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

[Greg G]

It is more about cash flow than sitting on piles of cash.

I would agree, although the law is essentially stating how the annual reserve is calculated (i.e based on Florida statutes as you indicated) and what estimates need to be shown.

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.

I'm not sure either where they get some of those estimated numbers either

 

[cubigbird]

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.

I wouldn’t be surprised if we begin to see defaults spike substantially in the timeshare industry in 2024. These increases can not continue or they’ll increase themselves right out of business.

 

[vol_90]

I wouldn’t be surprised if we begin to see defaults spike substantially in the timeshare industry in 2024. These increases can not continue or they’ll increase themselves right out of business.

If there is a significant increase in defaults along with increased MF's on points, inflation and higher interest rates likely impacting sales it will be interesting to follow ROFR on points over the next couple of years. ROFR is currently in the $3 to $3.50 range. Could it go lower?

 

[bobby]

We have the proposed budget for Lehigh Resort Club in Lehigh, FL. Same reserve funding as 2023. Info given: "The annual reserve funding uses a calculation as required by Florida Statute 718.112(2)(f)2. The total replacement cost of the reserve item minus the projected year-end reserve fund balance divided by the estimated remaining life expectancy of the item equals the funding for that item. " Our units are two story, not high risers, and well-maintained.

 

[timsi]

If there is a significant increase in defaults along with increased MF's on points, inflation and higher interest rates likely impacting sales it will be interesting to follow ROFR on points over the next couple of years. ROFR is currently in the $3 to $3.50 range. Could it go lower?

I believe it's possible. Marriott has already expressed its intention to decrease its inventory, and this aligns with a potential increase in owners looking to sell due to economic hardship.

 

[Fredflintstone]

I wouldn’t be surprised if we begin to see defaults spike substantially in the timeshare industry in 2024. These increases can not continue or they’ll increase themselves right out of business.

I agree. Inflation is like dominos. When everything is going up like the basics, people cut nonessentials like timeshares. The problem I see is if MFs continue to rise to stratospheric levels, the already tiny buyer market will shrink even more.


Sent from my iPad using Tapatalk

 

[Greg G]

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.

Yes, 24 years does seem awful old for furniture/fixtures.

Possibly a resort could stagger its replacements over the years then it could reduce holding piles of cash until replacement time of a given item and say only need reserves for the next few years? Possibly like the 8 year cycle you mention at Grand Vista.

So if say they replaced all furniture/fixtures (or some subgroup of it) in a unit every x years (x being the life expectancy of all furniture/fixtures or some subgroup of it), then maybe replace all furniture/fixtures (or some subgroup of it) in 1/x of the resort units one year, then replace all furniture/fixtures (or some subgroup of it) in another 1/x of the resort units the next year and so on. Or maybe replace all chairs in all units at the resort one year, then all sofas in all units the next year, and so on.

 

[pedro47]

Yes, 24 years does seem awful old for furniture/fixtures.

Possibly a resort could stagger its replacements over the years then it could reduce holding piles of cash until replacement time of a given item and say only need reserves for the next few years? Possibly like the 8 year cycle you mention at Grand Vista.

So if say they replaced all furniture/fixtures (or some subgroup of it) in a unit every x years (x being the life expectancy of all furniture/fixtures or some subgroup of it), then maybe replace all furniture/fixtures (or some subgroup of it) in 1/x of the resort units one year, then replace all furniture/fixtures (or some subgroup of it) in another 1/x of the resort units the next year and so on. Or maybe replace all chairs in all units at the resort one year, then all sofas in all units the next year, and so on.

This sound liked the old DRI model of the replacement of furniture in the resorts .

 

[1Kflyerguy]

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;
View attachment 82193

I agree that Furniture like chairs and sofa's won't last anywhere close to 24 years, but i wonder if "Fixtures" includes things like cabinetry and tiles, etc. That could last closer to 24 years... or is there a separate line item for that?

 

[Greg G]

I agree that Furniture like chairs and sofa's won't last anywhere close to 24 years, but i wonder if "Fixtures" includes things like cabinetry and tiles, etc. That could last closer to 24 years... or is there a separate line item for that?

