Attending Grande Vista 2018 Budget Meeting - Questions?

[dioxide45]

The 2018 Budget Meeting for Marriott's Grande Vista is Monday October 22nd and I plan to attend while we are in Orlando staying at Vistana Villages. There will be a whopping 20 minutes allotted for open discussion with owners. Does anyone have any specific questions they want me to ask while I am there?

 

[KarenP]

I don't have any questions, but thank you for going! Let us know what you learn.

 

[frank808]

Can't believe the reserve fee went up so much. That is the primary reason the mf for 2019 went up over $200. Now what used to be a bargain at grand vista is over $1400 for a week now. I figure with as many high rise structures and units,that the mf would not be so high.

In contrast willowridge went up about $25.

Sent from my SM-N950U using Tapatalk

 

[dioxide45]

The Reserve Fee is showing so high because when they send out the estimated budget they have to disclose the reserve as if the waiving of fully funding reserves does not pass. When/if that passes at the annual meeting, they adjust the reserve amount accordingly. It is a Florida thing and seems to happen every year.

 

[amanda14]

Thanks for going and I know you will be reporting back with helpful vignettes.

 

[dioxide45]

Here are my notes from the 2018 Board of Directors/Budget Meeting

Delinquencies

• In 2018 a total of 66,310,000 total was billed.
• 2.25% delinquency rate vs 2.5% at same time in 2017
• 1545 owners delinquent. This is higher than 2017 due to mainly small balances such as the $25 late fee. They don't actively attempt to collect these balances and just bill them with the next annual fee.
• Currently $2.456M in receivables outstanding.
• 0.5% is the lowest delinquency rate in the Florida/Caribbean region and 9% is the highest.
• Past year, 38 MORI reacquisitions, 100 COA reacquisitions, 7289 lifetime reacquisitions.
  

Trust Ownership of Grande Vista

• At year end 2017, 17.5% of the resort was owned by the trust.
• 15%-25% is the average for all Marriott resorts.

Housekeeping

• Line item is forecasted to be higher for 2019 because occupancy is also forecasted to be higher since there are no soft or case good refurbishments scheduled for 2019 or 2020. This means occupancy will be higher causing the need for more cleans.
• Disney was involved in new collective bargaining agreement which resulted in their plan to increase minimum wage to $15 per hour by 2021. This will put considerable strain on other Orlando properties. Current pay rate is in the mid $10 per hour. Grande Vista doesn't plan to try to match Disney but is having to increase pay to keep pace and retain and attract staff. If they were to keep pace with Disney, it would cost the HOA an additional $570,000 for the year.

Elevator Replacements

• Elevator replacement in 2019, buildings 96 through 100 (April - Oct 2019). They keep the first three floors open and close remaining floors.

Tiling of Exterior Building Floors

• Additional tile test in building 81, ground floor and stairs. All 24 buildings to have tiles installed on ground floor and stairs by end of 2019. Will continue with other floors over a several year time period.

Displacement Cost

• This was a very long discussion and basically a new cost that owners at Grande Vista will have to start to pay.
• Currently MGV HOA does not pay MVCI a displacement cost for units under renovation.
• Has been in place at other resorts for years.
• MGV was sold with 51.5 weeks for each unit. Making 3.5 days available for maintenance.
• For case goods refurbishment, they allow for 15 days. MVC allots 11.5 days from their own inventory to complete renovation.
• For soft goods refurbishment, they allow 10 days. MVC allots 6.5 days from their own inventory to complete renovation.
• If occupancy is forecasted to be below 85% during renovation time period, they they do not consider displacement cost calculation.
• If renovations are expected to take longer than the 15/10 days and occupancy is forecasted to be higher than 85%, then the HOA will now be required to reimburse MVCI for the displacement cost of the additional inventory that MVCI is giving up to facilitate the renovations.
• Cost of that inventory is based on revenue minus hard costs (about 24%, reservation fees, MR fees)
• It is not known if the HOA has to also pay the 10% management fee against this new displacement cost.

Other Items

• Owner occupancy year to date is 1% higher than budgeted.
• Golf Operation always ends year in a net loss. Owners currently subsidize golf operation to the tune of over $800,000
• Tax settlement was reached with Orange County assessor. Deposit of funds occurred in September 2018.
• They are looking to add "Towel Tracker". This is a new automated machine where you can get your towels and return them. It tracks towels out to each villa and can allow for chargeback if all towels are not returned. Currently in place at all the Palms properties. Assists with return of towels and less need for people to pick them up. Each machine costs about $30,000.
• Chase Reward credit card now provides a rebate when an owner pays their MF on that card. This is new due to a new agreement between Marriott and Chase for this card. Previously, HOA had to pay a merchant processing fee. This has caused credit card fee line item to go down.
• Media wall scheduled to be built. This is the large screen by the pool like they have at Shadow Ridge.

