2015 Proposed MF's and Budgets [15% MF Increase!]

[JIMinNC]

How many Weeks at HOA controlled Resorts do you own? I peaked out at 7. At every one the MFs were much lower but in every case the Resort was well managed and well maintained.

Valid point...I have no direct experience with HOA controlled resorts. I should have said my perception is that HOA control often results in pressure to cut corners to keep MFs low. I can't cite specific cases, but I do know I have read comments here on TUG over the years to that effect. That obviously may not be true in all cases.

I also know that in residential neighborhoods like the one I live in - when the builder was actively selling new houses and controlled the HOA, there was never any question that the common areas, clubhouse, etc. would be maintained in tip-top shape. Once the neighborhood was built out and the HOA became 100% controlled by the homeowners, we've managed to keep things maintained well, but there is always pressure from those owners for whom low costs are more important than quality to cut corners to keep HOA dues increases low.

I guess the other thing that biases my perception is my preference for "branded" resorts where the name on the sign - Marriott, Hilton, Westin, etc. - provides some level of assurance that quality and amenities will be kept above a certain level to maintain that brand's reputation. I just wonder if owner control offers an equally strong incentive to keep quality up.

 

[suzannesimon]

I don't think Marriott, HGVC etc would have had a special assessment for a hurricane. There is major insurance policies in place to cover hurricanes. I've never had a special assessment of any kind from any of the brand-names, though the maintenance fees are higher. So far that hasn't been a problem because they are easier to rent and more than cover the fees if I'm not using them.

 

[SueDonJ]

Generally, the branded resorts cover a much larger footprint than the non-branded so it stands to reason that the costs to repair/rebuild following a catastrophic natural disaster would be higher - in most cases, substantially higher - for a branded resort. As well, the deductibles for specialty insurance to cover such occurrences are exponentially higher.

For those reasons I think a Special Assessment following any natural disaster is possible with any of the branded resorts. I'd prefer it, actually, because the alternative means that a very large amount would have to be parked in the Reserves account to cover something that may never happen. I'd be okay with a reasonable percentage of the specialty insurance deductibles sitting in the Reserves, to provide a jump-start immediately following a disaster, but not the entire amount.

 

[dougp26364]

I don't think Marriott, HGVC etc would have had a special assessment for a hurricane. There is major insurance policies in place to cover hurricanes. I've never had a special assessment of any kind from any of the brand-names, though the maintenance fees are higher. So far that hasn't been a problem because they are easier to rent and more than cover the fees if I'm not using them.

Ocean Pointe & HGVC Flamingo have had SA's

 

[jjluhman]

We had a special assessment due to hurricane damage at Marriott's Ocean Pointe in 2005.

 

[bogey21]

My experience with bringing a Resort back after hurricane damage without Special Assessments is limited to Peregrine and Chateau LeGrand. In both cases the reason the job got done without a Special Assessment is that the Managers running the Resorts under the direction of the HOA were local people and used local contractors to do the work. In additon by being local they knew how to get things through City Hall.

George

 

[Ralph Sir Edward]

Here are the Royal Palm's proposed hikes.

Blue from 1,119.25 to 1,250,27 - 11.7%
White from 1,146.86 to 1,282.68 - 11.8%
Red from 1,163.08 to 1,300.68 - 11.8%

 

[ilene13]

Is that a Marriott?

 

[Seaport104]

Is that a Marriott?

Yes, in Orlando. Any news on the Aruba Maintenance Fees?

 

[dioxide45]

Here are the Royal Palm's proposed hikes.

Blue from 1,119.25 to 1,250,27 - 11.7%
White from 1,146.86 to 1,282.68 - 11.8%
Red from 1,163.08 to 1,300.68 - 11.8%

I think these proposed hikes are because they are now reporting the proposed replacement reserve based on the fully funded reserves. If the waiver for fully funding the reserves passes, then your fees won't be quite as high.

 

[SueDonJ]

I think these proposed hikes are because they are now reporting the proposed replacement reserve based on the fully funded reserves. If the waiver for fully funding the reserves passes, then your fees won't be quite as high.

