Florida Owners - Please vote "yes" to to waive the full funding of reserves

[rjp123]

Florida Owners - HGVC has sent an email about this but I am posting to bring it back to attention for those who have not yet voted. The vast majority of owners never vote at their owner meetings and this year it is super critical that you do.

This is very important to prevent your maintenance fees from increasing significantly in 2025.

From HGVC:

The State of Florida recently changed the voting threshold required to waive the full funding of association reserves. Under this new requirement, your maintenance fees could increase dramatically. This is how: Each association uses a Reserve Study to determine the annual contribution from Owners needed to support expected expenditures based on a resort’s 30-year cashflow management requirements. The Reserve Study is updated annually and provides information on the funding necessary for resort repairs, replacement of items and renovations without collecting more funds from Owners than necessary.

For many years, Florida law has required using a set formula to determine reserve funding unless more than 50% of Owners (or their proxies) who attended an Owners’ meeting voted “yes” to waive the statutory funding requirement. The law has now changed to require a “majority vote of the total voting interests of the association,” meaning a “yes” vote from more than half of all Owner interests in favor of waiving the statutory funding requirement regardless of attendance at an Owners’ meeting.

Our recommendation has not changed — the board of directors and the management company have historically recommended that Owners vote to waive the requirement to fund the reserves fully, and this issue usually passes by an overwhelming majority of votes cast. The difference this year is that a greater number of Owner votes is now required for passage.

Why Your Vote Matters
Unless a majority of Owners vote “yes” to waive the statutory funding requirement, you will experience a material increase in your maintenance fees starting in 2025.

Next Steps
You will receive information from HGV’s Association Management Services team with instructions on how to vote in an upcoming virtual Annual Owners’ Meeting or via a Special Owners’ Meeting. Voting instructions will be provided in each communication and/or meeting. If you have any questions, please email us at ams@hgvc.com.

Now more than ever, I encourage you to vote at your next Owner meeting and make your opinion count. I appreciate your prompt attention to this matter.

 

[TolmiePeak]

Why would any owner unless they were selling soon want to vote yes?

 

[rjp123]

From what I understand, most HGVC properties have traditionally waived full funding of reserves as a part of the ownership meeting vote.

HGVC Management and Boards are asking owners to continue waiving the full funding of reserves, but now require 50% of ownership to vote to do so (vs. 50% of owner meeting attendees as it was prior to Florida law changes).

From another TUG member:

Waiving of fully funded reserves does not mean that the HOA doesn't have the money to cover renovations and maintenance when it comes due. They just happen to utilize a different method to calculate the amount of money they will require to cover these renovations and maintenance. Example: The state law may say fully funded means a roof has a life span of 20 years, but the HOA may have a reserve study done as well as other assessments that determines the roof has a life of 25 years. So they waive fully funding to the states stricter 20 year replacement requirement.

The term fully funded is defined in the law, it doesn't necessarily mean underfunded.

 

[TolmiePeak]

From what I understand, most HGVC properties have traditionally waived full funding of reserves as a part of the ownership meeting vote.

HGVC Management and Boards are asking owners to continue waiving the full funding of reserves, but now require 50% of ownership to vote to do so (vs. 50% of owner meeting attendees as it was prior to Florida law changes).

From another TUG member:

If you don't full fund the reserve you will end up having a big special assessment. There is no free lunch.

 

[rjp123]

If you don't full fund the reserve you will end up having a big special assessment. There is no free lunch.

Can you give me an example of an HGV developed property having a big special assessment for any other reason than an Act of God (earthquake, weather, etc.)? Honest question.

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[Talent312]

A failure to vote "yes" (to waive) will cause a dramatic increase in MF's.
Most TS's, at least Hiltons, carry sufficient insurance to cover weather damages, and otherwise plan for capital expenses, without special assessments.

 

[letsgobobby]

Can you give me an example of an HGV developed property having a big special assessment for any other reason than an Act of God (earthquake, weather, etc.)? Honest question.

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acts of g-d are not rare in Florida. either insurance or reserves need to be prepared.

 

[rjp123]

acts of g-d are not rare in Florida. either insurance or reserves need to be prepared.

HGV properties are well insured.

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[TolmiePeak]

HGV properties are well insured.

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How can they afford insurance in Florida? Wouldn't most properties be self insured?

 

[letsgobobby]

HGV properties are well insured.

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what do you think has happened to insruance rates over the last twenty five years?

you're going to pay the piper one way or another. the higher assessments have to happen. the question is whethwr you want them a little at a time or all at once.

