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2025 Proposed Abound Trust Points MF's [Discussion Thread]

Fasttr

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Based on the WAIVED fully funding budget (which has been the approved one in prior years), the Abound Trust Points MF's budget shows a 3.5% uptick for 2025.

$203.70 per BI or 81.48 cents per point. up from 78.748 cents per point in 2024.

Here is the WAIVED fully funding budget.... https://image.email1.marriott-vacat.../m/1/923f5089-976c-4c37-b54a-3845d90a68a6.pdf

The fully funded budget would be an 8.8% uptick.

The 2025 Club Dues are budgeted to be $250 O&S, $290 E&P and $305 CC vs $240, $280 and $295 for 2024.
 
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With the Florida Laws, do you think they will continue with waived? I haven’t been following as closely but I have seen the article about FL real estate in general.
My gut tells me as long as its legal to have a waiver vote, folks will continue to waive.
 

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Funny
3.5% increase does not seem unreasonable to me but 81.48 cents per point seems terribly high
That's because we all got bent over last year, in addition to a lot of poor MF/point inventory in the Trust. :(
 

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With the Florida Laws, do you think they will continue with waived? I haven’t been following as closely but I have seen the article about FL real estate in general.
My understanding – and I'm not a lawyer, this is just based on what I've read – is that this is the last year that Florida law will allow waiver of fully-funded reserves. So I think we should expect at least an 8% increase next year if owners elect to waive full funding this year, and possibly more (I'm assuming that this year's 3.5% increase is about the lowest we are ever likely to see.)
 

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My understanding – and I'm not a lawyer, this is just based on what I've read – is that this is the last year that Florida law will allow waiver of fully-funded reserves. So I think we should expect at least an 8% increase next year if owners elect to waive full funding this year, and possibly more (I'm assuming that this year's 3.5% increase is about the lowest we are ever likely to see.)
Based on a letter we got from our HGVC ownership in Florida, it sounds like the change is that, going forward, it will take a majority vote of “all owners” to waive full funding rather than a majority of “all votes cast”. This could be problematic for timeshares where many owners don’t vote.
 

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Based on a letter we got from our HGVC ownership in Florida, it sounds like the change is that, going forward, it will take a majority vote of “all owners” to waive full funding rather than a majority of “all votes cast”. This could be problematic for timeshares where many owners don’t vote.
Ah, that's great info, thanks for the correction. Yes, getting a majority of all owners may be tough, although I suppose that MVC might vote all of their trust ownerships in favor of waiving full funding.

I am an advocate for fully funding the reserves so I won't be unhappy to start paying a little more for full funding, I guess.
 

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Ah, that's great info, thanks for the correction. Yes, getting a majority of all owners may be tough, although I suppose that MVC might vote all of their trust ownerships in favor of waiving full funding.

I am an advocate for fully funding the reserves so I won't be unhappy to start paying a little more for full funding, I guess.
This may not be a correct impression, but my impression has always been that both HGVC and MVC felt the statutory reserve requirements in Florida were excessive and unnecessary based on the feedback they get from the reserve studies they have consultants conduct. As a result, they always recommend waiving the statutory funding levels and only funding to the levels recommended in the independent reserve studies.
 

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Based on a letter we got from our HGVC ownership in Florida, it sounds like the change is that, going forward, it will take a majority vote of “all owners” to waive full funding rather than a majority of “all votes cast”. This could be problematic for timeshares where many owners don’t vote.
There is actually another part of the law that impacts the reserve waiver, not just the voting issue. I did some research a while ago, and I found this wording. Sorry, I can't find the original source, it was most likely a law firm publication for its Florida clients discussing the impact of section 721.07.

"After December 31, 2024, Condominiums with buildings of three (3) stories or higher will no longer be able to waive or reduce certain types of structural integrity reserves (SIRS) as enumerated under the new law. However, what is often overlooked is the fact that there are other changes to Chapter 718 ("Condominium Act") which affect all Condominium Associations, regardless of the height of the building. Specifically, under the new law which is currently effective, any Condominium Association which wishes to waive reserves that remain waivable (i.e., Condominiums under three (3) stories or for those Condominiums that are three (3) stories or higher, non-SIRS reserves), such reserves may now only be waived or reduced by a majority vote of the total voting interests of the Condominium. This is a major change from the previous statute which only required a majority of those in attendance in person or by proxy at a duly called meeting to waive reserves, as long as a quorum was established."
 

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There is actually another part of the law that impacts the reserve waiver, not just the voting issue. I did some research a while ago, and I found this wording. Sorry, I can't find the original source, it was most likely a law firm publication for its Florida clients discussing the impact of section 721.07.