I agree, it's probably something that'll be seen with all of the Florida resorts. It's vaguely interesting to think of why this year they're doing something different as far as the way they're reporting Reserves in the proposed budgets. I wonder if the same would be happening with the South Carolina resorts IF proposed budgets were released for those.

 

[Superchief]

I think these proposed hikes are because they are now reporting the proposed replacement reserve based on the fully funded reserves. If the waiver for fully funding the reserves passes, then your fees won't be quite as high.

Part of the increase at Royal Palms is an 18% increase in Management fees. I don't understand how this can happen because I thought the Management fees were 10% of total, so how could they increase more than the MF in total?

Both RP and Mountainside are proposing excessive increases, and these are the only two of my MVC proposed increase I have received.

 

[dioxide45]

Part of the increase at Royal Palms is an 18% increase in Management fees. I don't understand how this can happen because I thought the Management fees were 10% of total, so how could they increase more than the MF in total?

Both RP and Mountainside are proposing excessive increases, and these are the only two of my MVC proposed increase I have received.

The management fee should always go up in step with the overall fee because it is tied to that overall fee. With the Harbour Lake proposed budget, the overall fee is up 16.5%, and so is the management fee. The management fee is still only 10% of the overall fee.

 

[EducatedConsumer]

Marriott Worldwide Vacations INSANITY

In my opinion, Marriott has really reached the point of insanity.

An approximately 16% increase in the proposed maintenance fee at Summit Watch in Park City for 2015. 16%!

I don't doubt there are costs (perhaps, higher costs) to operate a resort of the quality of a Marriott, but I'd be especially curious to know what "economies of scale" or "purchasing power" that Marriott brings to the table for its timeshare owners, in the operation of MVC resorts? I'd expect that a company the size of Marriott Vacations Worldwide, purchasing en masse, as they do, would have significant purchasing power. But, a 16% increase? I understand that labor costs, energy costs, etc. have gone up, but my God, a 16% increase from 2014 to 2015 (and 2015 had included several "expense recovery" line items (e.g. defaulted retail landlord)). I wonder if Marriott Hotel rates in the same markets as Marriott Vacation Club resorts have incurred a similar increase in operating costs, and if the nightly guest rates at those hotels reflect that increase from last year to this one?

I also wonder if the Marriott Vacation Club HOA Board Chair or Board members (from one MVC resort to another) communicate with one another about the special interests of the timeshare owners, and strategies by MVC that might not be in the best interest of Marriott timeshare owners.

 

[Ralph Sir Edward]

The management fee should always go up in step with the overall fee because it is tied to that overall fee. With the Harbour Lake proposed budget, the overall fee is up 16.5%, and so is the management fee. The management fee is still only 10% of the overall fee.

dioxide45, 81% of the red week maintenence fees increase consists of the following three items:

reserve fee - up $81,14 (24.4%)
management fee - up $15.82 (18.4%)
property taxes* - up $15.15 (15.0%)

Total - up $112.47 (out of $137.60, or 81.1618% of the total)

* property taxe fee amount varied by week class, all (Red, White and Blue) went up the same percent

 

[dioxide45]

It doesn't look like this is limited to just Crystal Shores. Got the proposed budget for Harbour Lake and our gold week will be close to $1300 in 2015 if the proposed budget holds up.

A 50% increase in the operating reserve, up $123 from $247 to a total of $370. I wonder what is up with the reserve fees in Florida?

It definitely isn't as bad as initially thought. Harbour Lake is only up 7.05% overall this year. The proposed budgets are coming out with the full reserve fee based on the fully funded waiver not passing. So if it passes, these increases should be lower. Still, 7.05% is too high of an increase.

Proposed Reserve Fee: $370.66
Actual Reserve Fee: $247.50

 

[Superchief]

I am beginning to believe that weeks owners are absorbing more than their fair share of the increased costs due to the DC program. MVC wins both ways. If owners get fed up, MVC can buy back the week at low cost and have it in the trust to sell at the exhorbitant DC point prices.