 

[dioxide45]

I also want to add that I was very disappointed by the "Open Budget Discussion with Owners" segment. On the agenda it was schedule to last 20 minutes. It was 10 minutes at best, started 5 minutes late and ended 5 minutes early. It was very rushed and they seemed like they just wanted to get past it. No one was really asking tough questions, but one owner was upset about increasing MFs. The owner wasn't really well informed about how everything worked and the board wasn't really able to answer the question very well. He was trying to find out who paid the difference in MFs between what a getaway cost on II and what the actual MF was. I ended up having to answer the question because they weren't articulating the response very well to where the owner understood it.

I did ask about the increasing activities fee item. They are 100% concerned about satisfaction scores and this is why they continue to increase the activities fees. One other owner did speak up and say that Grande Vistana and Marriott have GREAT activities. About how they offered free mimosas that morning. We of course pay for those activities rather than on a pay per use type system. The owner did of course say he doesn't golf, so they could get rid of that any time.

 

[amycurl]

I can't believe they subsidize golf to the tune of $800K a year. Yeah, no way I am ever buying into that resort.

 

[Swice]

Interesting Dioxide. Thank you for the effort.

 

[StevenTing]

I wish we had a report like this for all properties. Maybe even a webcast or recording of some type.

 

[dioxide45]

I can't believe they subsidize golf to the tune of $800K a year. Yeah, no way I am ever buying into that resort.

It really only works out to $18 a year for each owned week. They seemed to justify it in the meeting by saying that they provide the owners with a golf discount. While I don't have the budget for Shadow Ridge, I suspect they are paying a similar premium to prop up the golf operation.

 

[dioxide45]

I wish we had a report like this for all properties. Maybe even a webcast or recording of some type.

There was a secretary taking meeting minutes. I suspect you could contact the BOD and ask them from the meeting minutes from any other board meeting where you are an owner.

 

[bazzap]

There was a secretary taking meeting minutes. I suspect you could contact the BOD and ask them from the meeting minutes from any other board meeting where you are an owner.

The Board meeting minutes should be published on the Owner website under your account sign in for all your home resorts. They are for mine anyway.

 

[dioxide45]

The Board meeting minutes should be published on the Owner website under your account sign in for all your home resorts. They are for mine anyway.

Perhaps, but it may take a long time for them to get there. The most recent stuff I see for Grande Vista is from the fall of 2017.

 

[bazzap]

Perhaps, but it may take a long time for them to get there. The most recent stuff I see for Grande Vista is from the fall of 2017.

You are right, they used to go on earlier, but MVC then wanted the minutes to be approved before publishing on the owner website which meant after the next meeting.
In one of our resorts they are published first on an Owner blog run by the Board, identified as subject to approval, but typically available within a couple of months at most.
In other of our resorts, the mid Year 2018 meeting minutes have already been published.
So it does vary a lot.

 

[RLS50]

I wish we had a report like this for all properties. Maybe even a webcast or recording of some type.

Barrier Island Station - Duck, a resort managed by SPM Resorts, did their annual owners meeting via Facebook Live last year and will be doing it this year. They also left the recording up online for some weeks after for any who wanted to watch it. It was great to be able to watch from home vs an 8hr drive.

I seriously wish the bigger managers like Marriott, Diamond, etc would do something similar for owners. There really is no reason they can't. The technology is available and the costs are minimal. It doesn't have to even be an elaborate presentation since something like Facebook Live would suffice. But unfortunately from a technology perspective most Annual meetings are still run like it's 1985.

 

[dioxide45]

I seriously wish the bigger managers like Marriott, Diamond, etc would do something similar for owners. There really is no reason they can't. The technology is available and the costs are minimal. It doesn't have to even be an elaborate presentation since something like Facebook Live would suffice. But unfortunately from a technology perspective most Annual meetings are still run like it's 1985.

It seems that the big resort managers want as little transparency as possible. They don't seem to want the owners actually involved. The more they are involved the more they want to ask questions. The BOD certainly didn't seem eager to answer questions at the meeting I attended.

Another thing about the meetings being in the 80s. The following is noted in the meeting minutes for regular meetings throughout the year;

"...stated that the notice of the Board Meeting was provided to all board members via email on [date] and posted onsite in a prominent location at the resort as required by the Association's Bylaws and Florida Statutes."

 

[pedro47]

When did proxy voting start?

 

[RLS50]

It seems that the big resort managers want as little transparency as possible. They don't seem to want the owners actually involved. The more they are involved the more they want to ask questions. The BOD certainly didn't seem eager to answer questions at the meeting I attended.

Another thing about the meetings being in the 80s. The following is noted in the meeting minutes for regular meetings throughout the year;

"...stated that the notice of the Board Meeting was provided to all board members via email on [date] and posted onsite in a prominent location at the resort as required by the Association's Bylaws and Florida Statutes."

Unfortunately I personally believe that’s exactly the reason...they don’t want to provide real transparency.

I suspect that they believe a more educated and informed owner base will be less susceptible to tactics used by their sales forces to push perpetual upgrades and modifications.