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dioxide45

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After almost 10 years of ownership, I made it to my first Grande Vista BOD and Annual meetings this year. It was definitely an interesting and eye opening experience.

For Florida properties, there are actually two meetings that they invite owners to; the Annual BOD Meeting and the Annual Meeting. The former is actually a much more interesting meeting. At the BOD Meeting, they go over the annual budget items. Though this wasn't a line by line review like I expected it to be.

There are a lot more people there than I expected. The five board members. The Grande Vista General Manager, the Financial Operations Manager for Grande Vista. Other select people. Some who actually spoke and others that were either texting or browsing the internet the whole time.

BOD Meeting
The BOD meeting was held on Thursday November 10, 2016. The main topics at the BOD meeting were Taxes, Towels, Taxes, Towels, Taxes and painting

Here are the main points I took note on from the BOD meeting;
  • There are 22 active MORI foreclosures. This number is slowly dropping. MORI foreclosures are those where the owner is behind on their mortgage payment. These will eventually go away when all mortgages from weeks based purchases are paid off. MVCI no longer offers financing on weeks based purchases.
  • The HOA has an agreement with MVCI for MVCI to buyback all weeks taken back through foreclosure. I have note that the buyback cost is the amount of the foreclosure costs. So the HOA becomes whole. I don't know if MVCI also covers past past due MFs.
  • The HOA actually counts on late fees as income. So if fewer people are late on their MF payment, it negatively impacts the HOA. I don't think this is really a wise thing to budget hoping to receive. Delinquencies are less than 3%
  • The golf operation operates at a significant loss. That loss is covered by the owners though the MF.
  • MGV is currently $300,000 or 4% over budget in housekeeping. Other items are enough under budget to cover this overage.
  • They have changed how they allocate staff around the property. They now keep staff within the village that they are working in for the day. In the past, staff would have to go back to the main facilities area for breaks and lunch. This would require a long wait for shuttles to take move the staff around. Now they have converted some former storage areas in to break rooms within each of the villages. So after staff gets their assignments for the day, they don't leave the village they are assigned to.
  • The last refurbishment study was in 2014, the next is schedule for 2018.
  • The HOA retains a $3 million liquidity fund to hedge against surprise costs and limit the need for a special assessment should there be some surprise charges.
  • The board currently spreads its assets over many financial institutions. They seem rather concerned that all of their funds are covered by FDIC insurance. This requires them spreading their many millions in replacement reserve funds over hundreds of $250,000 FDIC insured accounts and institutions. They couldn't answer the question of how many accounts they had.
  • They are considering installing a Megapixel screen. During the Q&A session, I asked specifically what this was. This is the same type of poolside screen that they installed at Shadow Ridge. They seemed rather eager about this. Not sure if I am willing to have the owners pay the $260,000 cost for such a luxury.
  • 400+ exterior entry doors at the property have problems with mildew stains, the bulk of these being in the Golfside Village. Costs to repaint these doors amounts to $137,000 annually.
  • Humidifier have been installed in 93 villas that have mildew problems.
  • Replacement of the street lamps and other repairs are needed at the Grande Vista main entrance. Since this is a shared entrance between the HOA and MVCI sales gallery, the costs are also shared. However, the shared costs are based on land value of the resort and MVCI owned property. Thus the HOA is responsible for 99.6% of the costs, Marriott only 0.4%.
  • All pool towels are washed onsite. Marriott is recommending the HOA buy a $50,000 towel folding machine. During peak season, the staff has a hard time keeping up with towel usage and the new machine would allow them to restock towels faster. They complained about guests not taking just one towel, but rather three or four. While I didn't counter this, I can easily explain three towels. 1-Dry off, 2-One to put over your chair to lay on, 3-One to roll up for a pillow. Two of these usually end up wet, the one for drying and the one for sitting. They have implemented a towel card exchange system during peak season.
  • 1 in 3 guests report a problem.
  • The BOD is considering installing floor tiles on all floors in all the buildings at a cost of $4.2 million. Currently the floor paint very quickly peels off of the floors. Within a few months the floors are peeling and not leaving a good impression on guests. They currently spend $127,000 in painting. I suspect this is just for the floors but could include other painting. The resort is a very paint intensive property. They have just completed having the tile installed on the first floor of building 100 to test it out to see if it holds up as expected. See the photos below.
Bldg 100, second floor. Currently hallway flooring;Bldg 100, first floor.
New tile being considered.