"After December 31, 2024, Condominiums with buildings of three (3) stories or higher will no longer be able to waive or reduce certain types of structural integrity reserves (SIRS) as enumerated under the new law. However, what is often overlooked is the fact that there are other changes to Chapter 718 ("Condominium Act") which affect all Condominium Associations, regardless of the height of the building. Specifically, under the new law which is currently effective, any Condominium Association which wishes to waive reserves that remain waivable (i.e., Condominiums under three (3) stories or for those Condominiums that are three (3) stories or higher, non-SIRS reserves), such reserves may now only be waived or reduced by a majority vote of the total voting interests of the Condominium. This is a major change from the previous statute which only required a majority of those in attendance in person or by proxy at a duly called meeting to waive reserves, as long as a quorum was established."
Not responding to you directly @LeslieDet but more the topic...given MVC holds significant interests in the Abound Trust, I wouldn't think they'd have much of a problem hitting that 50% overall, right?
 

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I'm kind of torn on this - should we keep kicking the can down the road or phase it in while the overall increases are relatively low.
 

LeslieDet

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Not responding to you directly @LeslieDet but more the topic...given MVC holds significant interests in the Abound Trust, I wouldn't think they'd have much of a problem hitting that 50% overall, right?
"Hitting" the 50% overall mark will depend entirely upon the FL property. I have not bothered to look at the ratio of MVC Trust ownership to individual owners at any of the FL properties impacted by this law. In order for the MVC Trust to control the vote of the individual properties in FL and ensure that the 50% +1 vote is achieved, you would need to know the total ownership interests at each FL HOA, and then the MVC Trust would need to control 50%+1 of that ownership in each separate FL HOA subject to the law in order to always hit that mark. And, there is in effect a two layer voting for the Trust -- the BI owners of the Trust will need to vote (or submit proxies) so that the Trust BOD can then vote consistent with what the majority of BI owners endorse as to those individual HOAs. I do not know if the 50% +1 rule will also apply at the MVC Trust BI owner level. I have not studied that aspect, but I suspect it doesn't since the Trust has its own statutes to comply with.
 

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"Hitting" the 50% overall mark will depend entirely upon the FL property. I have not bothered to look at the ratio of MVC Trust ownership to individual owners at any of the FL properties impacted by this law. In order for the MVC Trust to control the vote of the individual properties in FL and ensure that the 50% +1 vote is achieved, you would need to know the total ownership interests at each FL HOA, and then the MVC Trust would need to control 50%+1 of that ownership in each separate FL HOA subject to the law in order to always hit that mark. And, there is in effect a two layer voting for the Trust -- the BI owners of the Trust will need to vote (or submit proxies) so that the Trust BOD can then vote consistent with what the majority of BI owners endorse as to those individual HOAs. I do not know if the 50% +1 rule will also apply at the MVC Trust BI owner level. I have not studied that aspect, but I suspect it doesn't since the Trust has its own statutes to comply with.
That's really my question, whether the new Florida requirements will apply to properties owned by trusts and to the reserves collected by those trusts, regardless of their location. Obviously it will apply to the Florida properties themselves – which would mean that all Florida properties would be subject to the new rules – but what about a Florida trust which owns property interests in other states and is collecting and paying into reserves on those underlying ownerships? It all gets a bit complex. But I think pretty much all of the MVC trusts, including the various Vistana Flex trusts, are domiciled in Florida, even things like Westin Flex (which has no Florida property deeds.)

And when we are asked, as Abound Trust owners, to vote for a waiver of full funding, are we only voting for that waiver for the trust's ownership of Florida properties? Or does it apply to properties in other states too?

I guess I'm a bit confused (and I go back to assuming that the best way to avoid the need for special assessments is to fully fund your reserves.)
 

LeslieDet

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That's really my question, whether the new Florida requirements will apply to properties owned by trusts and to the reserves collected by those trusts, regardless of their location. Obviously it will apply to the Florida properties themselves – which would mean that all Florida properties would be subject to the new rules – but what about a Florida trust which owns property interests in other states and is collecting and paying into reserves on those underlying ownerships? It all gets a bit complex. But I think pretty much all of the MVC trusts, including the various Vistana Flex trusts, are domiciled in Florida, even things like Westin Flex (which has no Florida property deeds.)

And when we are asked, as Abound Trust owners, to vote for a waiver of full funding, are we only voting for that waiver for the trust's ownership of Florida properties? Or does it apply to properties in other states too?

I guess I'm a bit confused (and I go back to assuming that the best way to avoid the need for special assessments is to fully fund your reserves.)
Most other states already have existing reserve requirements in place and they cannot be waived. The FL law regarding waiver applies only to the properties that are in FL. So, when the BI owners are asked to vote to waive it, that will only apply to the components in FL.

