November updates

We are all equal owners at HRGR although some owners wish to override the rights of others, insult them, or bully them to go away with their issues. This will never happen and this childish mentality culture will only make fellow owners stronger for change.

Fair, open and honest transparency and respect for all owners is what is required to address owners injustices.

Little did we really understand back in June that changing and adopting the health and safety angle, what the implications would be for those at the resort!

At the same time the impact of PW not paying its fees is having a serious impact on the cashflow of the resort resulting also in over expenditure, (ie spending more than we receive in cash), pushing reserves further down. This has we believe resulted in the short term solution of accepting the insurance building default claims at substantially 90% less than previous committees positioned. We are now stuck with taking PW to court with very little chance of ever receiving any further cash.

Details, together with reference to the highly secret  2012 manifesto, are:

A) Decision Making

A 

NB: “I Intend to cascade information through the Resort’s hierarchy which means that Block Presidents will be a fundamental part of the information flow. The HPA makes the first level of responsibility that of the Block President so it is my belief that there is a need to get them to buy in to the concept of being a part of that communication process. If this procedure does not work, then I fear that neither will my Presidency which, in turn, may require a rethink on how we move forward.”

Let’s begin as we start this month with setting the scene going back to 2011 with the following comments:

Source: click here, page 5

So 3 years on and despite Nigel’s manifesto to fully engage all of the Building Presidents in the key decisions of the resort, we are no further along, in fact we are moving in the opposite direction with the recent building defects and workers compound decisions not being referred to Building Presidents at all in  “making decisions for their building” Not really good in any circumstances……..

Of course we are all passionate about the resort and want what is best for the whole resort, what is value for money, and open and honest transparency however the current regime shows fundamental issues with these concepts especially against the commitments made back in 2012:

We believe all owners should be treated as they would want to be treated and that each owner has the right to express their views and raise issues as when required for resolution. The current regime of spin after spin, or bullying or insults continues to tear this community of owners further apart and will always continue to do so unless we work together for mutual satisfaction. Formal communications need to show the truth and total perspective and not the best angle or best picture of spin. Restortalia and the Committee need to answer direct questions with direct replies rather that their ever continuing sitting on the fence never taking one view or the other. If they are not prepared to be held accountable for their appointed roles and decisions then it is time for them to move on.

Summary: There are fundamental issues within the Community that need to be fully aired and long term action plans raised that involves not just 7 owners within a Committee.

B) Debtors

NB:Described as a hard-liner“ on debts!

• Total debt has now doubled since the 2012 AGM!
• Net collections remain consistent at less than 100,000 per quarter even though debt has doubled!
• 2008 and 2009 debt is still not materially being collected!
• Debt will be over 1 Million euros even due to the PW impact by the time of the 2014 March AGM.

The issue of the ever increasing debtors is very, very concerning and owners need to fully understand that the process is in control to the best and optimum level possible. We keep hearing from fellow owners that some debtors have never been chased which is also worrying. Accordingly, the data has to be drilled down to show the key processes are working and to do this, we would like answers to:

• What percentage of debtors in numbers and value do debtors that are not contactable represent?
• What are the full statistics of how many and the value of debtors for each element that have court papers served, have a court hearing scheduled, have a court decision and are in a court repayment plan?
• How realistically can the Polaris debt be collected when even the recent news of the golf course collapse shows Polaris to be a shell with no asset values?
• What is the bandwidth and proven experience of the Spanish lawyer in collecting community fees through the courts?

It should be noted that six months ago it was clearly stated that even a group of people dressed up as Clowns have a better collection record on the same criteria of debtors. So what is really happening, where is the route causal data behind the debtors, where is the proven collection experience and where is the focus, as promised, by the President.

C) Golf Course

Key publicly available financial information:

Further to my email, where I said, “We were responding to your inaccurate comments that IRM had gone into liquidation. It is a fact that, at the time, they hadn’t.”Whilst this is correct I realise it may have implied that IRM are now in liquidation. They are not. They are claiming Article 5 relief, which is categorically not the same as going into liquidation. It is a Spanish process that allows a cash strapped organisation 4 months to rearrange its finances without creditors forcing their hands.