No separate line item for that as the whole reserves table is shown below.
They have a note in the document the OP posted " Furniture and Fixtures – includes replacement of unit furnishings, equipment, and appliances"

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​

 

[jyoung3381]

The fully funded “Reserves” is a pay me now or pay me later dilemma…if you are fortunate to be in a fully funded reserve timeshare now, your reserves are earning a conservative 5% interest thus lowering your future increases. Most other than Marriott Vacation Clubs guided by conservative board of directors have Fully funded reserves. take a look at the insurance increase in this proposed operation budget….around 30%..? We all know what reality is in Florida….if they can get insurance….dramatic housekeeping labor. Increase…if your board skimps on housekeeping hourly rates, the best employees leave and you end up saving a few bucks, but your employees are all entry level or the positions remain empty..if your board refuses the increases necessitated by law, you will have to pay by special assessment a little later on….

 

[TUGBrian]

. The problem I see is if MFs continue to rise to stratospheric levels, the already tiny buyer market will shrink even more.

this 100%

 

[dioxide45]

The whole thing about fully funded reserves is if you look at past year maintenance fee threads, you will see that most other resorts are somewhat in line with Grande Vista when it comes to reserve funding.

All 2BR units at these resorts
Shadow Ridge Enclaves -Replacement Reserve was $367 in 2023
Fairway Villas - Replacement Reserve was $414 in 2023
Timber Lodge - Replacement Reserve was $377 in 2023
Willow Ridge Lodge - Replacement Reserve was $369 in 2023

Grande Vista Replacement Reserve was $374 in 2023. Those resorts above aren't magically doing something different with their $350-$415 that Grande Vista somehow needs $1,233.78 per unit week in order to do the same thing. If Grande Vista is somehow underfunding at $374, those other resorts seem to be tracking about the same...

 

[pedro47]

Does fully funded reserves only applies to timeshare resorts in Florida ?

 

[4TimeAway]

We get fooled by inflation as people spend every penny, they can muster to lower future costs.
Then we get fooled by deflation as nobody has any money to buy anything.

I see it more of a hedonistic increase in quality of accommodations. I mean a pool used to be a rectangular hole in the ground. Now it is how many slides, bars, lounge areas in the water and can 1,000 people fit there.
We might be reaching peak opulence like the roaring 20’s, but then again, we do just print money.


One thing that always strikes me, is most spending happens in boom times when labor and costs are 3x what they are at the crappy times. The contrarian in me always wonders what would happen if we shifted major spending to align with downturns and the values we could obtain.

 

[Greg G]

All 2BR units at these resorts
Shadow Ridge Enclaves -Replacement Reserve was $367 in 2023
Fairway Villas - Replacement Reserve was $414 in 2023
Timber Lodge - Replacement Reserve was $377 in 2023
Willow Ridge Lodge - Replacement Reserve was $369 in 2023

Grande Vista Replacement Reserve was $374 in 2023. Those resorts above aren't magically doing something different with their $350-$415 that Grande Vista somehow needs $1,233.78 per unit week in order to do the same thing. If Grande Vista is somehow underfunding at $374, those other resorts seem to be tracking about the same...

Would be interesting to see their reserves estimates table for comparison.

For Grand Vista it's interesting that the calculated Estimated Replacement cost/year/interval is $252.
So if you had a "fully funded" reserve balance you would not need to collect more than that per year.
If you could stagger/do partial replacements you could get away with less than fully funded reserve balances.

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		Estimated replacement cost per year of Estimated Useful life
RoofReplacement	25​	$22,551,142​	6​	$3,179,024​	$2,560,418​		$902,045.68​
FurnitureandFixtures	24​	$134,431,330​	4​	$14,299,409​	$23,816,797​		$5,601,305.42​
BuildingPainting	10​	$5,898,575​	9​	($2,652,616)​	$5,509,673​		$589,857.50​
ExternalBuildingMaintenance	30​	$30,731,089​	5​	$3,963,977​	$4,245,379​		$1,024,369.63​
PavementResurfacing	20​	$1,669,909​	12​	$450,228​	$80,603​		$83,495.45​
CommonAreaRehabilitation	20​	$70,285,807​	14​	($9,189,366)​	$20,978,553​		$3,514,290.35​
						Total Estimated replacement costs pre year of estimated useful life	$11,715,364.03​
						Total Intervals at the resort in a year	46,350​
						Estimated Replacement cost/year/interval	$252.76​

 

[dioxide45]

Would be interesting to see their reserves estimates table for comparison.