Keep in mind that the Trust itself has statutory reserve obligations imposed under the statutes that allowed the creation of the Trust. So, as is stated in the annual budget documents for the Trust, it must comply with the statutes under which it was created. IDK if the excerpt included in this post includes this wording, but here is the info from the 2024 budget:

"As required by Florida law, the table below provides the following information for the non‐Florida sites in the MVC Trust: (i) the amount of reserve funding required by the law of the situs state for the interests at such component owned by MVC Trust, and (ii) the amount of reserve funding actually provided (if any) in the MVC Trust Association’s budget for such interests. The Association is responsible for paying a portion of the amounts necessary for reserves under the Component Association’s budget and the Association’s budget includes these reserve items in the Component Expenses."

Then there is a list of properties where the Trust owns components as of 9/7/23, with a column identifying the "reserve funding required by the situs state", a column with the 2024 budgeted reserve funding required by the Trust, and the variance. So, for 2024 as an example, the situs states required reserves totaling $31,259,189, but the Trust had budgeted reserve funding of $76,936,621.

The audited financials statements of the Trust for year ended 12/31/2022, include the following disclosure regarding reserves: "Florida law requires the Association to accumulate funds for future repairs and replacements. The Association pays a portion of the amounts budgeted for reserves under each component associations' budget, and this amount is included within the Association's common assessment expenses."

"MRHC, on behalf of the Association's Board, estimated the remaining useful lives of the components of common property listed in the table below. The estimate replacement costs and funding requirements of the Association are expected to be zero because, as noted above, reserve funding is provided in the budgeted reserves of each component association."

The financials also include this wording: "The Association is responsible for paying a portion of the amounts necessary for reserves under each component association's budget. The Association's budget includes these reserve items in the component expenses (see Note 4); provided however, that some component association may determine to provide less than full funding of reserves to the extent permitted under applicable law."

So, all that being said, per the financial statements it seems as though the Trust's analysis of the reserves it is required to maintain are categorized as "component expenses". And, the 2024 budget listed "component expenses" at $528,696,801. Then there is a note attached to that number that includes the following wording: "For most Trust Properties, the Association is responsible for paying a portion of the amounts necessary for reserves under the Component Association’s budget, and the Association’s budget includes these reserve items in the Component Expenses. However, for some Trust Properties, the Association may budget for, and separately accrue, funds for reserve expenses which are not reflected in Component Expenses."

Hope that helps.
 
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Most other states already have existing reserve requirements in place and they cannot be waived. The FL law regarding waiver applies only to the properties that are in FL. So, when the BI owners are asked to vote to waive it, that will only apply to the components in FL.

Keep in mind that the Trust itself has statutory reserve obligations imposed under the statutes that allowed the creation of the Trust. So, as is stated in the annual budget documents for the Trust, it must comply with the statutes under which it was created. IDK if the excerpt included in this post includes this wording, but here is the info from the 2024 budget:

"As required by Florida law, the table below provides the following information for the non‐Florida sites in the MVC Trust: (i) the amount of reserve funding required by the law of the situs state for the interests at such component owned by MVC Trust, and (ii) the amount of reserve funding actually provided (if any) in the MVC Trust Association’s budget for such interests. The Association is responsible for paying a portion of the amounts necessary for reserves under the Component Association’s budget and the Association’s budget includes these reserve items in the Component Expenses."

Then there is a list of properties where the Trust owns components as of 9/7/23, with a column identifying the "reserve funding required by the situs state", a column with the 2024 budgeted reserve funding required by the Trust, and the variance. So, for 2024 as an example, the situs states required reserves totaling $31,259,189, but the Trust had budgeted reserve funding of $76,936,621.

The audited financials statements of the Trust for year ended 12/31/2022, include the following disclosure regarding reserves: "Florida law requires the Association to accumulate funds for future repairs and replacements. The Association pays a portion of the amounts budgeted for reserves under each component associations' budget, and this amount is included within the Associations's common assessment expenses."

"MRHC, on behalf of the Association's Board, estimated the remaining useful lives of the components of common property listed in the table below. The estimate replacement costs and funding requirements of the Association are expected to be zero because, as noted above, reserve funding is provided in the budgeted reserves of each component association."

The financials also include this wording: "The Association is responsible for paying a portion of the amounts necessary for reserves under each component association's budget. The Association's budget includes these reserve items in the component expenses (see Note 4); provided however, that some component association may determine to provide less than full funding of reserves to the extent permitted under applicable law."