Regards 

Ron
That will be 624,366,000 euros as at 31 December 2012 or 630,000,000 as at September 2013 of toxic assets - that's a lot of rearranging which is why the Bad Bank was created in the first place.

We all brought into the 5 star golf resort complex concept hence the actual golf course is so important to all of us however the current cost of 1 million euros p.a. is not sustainable under any circumstances. This together with the very low water levels in the lakes shows a very difficult situation exists.

We can only hope that IRM’s property development and Golf Course Empire is broken up in a further fire sale and a new independent golf course owner appears.  If not we need a fall back position…………

D) Workers Compound and Chemicals

The buildings directly affected by the compound were asked in September by certain committee members to prepare a proposal on the way forward. This was finalised by the SCP’s as:

• At last we have confirmation from the HRGR Committee member that this land is only to be used for public utilities (i.e. a public park or public garden, etc). There has never been any permission granted for this area to be used as a workers compound or rubbish dump. Accordingly IRM, STV and the Committee know full well that this land is being used illegally based upon unauthorised permission.
• It is again the committee that is calling the shots by stating if we force the issue the golf course will probably close down however this is very, very likely anyway. especially with the voluntary bankruptcy protection that has now been entered into
• Compromise was always likely to be the way forward and we therefore propose:

Within 45 calendar days from 1^st September 2013:

1. A legally signed agreement is raised between IRM and the Sub Community Presidents directed affected whereby we would allow the continued use of the facility providing the following measures are fulfilled
2. A clear statement needs to be made by the HRGR President concerning the unacceptable personal insults from fellow SCP's and other owners to SCPs directly affected for standing their ground on this and other matters. It is totally unacceptable for this behaviour to take place in the first place let alone to continue.
3. All of the rubbish and rubbish skips are removed from the area and no further rubbish are to take place at this facility. Any breach of this condition will result in the immediate closure of the site
4. No access is to be made to the area by any worker before 7am and none after 9pm
5. A clear verification is made in compliance with the Environmental Impact Study for HRGR
6. An audited list of chemicals used within the resort is performed in order to safeguard especially our children’s health
7. A satisfactory solution and relocation is found for the community gardeners and other community providers
8. A 3.5 meter hedge screen to the compound needs to be erected to prevent viewing from any of our apartments which is located next to the current green plastic screen. Hedge screening at the front is meaningless to those of us most affected, up, and overlooking the compound. A hedge at the rear, in front of the huts\compound is what is required,
9. The front level area of the compound to be planted as natural gardens (ie wild grasses) with irrigation as required for the benefit of all residents
10. All costs of the above to be IRM and STV, (or alternative community gardeners) responsibility

After 2 years from 1^st September 2013

1. The compound to be vacated fully and the area to be planted as further gardens to match.
2. If at any time IRM becomes insolvent or sells the golf course then this will imply the immediate closure of the workers compound..

It should be clearly noted that each Phase is a legal entity and as such each Phase President is clearly accountable for the actions for their phase and the decisions so reached in each Phase President meeting. This appears to be an oversight by some.

The Committee subsequently chose to completely ignore this proposed solution and established the same old framework but this time did not connect directly with the Presidents of the Sub Communities. Not really a way to work together amongst owners! We thank fellow owners for not taking part in this silly PP survey which at the end of the day the PP or the Committee have no rights over the land or bargaining position hence a complete waste of time especially with only 1 no vote when it is clearly known that there is a lot more than that!

We will therefore seek readdress through the necessary court injunctions unless satisfaction is reached through Murcia Council.

Chemicals:

There are major health and safety risks and we for one would not want to be living on HRGR as a full time resident with risks clearly identified from other golf resorts around the world. 

