Florida Resort - Hideaway Sands - Real life story of what happens after a hurricane to a small independent resort

[TUGBrian]

This is just a sad story all around for this resort, but a grim reminder of what can happen in situations like these especially when most people assume that "insurance will just cover it"

This resort held a special board meeting today to discuss the rebuilding process and the main takeaway was that they expected the resort to remain closed thru the entirety of 2025. another owner posted this synopsis of the meeting as they heard it:

These are my notes from the meeting. It was very dark


The current assessment by FEMA is $437,000. That means repairs would have to be done for less than half this amount- $218,500. That amount will not touch the amount of rebuilding needed.
Hideaway cannot get a building permit to make repairs, until and unless the assesment and evaluation that indicate that the buildings can be rebuilt for an amount that is under the 50% value of the current building (not land).
The board voted to hire a private assessor to see if they can get a higher value on the building to work with that would enable rebuilding with the units the way they were (not to the new codes)
But the tone of the meeting was not optimistic.The evaluation of property value would need to be more than double the one FEMA made, and FEMA would still have the power to not accept the private assesment, and require Hideaway to build to meet the new codes.


The general feeling was that to repair the buildings to “code”, could require a special assessment of almost $10,000 per owner per week–and 80% of the owners would need to vote yes. (unlikely).
If they cannot get a building permit because the assessment is too low to cover repairs under the 50% rule, and the owners will not agree to cover a very large ($10,000) assessment, the only option is to sell the land and distribute the proceeds to the owners who stay on and continue paying maintenance fees (most likely for the next two years).


Best case–the assessment comes in high enough to have insurance pay for rebuilding to the old standards (under 50% rule). In that best-case scenario, the earliest estimated opening date will be December 31, 2025.
What was also discussed was the insurance calamity and the likelihood that by 2030, our maintenance fees are likely to be $1600 per unit week.

 

[buzglyd]

Sad. A lot of great locations have been pummeled. At least the land has such high value, the owners should get something out of it.

 

[pedro47]

Please forgive me TUGBrian, but FEMA offer to the resort is very low. How can you rebuild a timeshare resort at half the costs and meet Florida new building codes? Will any other insurance policies kick in with additional funds?

 

[TUGBrian]

I believe this is just a situation where the fema adjustor (flood claims in florida are handled by nfip/fema) simply provided an unrealistic estimate to repair the damage... no real difference than any insurance adjuster making an estimate to repair your car or home during a claim. Ie they say they will pay 15k for your new roof, but good luck finding a contractor that will do the job for that amount!

Thus they are seeking an independent estimator for a 2nd opinion. I have to imagine that construction prices and schedules for the florida gulf coast are nowhere near what they would normally be given the past 2 storms etc.

 

[Roger830]

We live in a 100 year flood zone in Connecticut and have the same fema policy.

The major problem to rebuilding in our town is that there is a 10 year moving average where no more than 50% of the apprised value of the house can be spent on any permitted work.

If that resort is governed by a similar policy, then if they can rebuild for 48% of the apprised value, then over the next 10 years, no more than 2% can be spent on permitted work.

Because of this policy, I'm reluctant to do any significant improvements to our house.

In our town, this policy was agreed upon with fema so that everybody in the town gets a lower cost for flood insurance.

 

[theo]

I believe this is just a situation where the fema adjustor (flood claims in florida are handled by nfip/fema) simply provided an unrealistic estimate to repair the damage... no real difference than any insurance adjuster making an estimate to repair your car or home during a claim. Ie they say they will pay 15k for your new roof, but good luck finding a contractor that will do the job for that amount!

Thus they are seeking an independent estimator for a 2nd opinion. I have to imagine that construction prices and schedules for the florida gulf coast are nowhere near what they would normally be given the past 2 storms etc.

After hurricanes in recent years, many independent timeshare properties in FL engaged the services of a "Public Adjuster" to contest proposed insurance claim payout amounts by insurance companies, often achieving impressive results. My (admittedly limited) understanding is that such Public Adjusters customarily get 10% of any additional insurance funds successfully obtained in this "challenge" process as their compensation, but receive nothing at all if they are unsuccessful in obtaining additional funds beyond those amounts initially identified by the insurer.

That being said, I do not claim to know whether imperious FEMA can be challeged through that same Public Adjuster avenue, with FEMA being an insular U.S. Government agency, not a private insurance company.

 

[crowmg]

Our resort, Silver Beach Club, that is directly on the beach in Daytona, FL, suffered a lot of damage the week that Milton came through and we had to cancel our vacation there and make some alternate plans.

