Association: Walley's will stay open

Despite conflict between the Walley's Property Owners Association and Celebrity Resorts, David Walley's Hot Springs Resort & Spa south of Genoa will stay open, according to Gary Grottke, treasurer of the association and president of Quintus Resorts.

"We have a plan for reduced level of service - the resort is going to stay open, but we're going to have to cut back in areas," Grottke said.

In 2008, Quintus sold most of its Walley's real estate and management contract to Florida-based Celebrity Resorts; however, Quintus still retains a little more than 500 time-share weeks, Grottke said.

On Saturday, time-share owners met at the historic resort for a second time to consider a $900-plus special assessment proposed by Celebrity Resorts, which was to be paid on top of annual dues.

Grottke said that special assessment "is dead."

"A motion was not called," he said. "It required an absolute majority, and there was not a majority at the meeting ... We did discuss the concept of a board-approved special assessment no more than 5 percent of dues, which is about $35 per person."

Grottke said they took a poll at the meeting, and about 95 percent of owners present supported the board-initiated special assessment, though no action was taken.

"Once people understood that the previously discussed special assessment was dead, they were generally supportive and understanding that we need some money to sort through financial issues. The board has to meet on that (the new special assessment), and it's anticipated to pass."

Grottke also said the time-share owners voted to remove two Celebrity-appointed directors from the association board, Jared Meyers and Craig Lewis.

"You need two-thirds of owners' votes to remove a director, and it was well over 90 percent," Grottke said.

Furthermore, Grottke said the association filed action Friday in Douglas County District Court to appoint Quintus as receiver of the association's assets and accounting records.

"It allows us to oversee what happens at the resort and to protect the assets of the association until other financial issues are resolved," Grottke said. "Quintus is acting as trustee for the association."

Grottke said there have been some "rather significant financial issues that the board has not been happy with."

According to court documents, the association is demanding an accounting from Celebrity Resorts. Association representatives claim that in the fall of 2009, the company billed the association $4.5 million. On Feb. 20, they claim, the company said it collected $2.5 million, but there was only $170,000 left in the association's account with the reserves depleted.

In court documents, association representatives said they believe that up to $1 million is missing from the association's operating accounts. Furthermore, they claim Celebrity took $800,000 as part of their facilities use agreement, for spa, pool and other amenity upkeep.

"There is no dispute with the contract; they do have a contractual claim to that money," Grottke said. "But, as a manager, they have an obligation to manage funds in a prudent way. The question is if it was appropriate to take that fee if it literally empties the association's bank account. It should have been taken to the board.

Grottke said a hearing on the case is scheduled for March 11.

Minden resident Karen Davis, part-owner of a Walley's time-share since 2007, is optimistic about the actions taken by the association.

"The three remaining board members seem committed to controlling expenses, retaining the time-share employees and keeping the facilities open," Davis said in an e-mail. "Hopefully their efforts will effectuate the changes necessary to support the association and our community."

Davis said the resort's viability affects not only its 6,600 time-share owners but also "the local businesses that will be affected by 15,000 lost visitors to the Valley if the time-share facilities are closed in March."

"This is not an issue confined to the time-share owners, but to owners of local casinos, golf courses, restaurants, movie theaters and other businesses who rely on the influx of visitors to the area to support their businesses," she said.