They also benefit from the MF fee increase because they get 10% of the higher amount. Now I can understand why there are so many lawsuits.

 

[Superchief]

Ocean Pointe Explains MF Impact of Reserves

I just received the proposed MF budget for Ocean Pointe. This is the first communication that I have received that clearly explains the potential huge increases if the Reserves need to be fully funded. Here is a helpful paragraph:

'In prior years, the proposed budget document included a recommended Reserve Fee which assumed a majority vote by the membership to waive fully funding. The State of Florida requires the Association to submit a proposed budget to you with a Reserve Fee amount that represents the fully funded amount. Therefore, the Reserve Fee included on this proposed budget is $599.65, but this is significantly higher than the range recommended by the Board of Directors, of $293.00 to $350.00. I encourage you to review the Annual Meeting notification that was sent to you in September, and vote on this important issue. If a majority vote from the membership does not waive fully funding the Reserve Fund, the Reserve Fee shown on the enclosed
budget of $599.65 will have to be collected. This higher Reserve Fee would also result in a higher Credit Card Fee and a higher Management Fee, as both of these expense items are calculated as a percentage of the total
fee. It is the recommendation of the Board of Directors that you vote to waive this requirement, which will result in a lower Reserve Fee, and a lower Operating Fee!"

It appears that a majority vote is needed to waive the fully funded requirement. This will be very difficult since many owners never vote. I don't think the importance of voting was explained very clearly in corresponces from my other timeshares. However, MVC actually benefits from a significant increase in Fees because they receive 10% of the total. Make sure you vote!

 

[SueDonJ]

I just received the proposed MF budget for Ocean Pointe. This is the first communication that I have received that clearly explains the potential huge increases if the Reserves need to be fully funded. Here is a helpful paragraph:

'In prior years, the proposed budget document included a recommended Reserve Fee which assumed a majority vote by the membership to waive fully funding. The State of Florida requires the Association to submit a proposed budget to you with a Reserve Fee amount that represents the fully funded amount. Therefore, the Reserve Fee included on this proposed budget is $599.65, but this is significantly higher than the range recommended by the Board of Directors, of $293.00 to $350.00. I encourage you to review the Annual Meeting notification that was sent to you in September, and vote on this important issue. If a majority vote from the membership does not waive fully funding the Reserve Fund, the Reserve Fee shown on the enclosed
budget of $599.65 will have to be collected. This higher Reserve Fee would also result in a higher Credit Card Fee and a higher Management Fee, as both of these expense items are calculated as a percentage of the total
fee. It is the recommendation of the Board of Directors that you vote to waive this requirement, which will result in a lower Reserve Fee, and a lower Operating Fee!"

It appears that a majority vote is needed to waive the fully funded requirement. This will be very difficult since many owners never vote. I don't think the importance of voting was explained very clearly in corresponces from my other timeshares. However, MVC actually benefits from a significant increase in Fees because they receive 10% of the total. Make sure you vote!

I'm glad to finally see an explanation from a resort board that clearly outlines the issue as far as how/why it's proposed differently from past years, and puts the proper emphasis on how valuable the owners' votes can be. It's also nice to see the too-often, "Marriott is bad, Marriott is increasing MF's just to get higher profit from the Management Fee, Marriott won't tell us what's happening etc etc etc" mantra de-bunked. Obviously the BOD wants the votes to support the waiver, and if they're taking their cues from Marriott (which is what's always alleged to happen) then Marriott must not want fully-funded reserves either.

I bolded your most important point - GET OUT AND VOTE! It's never a bad thing.