Just looking at one chemical used at our resort, MCPA we are informed that The International Agency for Research on Cancer identifies MCPA as a possible carcinogen. Inhalation of MCPA can cause headache and nausea. Contact with the eyes and skin can cause redness. Symptoms of ingestion include abdominal pain, nausea, vomiting, weakness, and unconsciousness. 

In addition, MCPA is slightly toxic to freshwater fish which could explain certain issues that have arisen lately.

Precautionary Notes

---

Pregnant women should take special care to avoid exposure to MCPA.

 Keep MCPA away from the eyes.

Please see http://toxipedia.org/display/toxipedia/MCPA

In addition:

Source: http://www.golfdigest.com/magazine/2008-05/environment_feldman

Source: http://grounds-mag.com/golf_courses/grounds_maintenance_sick_golf/

Source: http://www.beyondpesticides.org/golf/index.php

Source: http://golfcoursemanagement.randa.org/en/Environmental-Impact/Using-chemicals-responsibly.aspx

Source: http://www.golfersmd.com/GolferMD_Articles/id/126.aspx
From STV:

" I would like to comment that, when fighting plagues, STV Gestión uses products authorized by the Ministry of Agriculture and Environment of the Spanish government. These products are used on specific spots and with the smallest dose possible.

The protective equipment used by the workers who apply these products is not required or necessary for the rest of the people at all; our workers are subject to continuous exposure of vapours coming out of the products, vapours which are only produced when the product is applied, and they disappear when the application is complete; the owners do not need any special protection.

In order to avoid contact with these products, the treated areas are marked to prevent the owners from accidentally entering in contact with these areas and the products used. After a reasonable time, when the continuous irrigation in the area makes the products dissolve, the areas are open to the public again.

We are spraying against the cotton leaf worm (Spodoptera littoralis). It is a very common lawn pest.

We are using against this pest, the insecticides with the components Clorpirifos and Cimpermetrina (Please see attached the security indications were you can find that it has a low toxicity for the animals)."

Photo of chemical store in metal 40 ton container housed within Workers Compound - Sept 2013

From IRM:

"With regards to your e-mail, please find below the list of products we usually use in the golf course and which are usually stored at the workers compound:

·        Bacillus thurigiensis

·        Azospirillum brasilense

·        Pantoea dispersa

·        Bacillus vezelensis

·        Fosetil-Al

·        Flutalonil

·        Fenoxaprop-p-etil

·        MCPA

·        Metil tiofanato

·        Imidacloprid"

Source: http://www.epa.gov/pesticides/about/intheworks/ccd-european-ban.html



Source: http://www.epa.gov/iris/subst/0394.htm

IRM further comments "We also use a number of “fitofortificantes” that comes from a nutritional family; therefore, they do not affect the environment. Generally, we always act with higher security measures that what is said in the security information papers of the products.

Related to the dead fishes and as per the information I have received it is due to the low level of water we work with in the lakes as it is more or less 1 meter lower or 1 meter higher than the step. In this way, when the water is used for the irrigation and the level of the water goes down some fishes get trapped in the step were there is also lots of vegetation, and if there are a few hours without water in that area the fishes die due to the lack of water. When the lake gets to a higher level and is over the step then the dead fishes can be shown floating."

We would not want to be in a position that the Committee has been clearly informed of the risks and yet decided not to do anything especially if  individual health problems were to subsequently arise.

In summary, it is a bit like living next to a nuclear processing plant that is leaking nuclear waste and being told it is not our responsibility and not to worry! Accordingly, the points we were making are;

1. All chemicals need to be adequately supervised to ensure that the correct chemical and mix is always used. There are clear dangerous chemicals on the list that could damage the environment, wildlife and humans if not used correctly. We already have the instance that our sub community hedges were killed off as they were sprayed incorrectly with weed killer. We wonder what else has happened ?

