Grande Vista 2024 fee proposed to increase over $1000! What is going on?

[rickandcindy23]

The price of real estate and rentals is very high in Orlando, which is why you see apartments going up next to the popular timeshare resorts.

I remember when Rick and I toured a house at Celebration that was for sale for $140,000 and it had a guest house on top of the garage. It was a beautiful home. That home today, I can only imagine what it would cost. I know that we have friends who bought a nice home between Tampa and Orlando, and they paid over $1 million for it. Ten years ago, they could have gotten it for 20% of that cost.

 

[The Colorado Kid]

The price of real estate and rentals is very high in Orlando, which is why you see apartments going up next to the popular timeshare resorts.

I remember when Rick and I toured a house at Celebration that was for sale for $140,000 and it had a guest house on top of the garage. It was a beautiful home. That home today, I can only imagine what it would cost. I know that we have friends who bought a nice home between Tampa and Orlando, and they paid over $1 million for it. Ten years ago, they could have gotten it for 20% of that cost.

Makes me wonder what that $1 million+ friend's home will cost 10 years from now.

 

[SueDonJ]

I beleive I have only seen them in Florida. Perhaps also SC.

I've never seen a proposed budget for SurfWatch or Barony Beach in SC, but during the years that a waiver vote of legislated "Fully Funded Reserves" has been required, it's been explained in the Annual Meeting packet. I just voted my SurfWatch and Barony proxies two days ago and it's not a voting issue this year.

I'm confused about Florida's Fully-Funded legislation. Does the post-building collapse legislation that requires additional Reserves incorporate the previous F-F requirements, or are they two separate components? I'm not sure I'm wording this correctly but I guess what I'm asking is, is the F-F assessment astronomical because it's like two separate legislated obligations, and, is the newly-legislated component even eligible for waiver votes?

 

[dioxide45]

I've never seen a proposed budget for SurfWatch or Barony Beach in SC, but during the years that a waiver vote of legislated "Fully Funded Reserves" has been required, it's been explained in the Annual Meeting packet. I just voted my SurfWatch and Barony proxies two days ago and it's not a voting issue this year.

I'm confused about Florida's Fully-Funded legislation. Does the post-building collapse legislation that requires additional Reserves incorporate the previous F-F requirements, or are they two separate components? I'm not sure I'm wording this correctly but I guess what I'm asking is, is the F-F assessment astronomical because it's like two separate legislated obligations, and, is the newly-legislated component even eligible for waiver votes?

I am confused also, but what I understand is that for the most part, only a few things changed when it comes to reserves. A condo can not vote to waive fully funding of reserves unless there has been a reserve study in the past 36 months. I think the threshold to waive fully funding of reserves went up to 75% of those that vote. I would think for a BOD to be prudent, they shouldn't be suggesting reserves that fall short of the reserve study. This is in addition to certain requirements where it comes to inspections related to the Seaside Condo collapse.

 

[Greg G]

The following is from an article on that Florida law (Senate Bill 4-D (“S.B. 4-D”), which was enacted in May 2022
https://www.bilzin.com/we-think-big...new-mandatory-requirements-for-florida-condos

The article is basically saying there are two new requirements:

1) "... Senate Bill 4-D (“S.B. 4-D”), which was enacted in May 2022 in response to the collapse of Champlain Towers South, attempts to address the foregoing problems. It amends the Florida Condominium Act (“Act”) in two significant ways with respect to condominium reserves. First, condominium associations must now have a structural integrity reserve study (“SIRS”) completed every 10 years after the condominium’s creation for each building on the condominium property, that is three stories or higher in height.[1] The Act defines a “structural integrity reserve study” as:
[A] study of the reserve funds required for future major repairs and replacement of the common areas based on a visual inspection of the common areas. A structural integrity reserve study may be performed by any person qualified to perform such study. However, the visual inspection portion of the structural integrity reserve study must be performed by an engineer licensed under Chapter 471 or an architect licensed under Chapter 481. At a minimum, a structural integrity reserve study must identify the common areas being visually inspected, state the estimated remaining useful life and the estimated replacement cost or deferred maintenance expense of the common areas being visually inspected, and provide a recommended annual reserve amount that achieves the estimated replacement cost or deferred maintenance expense of each common area being visually inspected by the end of the estimated remaining useful life of each common area.