 

[rjp123]

How can they afford insurance in Florida? Wouldn't most properties be self insured?

HGV properties in Florida have insurance. I've not heard of any being self-insured.

Being a part of the umbrella HGV company helps them get rates that other groups may not.

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[TolmiePeak]

HGV properties in Florida have insurance. I've not heard of any being self-insured.

Being a part of the umbrella HGV company helps them get rates that other groups may not.

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Still this seem like a hard NO to me. Waiving reserves is what caused the condo collapse in Surfside.

 

[rjp123]

Still this seem like a hard NO to me. Waiving reserves is what caused the condo collapse in Surfside.

Separate issue. This vote is for general reserves being waived.

Florida Law no longer permits structural reserves to be waived and they will need to be fully funded starting in 2026.

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[AmexBlack]

Reserves should be at 100%. If the reserves are not at 100%, then there will be a large special assessment when the issue happens.

 

[dioxide45]

Reserves should be at 100%. If the reserves are not at 100%, then there will be a large special assessment when the issue happens.

100% doesn't necessarily equal fully funded reserves.

 

[Talent312]

Here's a post by dvc_john from 2006 which discussed the insurance issue:
Sep 2, 2006 #5
"I own several HGVC affiliated resorts that were damaged by Hurricanes Charley and Wilma. They are under the HGVC insurance, which is absolutely excellent! Two neighboring resorts with a total of 100 units share a $100,000 deductible. The deductible came out to about $20 per unit/week, so there was no special assessment for hurricane damage. The insurance paid several million dollars.
"At one resort, once the hurricane repairs were under way, they decided to make some non-hurricane related repairs at the same time, and they did have a small special assessment for that."

 

[BingoBangoBongo]

Here's a post by dvc_john from 2006 which discussed the insurance issue:
Sep 2, 2006 #5
"I own several HGVC affiliated resorts that were damaged by Hurricanes Charley and Wilma. They are under the HGVC insurance, which is absolutely excellent! Two neighboring resorts with a total of 100 units share a $100,000 deductible. The deductible came out to about $20 per unit/week, so there was no special assessment for hurricane damage. The insurance paid several million dollars.
"At one resort, once the hurricane repairs were under way, they decided to make some non-hurricane related repairs at the same time, and they did have a small special assessment for that."

I imagine the insurance market today is much different than it was in 2006.

 

[JimS]

As I understand the issue, the legislation provides a calculation of "fully funded" which the industry believes may be excessive and unrealistic. The waiver does not mean the required reserves are not funded or fully funded, just that the state formula is not used. If you are satisfied with the way the resorts are managed, let the HOA/HGVC determine what the funding should be NOT Tallahassee!!!

 

[CO skier]

Just out of curiosity, has anyone ever heard of any timeshare where 50% or more of the total ownership voted in an election, much less voted for the same thing?

No?

Then that is the key that renders all this discussion a moot, windmill-tilting point.

There will be not a single Florida timeshare association that can dodge this new requirement, imo.

 

[dioxide45]

Just out of curiosity, has anyone ever heard of any timeshare where 50% or more of the total ownership voted in an election, much less voted for the same thing?

No?

Then that is the key that renders all this discussion a moot, windmill-tilting point.

There will be not a single Florida timeshare association that can dodge this new requirement, imo.

I suppose it depends on the ownership structure. Some developers with points based trusts where the trust has a significant ownership in the resort may pass the requirement. Others with all deeded ownerships (like HGVC) and no trust based ownership may be hard to get to 50%.

 

[ocdb8r]

There are a lot of generalities being thrown around in this thread. I've been watching these developments closely as we own a couple of Vistana Villages weeks. I tend to agree with the sentiment that chronically underfunding reserves is not a healthy way to maintain an association....eventually it will catch up with you. However, I don't know that this means reserves need to be funded at 100% based on reserve reports, as there are elements of these reports that can vary from surveyor to surveyor and elements that associations can "manage" to get more life out of certain components of the resort compared to standard "expected lifetime" used for such reports.

The problem is that I do believe a line needs to be drawn somewhere as too many associations underfund reserves to placate a desire to constantly minimize maintenance fee increases (and maybe the cynic in me believes that some professional management companies do this to their benefit to ensure the fees they benefit from increase in their desire metrics while overall maintenance fees remain at "acceptable" levels). I also do not believe expecting insurance to serve as a solution for major catastrophes is also prudent. There will always be deductibles to pay and items not covered by insurance. I also don't believe HGVC has some "magic" insurance policy with greater coverage than what MVC or Wyndham could get....and there are plenty of examples across the timeshare world of insurance not sufficiently covering the damage from major catastrophes. Finally, I also don't believe funding reserves at 100% will in all cases result in "massive" increases to maintenance fees. The most drastic impact would be to those with the most significant underfunding. I know that several of the HGVC affiliates in FL reports show perhaps a 10-12% increase would be needed to meet "fully funded" requirements. Yes, that's a decent hit, but it would be a 1-time hit to catch-up which should then be followed by "normal" annual increases.

