,"
The involuntary bankruptcy
A hearing has been scheduled for May 19 for a court to address the involuntary Chapter 7 bankruptcy petition filed by Joseph Tesch on April 27 on behalf of five owners owned money by Deer Valley Lodging.
Joe Wrona, who represents over 25 unit owners in the process, predicted that about $7 million is owed to property owners.
As part of filing for involuntary bankruptcy, a stay is put on creditors but the debtor is allowed to continue operating in many ways the reverse of normal bankruptcy. Wrona said on May 19 his clients will be requesting a lifting of that stay so they can renegotiate contracts with other property management companies.
As far as he can tell, Premier Resorts of Utah doesn’t have many tangible assets that can be liquidated to pay creditors.
A former employee referred to the assets as "a bunch of old computers."
"This entity is continuing to take money from people, and that money is disappearing instead of going to the people who own the property," he said.
His clients have no hope of being repaid by the company since Deer Valley Lodging is struggling to pay its own employees, he said.