2) "beginning in 2025, members of a unit owner-controlled condominium association may not elect to provide no reserves or less reserves than required for the following building components: (1) the roof; (2) load-bearing walls or other primary structural members; (3) floors; (4) the foundation; (5) fireproofing and fire protection systems; (6) plumbing; (7) electrical systems; (8) waterproofing and exterior painting; (9) windows; and (10) any other item that has a deferred maintenance expense or replacement cost that exceeds $10,000 and the failure to replace or maintain such item negatively affects one or more of the components above, as determined by a licensed engineer or architect performing the visual inspection portion of the SIRS.


I believe "fully funded reserves" would be defined as "annual reserve amount that achieves the estimated replacement cost of items by the end of the estimated remaining useful life of the items."
Fully funded is also explained in https://www.reserveadvisors.com/resources/blog/what-percent-should-hoa-reserves-be-funded/

So it looks like the law is adding maintenance costs for structural integrity analysis and reserves for replacement of structural integrity items, and possibly increasing maintenance fees to achieve fully funded reserves and to cover items that may not have been in the reserves before but are now required by law.

Not sure about the waiving of reserves mentioned in previous posts as the above states "may not elect to provide no reserves or less reserves than required" so possibly less reserves than required is not necessarily the same as fully funded if you can vote to say what is required? Also the wording " members of a unit owner-controlled condominium association"

 

[bnoble]

There is also SB 154, which is referred to as the "glitch bill" which amends this one. I don't know the details.

 

[Greg G]

SB 4D bill https://www.flsenate.gov/Session/Bill/2022D/4D/?Tab=BillText
and the SB 154 https://www.flsenate.gov/Session/Bill/2023/154/ByVersion

I haven't looked either as to how 154 amends the 4D bill.

 

[echino]

Net Operating Fee already increased 15% in last year‘s budget. Now 23% more. Both are not in line with average wage increases in the US. The newest jobs report (Labor Department, 10/6/2023) from September indicates a 4.2% average hourly rate increase. Who is benefiting from this disproportionate increase?

The developer is benefiting, via increased management fee, which is calculated as a percentage of operating expenses. The developer has a direct incentive to increase budgeted operating expenses. Owners have no say on the budget, which is prepared by the developer, and voted on by the board controlled by the developer.

 

[Bunk]

Does anyone know whether a Structural Integrity Reserve Study has already been completed at any Marriott Timeshares?
If so, are the actual studies being made available to owners.

 

[dioxide45]

Does anyone know whether a Structural Integrity Reserve Study has already been completed at any Marriott Timeshares?
If so, are the actual studies being made available to owners.

I beleive Ocean Pointe did one, which resulted in the findings and repairs needed for Kingfish. I don't know if there is a requirement to provide them to owners, just to purchasers of new residential units. I suspect you can contact your BOD and request a copy.

 

[Superchief]

The 23% increase in Operating Fee is a big concern. Reserve Fee can change based on the waiving of fully funded reserves. But I suspect Operating Fee is more likely to stick close to the proposed budget.

I noticed the management fee expense almost doubled. That is likely due to the proposed increase in reserves. This increase should go down substantially if lower reserve funding is approved.

 

[dioxide45]

I noticed the management fee expense almost doubled. That is likely due to the proposed increase in reserves. This increase should go down substantially if lower reserve funding is approved.

This is true and I didn't calculate that into the 15.5% I mentioned above. When I reduce the management fee based on lower reserves, the increase is about 13.8%.

 

[Venter]

If Lakeshore Reserve votes to fully fund, the MF will be $5000.