 

[dioxide45]

The issue seems to be where the property wants to avoid repairing/rebuilding to current building code. If the cost to repair is less than 50% of the value, then they can simply repair. If it is more than 50%, then they need to repair/rebuild to current building codes. The problem with just repairing as is, is that it opens the insurer (perhaps NFIP) to additional claims down the road. Thus why the 50% requirement is in place. Insurers don't want to keep paying to repair structures that won't be to the current code that is there to mitigate damage from recurring storm events.

 

[Cyberc]

As a foreigner what does this actually mean?

Can repairs of only 50% be done of the estimated value of $437k? If the value is only $437k that sounds low even if it was double that it sounded low, unless it’s a very small property?

Why would the regular building insurance not cover all repairs? One should mean that’s the intention with the insurance.

Perhaps a more alternative option would be to demolish the current buildings and build something new. This time build it larger, and sell the new additional rooms to more owners. That way the current owners might now have to pay just as much to get a new and shiny resort that’s up to code.

 

[Larry M]

Sad. A lot of great locations have been pummeled. At least the land has such high value, the owners should get something out of it.

Not really so sad. They will wind up selling the property to a non-timeshare outfit like Vacay and split the proceeds among the paid-up users. A similar thing happened to the timeshare I owned on Edisto Island, SC.

I had bought the independent timeshare in 2010 for $1000. It had a sunset clause for the first Sunday in 2026, so I had an exit strategy. Due to a lifestyle change, I started letting my son's family use it around 2013. Due to bad management there wasn't much reserve funds for repairs for the 2015 and 2016 hurricanes. By around 2018 the damage and deferred maintenance made the situation untenable.

The board surveyed the owners and found that more than 75% of the members were in favor of moving the sunset clause to 2020. The property was sold to Vacay. The proceeds would be divided across units/weeks and the cost to refurbish each unit would be deducted from that unit's distribution, then divided by the number of paid-up owners and distributed to them. My share was around $5500. I was pleased with the outcome--not a "sad day" at all.

 

[MLMarek]

Can anyone confirm if these FEMA rules apply also to residences in the area?

 

[theo]

The issue seems to be where the property wants to avoid repairing/rebuilding to current building code. If the cost to repair is less than 50% of the value, then they can simply repair. If it is more than 50%, then they need to repair/rebuild to current building codes. The problem with just repairing as is, is that it opens the insurer (perhaps NFIP) to additional claims down the road. Thus why the 50% requirement is in place. Insurers don't want to keep paying to repair structures that won't be to the current code that is there to mitigate damage from recurring storm events.

This is an excellent and accurate summation.

The question that comes promptly to my mind in the Hideaway Sands situation originally cited here is — can the value of the building(s) really be only $437k in the first place?

I know nothing at all about that resort, but that figure nonetheless seems remarkably low (to me). AFAIK, it is the assessed value (i.e., as reflected on the property value records of applicable local authority, NOT determined by FEMA) that is the figure used for FEMA’s “50% rule” calculations. Could that assessed value figure really be only $437k at Hideaway Sands?

 

[theo]

Can anyone confirm if these FEMA rules apply also to residences in the area?

To the best of my knowledge and belief, FEMA’s “50% rule” applies to any and all structures located within a designated flood plain area.

 

[boraxo]

You buy Florida coastal property, you know there are hurricanes. I’m surprised there was an insurer that would cover the property given the risks.

Let this be a learning message for anyone else who thinks Florida is a good place to buy timeshares

 

[TUGBrian]

FEMA covers pretty much ALL flood insurance in florida.

this is separate from regular homeowners insurance.

 

[dioxide45]

You buy Florida coastal property, you know there are hurricanes. I’m surprised there was an insurer that would cover the property given the risks.

Let this be a learning message for anyone else who thinks Florida is a good place to buy timeshares

Obviously there are insurers that will cover the risks as there are still companies that sell insurance in Florida. They are getting fewer in numbers and premiums are going up, but you can still get coverage. There is also the NFIP that provides flood insurance to those in high risk areas. Though IMO NFIP needs a massive overhaul.

 

[buzglyd]

We pulled the plug on buying a place in Florida a couple of years ago. I wanted the house with the boat dock out back but the market was crazy then and insurance and taxes were as much as the house payment.

 

[theo]

Why would the regular building insurance not cover all repairs? One should mean that’s the intention with the insurance.

Perhaps a more alternative option would be to demolish the current buildings and build something new. This time build it larger, and sell the new additional rooms to more owners. That way the current owners might now have to pay just as much to get a new and shiny resort that’s up to code.