So, all that being said, per the financial statements it seems as though the Trust's analysis of the reserves it is required to maintain are categorized as "component expenses". And, the 2024 budget listed "component expenses" at $528,696,801. Then there is a note attached to that number that includes the following wording: "For most Trust Properties, the Association is responsible for paying a portion of the amounts necessary for reserves under the Component Association’s budget, and the Association’s budget includes these reserve items in the Component Expenses. However, for some Trust Properties, the Association may budget for, and separately accrue, funds for reserve expenses which are not reflected in Component Expenses."

Hope that helps.
Very helpful. I guess I was trying to understand whether the new Florida laws, which are much stricter about reserves than in the past, would essentially require Florida-based trusts which own components in states with much more permissive policies for reserves to collect and hold some higher level of reserves than might be required in those other states.

That would probably be a bit of an accounting nightmare, and it’s certainly simpler to get my head around the idea that each property controls its own reserves and that the trust just pays the maintenance fees for the Components it owns, and those MFs incorporate the reserves due for each property. But it means there may be trust components which are located in states with permissive rules and which are more vulnerable to unexpected expenses. Special Assessments coming from a property where the trust holds component ownerships would result in an increase in trust MFs spread across all trust owners.

i actually have no idea if there are MVC properties where reserves are not being adequately funded. In my view, that’s not in anyone's interest, other than as a risky short-term bandaid on high MFs, and so I’d like to believe it’s more of a theoretical issue than an actual one. (Also, ”adequately funded” is somewhat subjective, a hurricane or other unexpected event can turn “Adequately funded” into “inadequately funded” in a matter of minutes or hours.)

Anyway, thank you, Leslie, for answering most of my questions.
 

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3.5% increase does not seem unreasonable to me but 81.48 cents per point seems terribly high
Plus, add the Club Fee - I believe the MF $/Pt should include the Club Fee
 

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Not responding to you directly @LeslieDet but more the topic...given MVC holds significant interests in the Abound Trust, I wouldn't think they'd have much of a problem hitting that 50% overall, right?
MVC probably doesn’t hold a large percentage of trust points. So they may not be able to sway fully funding on the points side. Where they may have weight is with trust ownership of individual resorts.
 

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Plus, add the Club Fee - I believe the MF $/Pt should include the Club Fee
No it shouldn’t. Different owners will have a different Club Fee based on owner benefit level.
 

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No it shouldn’t. Different owners will have a different Club Fee based on owner benefit level.
Not to mention that the Club Fee $/Pt will also vary with the number of points owned.
 

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I'm kind of torn on this - should we keep kicking the can down the road or phase it in while the overall increases are relatively low.
Depends on the resort I think. My 6 story Orlando resort has not had any issues in 20 years. I would not expect any changes in the maintenance cycle, so any extra reserves are just extra costs I have to pay. If I owned ocean front then I would probably have a different view.
 

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MVC probably doesn’t hold a large percentage of trust points. So they may not be able to sway fully funding on the points side. Where they may have weight is with trust ownership of individual resorts.
I agree It’s not the unsold inventory of MVC Trust points that gives MVC voting power at individual resorts, it’s the quantity of components the Trust may own at any specific location, and it’s the Trust BOD (appointed by MORI) that then votes as owner of those unit week components In those various associations’ annual meetings.

The MVC Trust points that MVC has in inventory for sale as BI, the company is able to ensure that those BI interests do indeed vote in the annual Trust meeting. But that vote is on the same questions presented to every individual MVC Trust Point owner.
 

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I'm kind of torn on this - should we keep kicking the can down the road or phase it in while the overall increases are relatively low.
Agree. But essentially they have us "coming or going"! Reserving a week using points and placing it out to rent will soon become a losing proposition. Remember not only are the MFs rising we already pay a "vig" to reserve a week using points. This whole thing is going to crater!!!
 

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Agree. But essentially they have us "coming or going"! Reserving a week using points and placing it out to rent will soon become a losing proposition. Remember not only are the MFs rising we already pay a "vig" to reserve a week using points. This whole thing is going to crater!!!
It doesn't have to be a losing proposition. Do what businesses do when their input costs rise - raise the rental price to keep your margins intact. Hotel costs have risen significantly over the last 4 years since the pandemic ended, so people renting from owners shouldn't expect to pay what they did in 2019. Raising the rental price to protect margins as maintenance fees go up is how a rational market should behave. If all owners follow a profit-based model, that's how it would work.

I acknowledge that, unfortunately, the owner-rental market is not alway a rational marketplace. Unlike for-profit businesses, some individual owners may set their prices artificially low just to recoup maintenance fees, not to make a profit. As result, the owner rental market tends to be under-priced, and doesn't always behave as a profit-based market would. So, the problem may not actually be the rising maintenance fees. The problem may be that the owner rental market is economically flawed, since it's not always a profit oriented marketplace. The bottom-feeders set the market price. To me, that seems like a market to steer away from as a business/seller.
 
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