 

[Greg G]

Don't know if SB 154 affects this part of SB 4D but the relevant parts of 4D in regards to reserves look to start on (f) annual budget section 2a page 34,
and (g) Structural integrity reserve study page 37 of the following document.

SB 4D bill https://www.flsenate.gov/Session/Bill/2022D/4D/?Tab=BillText

 

[amycurl]

Makes me wonder what that $1 million+ friend's home will cost 10 years from now.

Less, because homeowner's insurance won't be available for it, and the pool of buyers will decrease proportionately.

 

[TheTimeTraveler]

Makes me wonder what that $1 million+ friend's home will cost 10 years from now.

I think that may well depend on whom is in the White House in ten years from now.............






.

 

[Greg G]

I just got an email from the MGV Board with an attached budget showing that they plan to increase the maintenance fee from $1681 to $2,818 in 2024 (so 67%) in order to build up the reserve. This is egregious. Can they do this? Is this a 1 time assessment or new ongoing fee?

After looking at the budget you attached, that increase, or at least $842 of it for all reserve items, looks to be per year for at least 4 years (the smallest remaining life of all the reserve items) based on the reserve funding below and then decreases after that until 14 years out (the longest remaining life item) to reach a stable value / year (excluding the effects of inflation, actual replacement cost, and actual life incurred on a reserve item).

It's appears your resort is severely underfunded. In generally, the amount you should be reserving for a given item each year is (items replacement cost - items reserve balance )/ items remaining useful life which achieves what is considered fully funding.

For example the one item "Furniture and Fixtures" has a total replacement cost of $134,431,330 in 4 years, the remaining useful life out of its 24 year life expectancy, but the resort only has $14,299,409 in reserve balance so it needs $134,431,330 - $14,299,409 = $120,131,921 added funds in 4 years, or $30,032,980/year to be able to replace that item assuming the given life expectancy (for some reason the table shows less?, maybe its remaining years plus 1 or something). Ideally if it had been properly fully funded from the beginning you would only have needed $134,431,330 / 24 years = $ 5,601,305/year (less than 1/5 what you need now per year to reach fully funding the replacement cost of that item).

Components	Estimated Useful Life In Yrs	Estimated Replacement Cost	Estimated Remaining Useful Years	Anticipated Beginning Fund Balance As Of January 1, 2024	Contribution For 2024
RoofReplacement	25​	$22,551,142​	6​	$3,179,024​	$2,560,418​
FurnitureandFixtures	24​	$134,431,330​	4​	$14,299,409​	$23,816,797​
BuildingPainting	10​	$5,898,575​	9​	($2,652,616)​	$5,509,673​
ExternalBuildingMaintenance	30​	$30,731,089​	5​	$3,963,977​	$4,245,379​
PavementResurfacing	20​	$1,669,909​	12​	$450,228​	$80,603​
CommonAreaRehabilitation	20​	$70,285,807​	14​	($9,189,366)​	$20,978,553​

 

[hcarman]

I just got an email from the MGV Board with an attached budget showing that they plan to increase the maintenance fee from $1681 to $2,818 in 2024 (so 67%) in order to build up the reserve. This is egregious. Can they do this? Is this a 1 time assessment or new ongoing fee?

A lot of times the board votes down to fully fund the reserves. If they raise it that much they are going to have A LOT of defaults.

 

[hcarman]

of all the things to drive increasing maintenance fees, raising wages of the lower levels of the workforce are one thing that I totally agree with. We have such an excellent experience thanks to the legions of working people who do things we often never see or hear about, I'm glad to pay them decent wages.
Unfortunately their raises are usually eaten up with increased costs of living, but that is an issue I can't resolve.

And it tends to also affect the middle class because often their wages have not gone up enough to offset the increased costs of living.

 

[rickandcindy23]

People will be dumping their Florida timeshares. Watch for a lot on ebay over the next few years.

 

[4TimeAway]

People will be dumping their Florida timeshares. Watch for a lot on ebay over the next few years.