New tile flooring. Building 100, first floor.


  • The topic of taxes was high on the agenda. Over the past three years, Grande Vista, along with many other Orlando properties have seen considerable increases in taxes. 10% increases two years in a row and a 1.6% increase the last year. The HOA is currently fighting the assessed value. The main issue is what is the assessed value. The county seems to site the sales prices of weeks when Marriott last sold them. This is about $515,000 per villa total. The board indicates that they have the repurchase agreement that shows they are only worth about $3000 per week. Thus only about $156,000 in value per villa. Obviously the taxable value is somewhere in between. But I would expect if a unit at a comparable residential condominium would not sell anywhere close to $500,000. The number is probably somewhere in between the HOAs thinking and Orange County. The HOA is currently appealing the assessment, along with many other companies and properties around Orlando. The board has also been over collecting taxes from the owners in anticipation of three consecutive 10% increases. Since the last year was only 1.6%, they are going to give back some of the overage in taxes to the owners in over the next two years in the tax line item. So while the MF increase in 2017 is only about 4%, it would be slightly higher if this credit was not included.
I will have additional information related to the Annual meeting that was held on Friday November 11, 2016 once my notes turn up.
 
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del2327

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I have always wanted to go to one of these meetings, but haven't been able to do so. This is an excellent report and I greatly appreciate you posting it. I'm also not sure about $260,000 for a Megapixel screen. I look forward to reading your summary of the Annual meeting.

Thanks again!!
 

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Thanks for that awesome write up. We don't own here, but did stay there last month. These reports are always interesting to me for the information they provide concerning the issues that can come up at any resort and the various solutions proposed or implemented.
 

klpca

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Nice report Dioxide. Really interesting about the valuation issues with respect to property taxes.
 

pedro47

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Thanks for sharing an excellent BOD Meeting Report.
 

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Great report. Does anyone have any photos of the screen at Shadow Ridge that is being considered for Grande Vista that they could share? What would the purpose be? Resort messages? Poolside movies at night? Also, have to say I like the look of the tile experiment in Bldg. 100. Will be interested to see how it holds up given the number of years required to break-even on the investment versus ongoing annual painting fees.
 

dioxide45

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Great report. Does anyone have any photos of the screen at Shadow Ridge that is being considered for Grande Vista that they could share? What would the purpose be? Resort messages? Poolside movies at night? Also, have to say I like the look of the tile experiment in Bldg. 100. Will be interested to see how it holds up given the number of years required to break-even on the investment versus ongoing annual painting fees.
Here is the thread about the Megapixel screen at Shadow Ridge. I don't think anyone ever came back and posted a photo of it complete. During the Q&A session at the BOD Meeting, I asked what the Megapixel screen was because I heard them talking about it but wasn't sure if it was like what they had at Shadow Ridge. Board President, LaVar Christensen, is the one that explained it. It could be used for many things. The current screen they have now can only be used at night. I think they may have one of those inflatable screens that you can project movies on to. The Megapixel screen is more like an LCD television. It can be used day or night. They can show movies or sporting events or just about anything they want. It sounds kinda cool. I just don't know where they are thinking of putting it. Looking around the Village Center Pool, I don't really see a good place for it, unless they were to tear out the sauna where there is the small waterfall. It seems this would take up a lot of room.

I too really liked the look of the tile experiment in building 100. It does give the floors a great finish. While the return on investment is a long time, it may still be worth the effort as they can then redirect the efforts from repainting the floors to other maintenance issues around the resort, perhaps repainting the doors.

I went in to the meeting thinking the board was a simple rubber stamp to what Marriott would propose. After seeing it first hand, there are some on the board that I think could be easily swayed. Though surprisingly, LaVar Christensen, did seem to push back. I was surprised at this. He is from Utah and is also a Utah state legislator. He personally knows the Marriott family. Not knowing him before this, I am confident he was trying to do well for the property. There were a total of five board members. Of the five, one only spoke one time, another tabled a motion to spend $6 million on something, but LaVar stymied that, wanting to put it off for another meeting. Perhaps this is why LaVar was not reelected to the board at the Annual Meeting. More on that when I cover that meeting. The other two board members were rather involved, but I know that one of them serves on two other Marriott HOA boards.
 