Here's a post by dvc_john from 2006 which discussed the insurance issue:
Sep 2, 2006 #5
"I own several HGVC affiliated resorts that were damaged by Hurricanes Charley and Wilma. They are under the HGVC insurance, which is absolutely excellent! Two neighboring resorts with a total of 100 units share a $100,000 deductible. The deductible came out to about $20 per unit/week, so there was no special assessment for hurricane damage. The insurance paid several million dollars.
"At one resort, once the hurricane repairs were under way, they decided to make some non-hurricane related repairs at the same time, and they did have a small special assessment for that."

As to this specific example, the resorts mentioned above (4 of which shared a 100k deductible) reported to owners this year that this year the premium on the insurance plan increased by more than 750k with the deductible increasing to $3.3mn per property (not split)....that is not a typo. That means for the next major hurricane, the association will be on the hook for the first $3.3mn in costs (compared to what was $25k). Existing reserves will never cover that and I'm sure the next major hit will result in several special assessments.

 

[rapmarks]

Just out of curiosity, has anyone ever heard of any timeshare where 50% or more of the total ownership voted in an election, much less voted for the same thing?

No?

Then that is the key that renders all this discussion a moot, windmill-tilting point.

There will be not a single Florida timeshare association that can dodge this new requirement, imo.

Yeah, I posted about this on blue green page. One week after ballots went out to some owners, 95% of owners voted yes. I guess no one voted no, because many claim to not receive a ballot

 

[PigsDad]

Still this seem like a hard NO to me. Waiving reserves is what caused the condo collapse in Surfside.

Incorrect. That condo collapsed because the HOA repeatedly ignored the advice from inspectors that repairs were needed. Waiving to fully fund the reserves at a well-maintained, insured and managed property is completely different.

I have owned HGVC properties on Marco Island for years, and have been through two major hurricanes during that time; one that was a direct hit on the island and caused the resorts to be closed for several weeks. Both times the insurance covered the necessary repairs and NO special assessments were needed. These properties are well maintained, and have proper inspections and reserve studies completed every few years, allowing owners to review those studies.

Bottom line is that the amount of reserves required by the state is overkill. I'm voting the recommendation by the excellent management to waive the fully funded reserves -- they have proven their competence with their past management so I have no reason to vote against their recommendation on this issue.

Kurt

 

[ocdb8r]

Incorrect. That condo collapsed because the HOA repeatedly ignored the advice from inspectors that repairs were needed. Waiving to fully fund the reserves at a well-maintained, insured and managed property is completely different.

I have owned HGVC properties on Marco Island for years, and have been through two major hurricanes during that time; one that was a direct hit on the island and caused the resorts to be closed for several weeks. Both times the insurance covered the necessary repairs and NO special assessments were needed. These properties are well maintained, and have proper inspections and reserve studies completed every few years, allowing owners to review those studies.

Bottom line is that the amount of reserves required by the state is overkill. I'm voting the recommendation by the excellent management to waive the fully funded reserves -- they have proven their competence with their past management so I have no reason to vote against their recommendation on this issue.

As they say, past performance is not an indicator of future results. The Marco Island properties are included in those whose insurance deductible will go up from $25,000 to $3.3mn (as reported by the Board). I know that they are planning on taking out an extra policy to insure part of that deductible, but I wouldn't expect that the next major hurricane to hit the area will not require significantly more cash than past hurricanes.

That's not to say full funded reserves are reasonable or a must, but food for thought.

 

[chriskre]

As to this specific example, the resorts mentioned above (4 of which shared a 100k deductible) reported to owners this year that this year the premium on the insurance plan increased by more than 750k with the deductible increasing to $3.3mn per property (not split)....that is not a typo. That means for the next major hurricane, the association will be on the hook for the first $3.3mn in costs (compared to what was $25k). Existing reserves will never cover that and I'm sure the next major hit will result in several special assessments.

If this were to happen and there were several special assessments you can be sure that those timeshares will be dissolved due to major defaults.
Developers will be all over that prime real estate for re-development for a higher and better use than a timeshare.