With Power Comes Responsibility

BAW4.2Let’s acknowledge this: public service is often difficult, thankless work.   And from what we can tell, like many resort towns, Whistler has its share of disputes.  So we can appreciate as a general matter that City officials might not want to wade into controversy.

But amidst this impulse to avoid making decisions, something very important is being lost.

As regular readers of this blog now know, owners at Nita Lake Lodge have had their property used by a rental manager for over a year without payment.  When the owners refused to continue to work with this manager because of his practices, they were then locked out of their own property.  The manager never once provided audited financials.  Then, to ensure that owners would not be able to control use of their own property, he secretly ripped owners’ locks off their rooms and now refuses to permit access.   Through it all, he styles himself as “saving the hotel” – although when asked to open up competitive bidding to other managers who might have stronger balance sheets, established brands, global marketing resources and expertise to bring to the project, he wouldn’t agree to  be bound by an independent decision on that.

How does the manager justify this?  He says the Whistler Phase 2 covenant requires a single manager.  He says that as majority owner only he will decide who should manage everyone else’s property.  Shocker: he’s choosing himself, and then insisting that under the covenant everyone has to work with him regardless of his conduct.

Some, hearing of this, are just left scratching their heads at how the RMOW would let its rules be used in this way.  Others feel something must be missing from the story – how else can you explain this?http://www.dreamstime.com/royalty-free-stock-photography-responsibility-accountability-level-measuring-reputation-duty-guage-speedometer-your-increasing-improving-image32839397

We’ve received some good comments and questions from the Whistler community.  They generally are of two forms:

(1) How can this be?  How can someone get away with this?  You must be able to get the Courts to stop this.

(2) While you might be in a difficult situation, the City of Whistler will never remove a covenant.

To the first question, all we can say is that in our dealings to date with the manager in BC Courts, the manager has quite aggressively and quite skillfully relied upon Whistler’s covenant.  And yes, you’ve been reading this right: the manager has locked owners out of their property since September.

This, of course, makes the second question about the Whistler covenant all important.  While expressing a lot of concern and sympathy for this situation, people have also told us that the RMOW will not want to get rid of covenants.

Perhaps.  And this is where the facts about this situation and about Whistler’s covenant are important to examine closely.  We are not asking the RMOW to remove a covenant.  We are asking them to apply the explicit discretion they already have under the existing covenant.

That’s worth repeating.  No one is asking to change, remove, or alter covenants.  Covenants are an important part of how Whistler real estate works, and they’re something the buyer signs up for when buying.  In this project, the covenant itself permits the RMOW to release units from the requirement of a single manager, temporarily or for as long as the RMOW wants, for any reason, at any time.   Under this language, the RMOW could easily say, hey owners, you must still make these units available to guests at required levels of upkeep and guest service, but we understand – you don’t need to get bullied by a professional investor in order to comply with our rules .   Or how about saying that it’s fine not to have to work with this manager until an independent manager is selected?  Just make sure you follow all the other rules around usage.

Here’s the language in Section 6 of the RMOW covenant:

[Whistler] may by resolution of its council, upon request in writing, consent to release any Unit….from any or all of the restrictions set out in Section 2 and Section 4 either fully or for stipulated periods of time.

Now, here’s a simple question we’ve never had answered.

Why would that language be there, unless the RMOW understood when it wrote the covenant that sometime it might want or need the flexibility to authorize exceptions to a single manager?   As many in Whistler know already, the single manager rule is routinely not followed anyway.

Perhaps it’s helpful to think about it this way.  Let’s ask the RMOW what that language in the covenant is for.  Given that the RMOW gave itself the right to release units from its covenant under circumstances it deems reasonable, what it would take for this provision ever to be triggered?

Let’s say a manager at the Pan Pacific doesn’t pay owners for a year.  They protest and tell him he can’t keep using their rooms unless he pays for the use of other peoples’ property.  He comes into owners’ rooms one night, strips the rooms of linens so no one can stay there and and then locks the owners out unless they agree to accept him, despite some serious reservations about his conduct.

Let’s say the manager not only doesn’t dispute that he did these things – let’s say he claims the covenant protects his right to continue to force people to do business with him.  Would the RMOW say that the owners have to still work with the manager?

Our experience seems to suggest that they probably would.  Not because they agree with this type of conduct but more through lack of any active oversight or administration of their own covenant. Remember, it is their rule.

This brings us back to the title of this post.

Because the RMOW’s own rule is the weapon the manager uses at this project to bully people, the RMOW is already involved.  Thankless job or not, government wields a lot of power, even if it doesn’t want to.  And because the RMOW won’t take a stand under its own rules, Whistler’s Phase 2 market is being impacted in ways that may ripple across the globe.

A few people who wrote us recently were initially angry at us for saying things like that, and possibly tarnishing Whistler’s reputation.  We can say after speaking with them, we appreciate the level of understanding and thoughtfulness most have shared once they understood the facts.

At first blush, you can blame us for publicizing the RMOW’s inaction and  you can get blame us for “making” Whistler look bad, or you could look at it differently.

If you’re a potential investor looking at any of Whistler’s 5000 Phase 2 units, or even someone in the region who just wants to be proud of how the RMOW operates, maybe it’s time to get Phase 2 to work the way it was intended to.  Whistler is an amazing place and a lot of people we’ve spoken to expect more of its government.

You’d like to think that government officials understand that with the power they exercise comes some responsibility.

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