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image.jpeg
This is the pic of screen at Shadow Ridge. I hope I have better pic, but it is all I have for now.
 

dioxide45

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Okay, my notes related to the Annual Meeting finally turned up. I seriously thought I had accidentally thrown them away.

The election results were as follows;

Vote to waive fully funding the reserves passed;
No: 172
Yes: About 11,000

Results of Election of Two (2) Members to the Board of Directors for three year terms;

LaVar Christensen: 3,855
Samuel S. Colmery: 9241.5
Frank A. O’Sullivan: 1,470
George Spalthoff: 7,945.5
Christopher Zaborowski: 960

I was very surprised that LaVar was not re-elected. He has been on the board for quite a while with a short stint where he did not serve. It seems that Marriott put their votes behind Samuel and George. Samuel is a current Grande Vista board member and looking at the profiles provided in the Annual Meeting notice, George also serves on the board for Manor Club. I wonder if these members toe the Marriott line more to Marriott's liking where LaVar had perhaps started to push back? Purely speculation, but Marriott voted the way they did for a reason.

Here is the breakdown of individual owner votes vs trust votes.

12,125 total votes cast
7,100 votes cast by trust
5,025 votes cast by individual owners

As you can see, the owners don't have much of a voice when they don't all vote. There are a total of 46,350 ownership weeks in the system. This means only 12.8% of individual owners vote their proxy.

The 2017 BOD meeting is scheduled for November 9, 2017 and the Annual Meeting for November 10, 2017.

I have attached a handout that was provided at the meeting regarding resort updates.
 

Attachments

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BocaBoy

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12,125 total votes cast
7,100 votes cast by trust
5,025 votes cast by individual owners

As you can see, the owners don't have much of a voice when they don't all vote. There are a total of 46,350 ownership weeks in the system. This means only 14.7% of individual owners vote their proxy.
Sadly, that is one major reason that maintenance fees are out of control in all or virtually all MVCI resorts, and undoubtedly other systems have the same lack of ownership interest.
 

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Thanks once again for posting. While I wish I could attend the meeting, I can't. Your report and attachments provided me with information which is more informative than what I typically receive from MVCI. It is much appreciated!
 

amanda14

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Okay, my notes related to the Annual Meeting finally turned up. I seriously thought I had accidentally thrown them away.

The election results were as follows;

Vote to waive fully funding the reserves passed;
No: 172
Yes: About 11,000

Results of Election of Two (2) Members to the Board of Directors for three year terms;

LaVar Christensen: 3,855
Samuel S. Colmery: 9241.5
Frank A. O’Sullivan: 1,470
George Spalthoff: 7,945.5
Christopher Zaborowski: 960

I was very surprised that LaVar was not re-elected. He has been on the board for quite a while with a short stint where he did not serve. It seems that Marriott put their votes behind Samuel and George. Samuel is a current Grande Vista board member and looking at the profiles provided in the Annual Meeting notice, George also serves on the board for Manor Club. I wonder if these members toe the Marriott line more to Marriott's liking where LaVar had perhaps started to push back? Purely speculation, but Marriott voted the way they did for a reason.

Here is the breakdown of individual owner votes vs trust votes.

12,125 total votes cast
7,100 votes cast by trust
5,025 votes cast by individual owners

As you can see, the owners don't have much of a voice when they don't all vote. There are a total of 46,350 ownership weeks in the system. This means only 14.7% of individual owners vote their proxy.

The 2017 BOD meeting is scheduled for November 9, 2017 and the Annual Meeting for November 10, 2017.

I have attached a handout that was provided at the meeting regarding resort updates.
Maybe I have my head in the sand but I always vote, as an owner why wouldn't you? I guess that has an obvious answer but still baffling.
 

dioxide45

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Sadly, that is one major reason that maintenance fees are out of control in all or virtually all MVCI resorts, and undoubtedly other systems have the same lack of ownership interest.
I would agree. I had to update the percentage though. I did the math wrong. Unfortunately, the new number is more dismal.
 

KarenP

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Thank you so much for posting this information!
 

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Great stuff. I was going to go to Lakeshore's but I ended up with a schedule conflict. After reading this I am super motivated to go later this year.