The insurance looks cheap. Are they self-insured? I can only imagine the dramas.

 

[AlmostRetired]

MFs have gone up and it gets a little painful for all every year (drip, drip, drip). When the use or trading is not worth the MF, I will get rid of it. I am not being flip with my comment. In 2015 when I gave away my non Marriott timeshare, I paid closing costs and first year MF because the trading value went down over time. I actually got rid of two Monarch units, one a 4th floor direct ocean front. We had a 3 year assessment (150 per year) that was never eliminated and I saw the handwriting on the wall. I also started to think if I questioned this for summer, what are people owning Dec, Jan and Feb thinking. Between the only sleep 6 and MF, even though I really like the Monarch, I sold. I purchased at the GO instead.

If one of the low level paying jobs eliminated was housekeeping to save on the MF, and at check-in they gave you towels, sheets and had a vacuum cleaner on every floor, how many people would sign up for that (rhetorical question)? This is more important than the lazy stream they spent money on at the GO. How about line item veto of the budget (kidding). I do not know what the answer is. I do know if paying the MF becomes a challenge and he difference between MF and renting gets small enough, I will sell and not look back.

 

[pedro47]

So every year will their be a similar increase in this line item?

 

[dioxide45]

After looking at the budget you attached, that increase, or at least $842 of it for all reserve items, looks to be per year for at least 4 years (the smallest remaining life of all the reserve items) based on the reserve funding below and then decreases after that until 14 years out (the longest remaining life item) to reach a stable value / year (excluding the effects of inflation, actual replacement cost, and actual life incurred on a reserve item).

It's appears your resort is severely underfunded. In generally, the amount you should be reserving for a given item each year is (items replacement cost - items reserve balance )/ items remaining useful life which achieves what is considered fully funding.

For example the one item "Furniture and Fixtures" has a total replacement cost of $134,431,330 in 4 years, the remaining useful life out of its 24 year life expectancy, but the resort only has $14,299,409 in reserve balance so it needs $134,431,330 - $14,299,409 = $120,131,921 added funds in 4 years, or $30,032,980/year to be able to replace that item assuming the given life expectancy (for some reason the table shows less?, maybe its remaining years plus 1 or something). Ideally if it had been properly fully funded from the beginning you would only have needed $134,431,330 / 24 years = $ 5,601,305/year (less than 1/5 what you need now per year to reach fully funding the replacement cost of that item).

Components	Estimated Useful Life In Yrs	Estimated Replacement Cost	Estimated Remaining Useful Years	Anticipated Beginning Fund Balance As Of January 1, 2024	Contribution For 2024
RoofReplacement	25​	$22,551,142​	6​	$3,179,024​	$2,560,418​
FurnitureandFixtures	24​	$134,431,330​	4​	$14,299,409​	$23,816,797​
BuildingPainting	10​	$5,898,575​	9​	($2,652,616)​	$5,509,673​
ExternalBuildingMaintenance	30​	$30,731,089​	5​	$3,963,977​	$4,245,379​
PavementResurfacing	20​	$1,669,909​	12​	$450,228​	$80,603​
CommonAreaRehabilitation	20​	$70,285,807​	14​	($9,189,366)​	$20,978,553​

I am not really sure where they get those numbers. I suspect some of them are based on Florida statutes. As for furniture and fixtures. They certainly won't need to replace all that in 4 years and the useful life of much of it is less than 24 years. Imagine a 24 year old sofa... With resorts of this size they are always cycling through some form of renovation to villas. At Grande Vista, this is an eight year cycle. Also consider that if they put up $24million each year for the next four years, that puts them at or over $100 million. They can also use funds from other reserve items to cover if needed. It is more about cash flow than sitting on piles of cash.

Here is Harbour Lake;

 

[Superchief]

I've noticed that a lot of the resorts are using the reserve funds for things that are nice to have or on a GM's wish list. These are the types of things that the boards and owners need to start resisting. MF's can't go up at higher than inflation rates every year or none of us will be able to keep them.