2. There are new born babies within our sub community and one individual with a major health issue who all should of been clearly informed of these risks before now, To just put your head in the sand and say don't bother is just not good enough and really does question the expertise of the committee and the administrator

3. There are clear health and safety risks identified regardless of who owns what and they these need to be addressed ASAP

4. The resort is used by other people than just owners and there needs to be clear communication of the current status AND IDENTIFIED RISKS even before any changes are made

5. STV and Atlantas are under our direct HRGR owners contract and are therefore our responsibility including their usage of chemicals

6. We do not believe there is any sewage drainage in the compound implying that any foul water and waste liquid used for any purpose is going into the ground and thereby draining down the bank to be close to sub communities. If this is the case, then it is also totally unacceptable.

 

Summary: There is now clear evidence that the chemicals used within our gated community are a health risk to visitors, owners and the environment.

E) Contract Costs

NB “Contracts: It goes without saying that all the contractors will be performance monitored

In house services: Thoroughly research the cost effectiveness of taking specific services in house. I would expect to prepare a paper on each service and present options and recommendations to the owners at the appropriate time.  

Resort Administration: I am not a great fan of Resortalia I would expect to be considering options well before the next renewal.  

Gardens: Manicured lawns are high maintenance and cost a fortune to irrigate.  Intent to have a gardens committee to study these proposals and make recommendations for any further action”

We are amazed that committee members continue to state that there have been material cost reductions over the years when the actual costs do not show this to be the case. The only material cost reduction has been in the building cleaning and this was due to a contract that should never have been signed in the first place.

For the other contracts then there are still no performance monitoring, SLAs, in any of the contracts which is disgraceful. Contracts due for re-tender have not been publicly disclosed as clearly required by the procurement policy of the resort.

Feedback

In terms of costs then all brought into services are subject to 20% IVA and third party margins of at least 30% as proved by the financial reports of STV.  We believe that in-house gardening and our employment of qualified security guards can save at least 60% of today’s costs.

Where exactly is "Thoroughly research the cost effectiveness of taking specific services in house. I would expect to prepare a paper on each service and present options and recommendations to the owners at the appropriate time."

These are Nigel's own words that have been long forgotten and yet another balls up with the retenders up at Dec 2013.

We have now spent 1.5 million euros on the gardens over the last 5 years with no material improvement seen in fact; the gardens are a lot worse than we took ownership of our properties.

The problem is the rock hard sub soil implying that irrigation is not getting through to the roots of the trees and plants.

With the loss of the PW cashflow then this is having a material impact on the cashflow of the resort

Summary: Resort costs are NOT falling, cash collection is.

F) Building Defects ownershipThere are 1,864 apartments across the resort which averaged at least 200k euros each back in 2009 representing 372 million euros in total. The resort pools, infrastructure and gardens equate to at least another 15% in value to show 428 million euros for the community of owners value at that time.

Previous Presidents and Committees carried out a building defects analysis wall by wall, floor by floor, SC by SC with 13.7 million being identified which equated then to 3.2% of the resorts value which appears to be in line with past projects and defect claims. This is also in line with a 5% builder’s retention which is common practice across the industry worldwide.

Move on 4 years and the claim value appears by the current committee to be just 1.3 million being 0.3% of the resort value which would imply that really there are no major building defaults to be addressed !!!!!!!!

Make sense to change?

It should also be noted that any building defects payouts need to be ring fenced as capital reserves for the repairs to be carried out to the SC buildings. This cash cannot be used to top-up over runs in normal expenses or to top up the reserves funds that have been spent for normal ongoing resort expenditure. This is made very clear in IFRS accounting regulations and should be crystal clear to the Committee, Resortalia and the Auditors. We hope this will be the case, however time will tell!

Summary

Expensive contracts exceeding local markets conditions, no performance monitoring in contracts, health and safety issues identified, debtors out of control, reserves being used to pay for daily resort expenditure, infighting within the resort with a dog eat dog attitude – not really a situation to shout out about which is why formal resort communications are so poor as there is always more bad news to be disclosed.

Time for change..................

HRGR Owners that care

 

Comments:
I have not seen your website for a while, and have criticised you on various forums, well now your information now seems updated, and giving it a fairly quick glance seems much better presented and explained in a more interesting way, well done its good information and very much food for thought.
Mike