A few relevant observations:

1. Insurance policies have hefty “deductibles”. The deductible obviously decreases claim payment amounts. In one specific FL instance with which I am familiar (a small independent timeshare resort of only 40 units), the deductible on the wind policy alone (wind insurance policy is completely separate and distinct from the flood insurance policy), was $300,000.00. The timeshare owners must absorb or “eat” that $300k deductible, insurance payments notwithstanding.

2. To demolish a damaged building and construct a new one to current codes costs millions of dollars. Insurance addresses only the cost of damage to the original building(s). At small independent resorts, that “millions of dollars” cost to rebuild (i.e., any and all cost above damage claim payments received) would mean huge special assessments for existing owners to have to pay; likely tens of thousands of dollars per owner, per owned unit. Accordingly, the reconstruction option is often a “non-starter”, financially speaking, at smaller independent resorts with no access to the deep pockets or financial backing of big corporate / chain timeshare operations.

3. Building “more units“ in a reconstruction is not always an option. For one specific example, a (75 units) timeshare property on Fort Myers Beach, FL called Estero Island Beach Club was completely destroyed in 2022 and has since been demolished. If EIBC ever gets local approval to rebuild in compliance with new codes and other local requirements (they are having NO luck so far and their future is currently very uncertain) they still would not be allowed to exceed the 75 units lost.

Just a few observations, for whatever they may be worth, in response to quoted parts of your post.

 

[TUGBrian]

also most insurance policies have separate deductibles for hurricanes that are much higher than the normal written deductible....usually a % of the overall insured value on the policy.

 

[Cyberc]

I’m surprised that the deductibles are so high.

What’s the purpose of insurances if you end up paying a large portion of the repairs yourself?

Is it like that everywhere in the U.S?

Where I live we don’t have hurricanes but we occasionally have floods and should your house get flooded you have a deductible of $900. That will cover the house and everything else.

 

[TUGBrian]

you can usually pick your own deductible, just not for the hurricane part.

 

[theo]

I’m surprised that the deductibles are so high.

What’s the purpose of insurances if you end up paying a large portion of the repairs yourself?

Is it like that everywhere in the U.S?

Where I live we don’t have hurricanes but we occasionally have floods and should your house get flooded you have a deductible of $900. That will cover the house and everything else.

You have to consider scale and the significant differences between a “homeowner’s insurance” policy and the separate wind and flood insurance policies on a timeshare property (or other commercial enterprise). Bear in mind too that the $300k deductible on the wind insurance policy that I cited was actually on a policy with several *MILLION* dollars of coverage.

 

[Cyberc]

You really have to consider scale and the distinction between “homeowner’s insurance” and the insurance on a timeshare property.
Bear in mind that the $300k deductible wind policy I cited was on a several MILLION dollar policy.

I understand but I still think the deductibles are high, and maybe because the timeshare is considered a business the insurance and the deductibles are so high.
Curious to know how the insurances and deductibles are for the regular homeowner who lives in a high risk area like these timeshare resorts?

 

[dioxide45]

I understand but I still think the deductibles are high, and maybe because the timeshare is considered a business the insurance and the deductibles are so high.
Curious to know how the insurances and deductibles are for the regular homeowner who lives in a high risk area like these timeshare resorts?

If you consider the deductible multiplied buy the number of units (possibly hundreds of units), it may not be as high as you think. They also only want claims for catastrophic damage. The fact that there is a chance a storm could take out a building in any given year also leads to higher premiums. Having a higher deductible will lower the premium.

 

[Deb & Bill]

As a foreigner what does this actually mean?

Can repairs of only 50% be done of the estimated value of $437k? If the value is only $437k that sounds low even if it was double that it sounded low, unless it’s a very small property?

Why would the regular building insurance not cover all repairs? One should mean that’s the intention with the insurance.

Perhaps a more alternative option would be to demolish the current buildings and build something new. This time build it larger, and sell the new additional rooms to more owners. That way the current owners might now have to pay just as much to get a new and shiny resort that’s up to code.

Flood insurance covers all damage from rising water. Homeowners insurance covers wind, fire damage. If you can prove the resort was mainly damaged from wind before the rising water hit it, home owners insurance should cover most of the damage. Home owners in Lee County, FL just got their claims improved by proving damage from wind prior to rising water. After Irma, our homeowners insurance covered all our damage because we had no rising water damage. Other than our pool cage and deductible which we had to pay out of pocket.