Tax based on repurchase is wishful thinking. The tax value should be based on what Marriott brokers the resale weeks for (or the appraised value of the property as a whole). Unfortunately the brokered number is inflated due to the built in costs and massive commission. Marriott is obviously directly to blame for the tax issue. Couldn't they account for their 40% cut differently so it is not all considered purchase price and proceeds to the seller? They pay 3rd parties to handle the closing but that money still shows up as going to the seller. In the real estate world the buyer pays the closing and the seller commission. Marriott has the seller paying everything out of the "gross proceeds". It's wrong.

It's not true that Marriott no longer offers financing for weeks. They are closing one for me right now where the buyer is financing the purchase. Maybe they don't do it in house? I'll look at the settlement statement when I get home. Perhaps they are farming it out but it could stil result in a foreclosure, just not MORI.
 
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dioxide45

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It's not true that Marriott no longer offers financing for weeks. They are closing one for me right now where the buyer is financing the purchase. Maybe they don't do it in house? I'll look at the settlement statement when I get home. Perhaps they are farming it out but it could stil result in a foreclosure, just not MORI.
I just did a quick search on the Orange County Comptrollers website and did find a number of mortgages recorded for Grande Vista purchases. It looks like the lender on them is The Saylor Group. So any foreclosure wouldn't be in MORIs name. It does seem they are using a third party to handle these. It is a mortgage like none other I have seen. It references "Granny's Money".
 

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MORI is listed as the lender on the sale I am referring to, but it's Manor Club and not GV. Maybe they package them and sell them later, or hold it in the interim but sell it fairly quick. This is typical of timeshares but they would have to sell at a loss if it's truly a 3rd party ending up holding the mortgage. Maybe a different lender will actually be recorded and they just put MORI down on the statement.

Lender: Marriott Ownership Resorts Inc
Settlement Date: January 16, 2017
Disbursement Date: January 16, 2017
I am wrong on the entire amount paid being the timeshare sales price. Marriott is far more greedy than I thought. The buyer is paying all the closing costs like they should. The 40% for Mariott on the resale is solely for "commission" and no other expenses are included. For example they sold a Platinum Manor Club Original for $8,100. The closing expenses paid by the buyer were $1,113.83. The buyer paid a down payment of $810 and financed $8,403.83.

Clearly I never looked closely at my settlement statements for the buyer closing costs.
 
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dioxide45

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Is it possible that they are including amounts for financing if the buyer is possible buying a hybrid bundle? They still finance DC transactions and perhaps if one is buying hybrid they write it all in to one mortgage?

As for the closing costs, I think Marriott always requires the buyer to take title insurance. Perhaps that is why the costs are so high?
 

Saintsfanfl

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Is it possible that they are including amounts for financing if the buyer is possible buying a hybrid bundle? They still finance DC transactions and perhaps if one is buying hybrid they write it all in to one mortgage?

As for the closing costs, I think Marriott always requires the buyer to take title insurance. Perhaps that is why the costs are so high?
Definitely possible if they split the transaction into two settlement statements. If there are two, I only see the resale week side.

On the high closing costs it's the title insurance and the fact that I believe VA requires a licensed attorney. The govt fees only amount to $148.83. $130 of the closing costs is a loan origination fee. That makes me think that if this is a hybrid purchase then there are actually two loans and each is independent, which makes sense because I think you have to lien each deed separately. I don't have access to Williamsburg records to see if it's really MORI as the lien holder. My guess is no if there aren't any at GV in the last few years.
 

dioxide45

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Tax based on repurchase is wishful thinking.
I would agree that using the HOA/MVC buyback agreement as a basis for value isn't going to work. I don't think they could consider it an arms length transaction. The HOA could easily be able to offer to sell the weeks much cheaper in order to drive down value. I would think the value would be best assessed based on what they would resell for as a whole ownership condominium complex. It does seem that valuing it on the full developer costs is probably not the right thing to do and it is probably best to take legal action. The problem is that judges are part of the government and are elected by the population, so they can always be biased toward the people they represent.
 

Saintsfanfl

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I wouldn't sue in court but I would protest the valuation ever year and present a reasonable alternative valuation. It can't hurt. I know they probably did this but I would keep trying it.
 
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