 

[dioxide45]

I just received the proposed MF budget for Ocean Pointe. This is the first communication that I have received that clearly explains the potential huge increases if the Reserves need to be fully funded. Here is a helpful paragraph:

'In prior years, the proposed budget document included a recommended Reserve Fee which assumed a majority vote by the membership to waive fully funding. The State of Florida requires the Association to submit a proposed budget to you with a Reserve Fee amount that represents the fully funded amount. Therefore, the Reserve Fee included on this proposed budget is $599.65, but this is significantly higher than the range recommended by the Board of Directors, of $293.00 to $350.00. I encourage you to review the Annual Meeting notification that was sent to you in September, and vote on this important issue. If a majority vote from the membership does not waive fully funding the Reserve Fund, the Reserve Fee shown on the enclosed
budget of $599.65 will have to be collected. This higher Reserve Fee would also result in a higher Credit Card Fee and a higher Management Fee, as both of these expense items are calculated as a percentage of the total
fee. It is the recommendation of the Board of Directors that you vote to waive this requirement, which will result in a lower Reserve Fee, and a lower Operating Fee!"

It appears that a majority vote is needed to waive the fully funded requirement. This will be very difficult since many owners never vote. I don't think the importance of voting was explained very clearly in corresponces from my other timeshares. However, MVC actually benefits from a significant increase in Fees because they receive 10% of the total. Make sure you vote!

I think the majority only needs to come from those that actually vote, given that a quorum is met. Also, at Oceana Palms I would suspect that a quorum is always met and given that Marriott holds over 50% (or close to it) of the inventory in the trust. I would also suspect what Marriott says goes.

 

[suenmike32]

I'm glad to finally see an explanation from a resort board that clearly outlines the issue as far as how/why it's proposed differently from past years, and puts the proper emphasis on how valuable the owners' votes can be.

Actually, the explanation that outlines the issue came in a letter, (as well as the proposed budget), from the manager of Ocean Pointe.
The letter is very informative as to what may, or may not happen, if the "fully funded reserve amount" is not waived.

OP"s BOD's has recommended that the FFR is waived weeks prior to this letter. If it is not waived, the "proposed" MF's are going to increase substantially.

 

[Superchief]

I think the majority only needs to come from those that actually vote, given that a quorum is met. Also, at Oceana Palms I would suspect that a quorum is always met and given that Marriott holds over 50% (or close to it) of the inventory in the trust. I would also suspect what Marriott says goes.

Wouldn't MVC profits benefit from being able to collect management fees on a hgher amount? Therefore, wouldn't they want higher reserve requirements? I am concerned that trust controlled resorts will be more likely to have the higher reserve fee requirements and therefore higher increases. This could also be true for trust points.

 

[SueDonJ]

Wouldn't MVC profits benefit from being able to collect management fees on a hgher amount? Therefore, wouldn't they want higher reserve requirements? I am concerned that trust controlled resorts will be more likely to have the higher reserve fee requirements and therefore higher increases. This could also be true for trust points.

Remember, MVW is also responsible for the Weeks MF's of any weeks that have been conveyed to the Trust and are not correlated to sold DC Trust Points; the Trustee is essentially the owner of those Weeks. Doesn't make much sense for MVW either to support fully-funded reserves, especially at the newer resorts which have a high percentage of Weeks conveyed.

 

[dioxide45]

Wouldn't MVC profits benefit from being able to collect management fees on a hgher amount? Therefore, wouldn't they want higher reserve requirements? I am concerned that trust controlled resorts will be more likely to have the higher reserve fee requirements and therefore higher increases. This could also be true for trust points.

That would make sense but it would also push up trust point MFs making them less competitive. Plus, MVCI has to pay the MFs on any unsold trust points, so it would also cut in to their profit margin on the inventory they rent out.

 

[SueDonJ]

Actually, the explanation that outlines the issue came in a letter, (as well as the proposed budget), from the manager of Ocean Pointe.
The letter is very informative as to what may, or may not happen, if the "fully funded reserve amount" is not waived.

OP"s BOD's has recommended that the FFR is waived weeks prior to this letter. If it is not waived, the "proposed" MF's are going to increase substantially.

You're right, it's important to note that the letter came from the resort manager. I assumed - but of course could be wrong - that it was sent on behalf of or at the request of the resort BOD. That's how SurfWatch's budget report is usually sent out.