For Grand Vista it's interesting that the calculated Estimated Replacement cost/year/interval is $252.
So if you had a "fully funded" reserve balance you would not need to collect more than that per year.
If you could stagger/do partial replacements you could get away with less than fully funded reserve balances.

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		Estimated replacement cost per year of Estimated Useful life
RoofReplacement	25​	$22,551,142​	6​	$3,179,024​	$2,560,418​		$902,045.68​
FurnitureandFixtures	24​	$134,431,330​	4​	$14,299,409​	$23,816,797​		$5,601,305.42​
BuildingPainting	10​	$5,898,575​	9​	($2,652,616)​	$5,509,673​		$589,857.50​
ExternalBuildingMaintenance	30​	$30,731,089​	5​	$3,963,977​	$4,245,379​		$1,024,369.63​
PavementResurfacing	20​	$1,669,909​	12​	$450,228​	$80,603​		$83,495.45​
CommonAreaRehabilitation	20​	$70,285,807​	14​	($9,189,366)​	$20,978,553​		$3,514,290.35​
						Total Estimated replacement costs pre year of estimated useful life	$11,715,364.03​
						Total Intervals at the resort in a year	46,350​
						Estimated Replacement cost/year/interval	$252.76​

Resorts outside of Florida don't provide estimated budgets, so we really can't see those.

In the table above, are you adding the last column? That isn't in the paperwork I received for Grande Vista. They are also anticipating collecting $21 million, not just $3 million. If you go by the $20 million, then it would cost $431 per year per interval. I am also not sure what that last column is supposed to show? That would seem to indicate they only need to collect $252 per year per interval in order to cover the estimated replacement cost but they collected $374 in 2023. Grande Vista is a 25 year old resort which would have gone through nearly a full cycle of all renovations of items on the schedule and have yet to fully fund their reserves per Florida Statute.

As for villa renovations for Furnature and Fixtures, Marriott has, and still until recently renovated entire villas at a time. Nearly 75% of the resort has been renovated in the past two years. Perhaps this is why the reserve balance is low. 24 years could just be used as a calculation to determine the funds needed over that time even though they renovate every 5/10 years.

I still point out that those other resorts collecting the same aren't really doing anything different than Grande Vista is with the same amount of money. If Grande Vista were to collect $1233 per unit interval in 2024 and every year thereafter. there would certainly be more money there than is needed. Otherwise, if the $1233 is really what is needed, then you would think those other resorts are undercollecting also.

 

[Greg G]

That isn't in the paperwork I received for Grande Vista.

Yes, I added in a column to show Estimated replacement cost per year of Estimated Useful life to make a point/observation, otherwise all the other data shown is present in the 2024 MGV reserve budget table

In the table above, are you adding the last column? That isn't in the paperwork I received for Grande Vista. They are also anticipating collecting $21 million, not just $3 million. If you go by the $20 million, then it would cost $431 per year per interval. I am also not sure what that last column is supposed to show? That would seem to indicate they only need to collect $252 per year per interval in order to cover the estimated replacement cost but they collected $374 in 2023. Grande Vista is a 25 year old resort which would have gone through nearly a full cycle of all renovations of items on the schedule and have yet to fully fund their reserves per Florida Statute.

Yes, I used the wrong term "fully funded". What I meant to say is that if the reserve funding balance had been the (Current Age of item in years) * (Estimated Replacement cost / Estimated useful life of item in years) the cost per interval per year would be (Estimated Replacement cost / Estimated useful life in years) = $252
The point being, once an item is replaced, assuming it uses up the exact reserve funding for that item, the budget cost for it each year would ideally be (Estimated Replacement cost / Estimated useful life in years) per year , assuming , for the purpose of this point, the estimates don't change over the years (except for the estimated remaining useful life decreasing by 1 year). In reality those estimates will probably change, although hopefully not increase or increase by much per year (other than inflation, etc). As those estimates change each year the budget cost for that item for that year also changes, and that will most likely be the case in reality.

The roof, for example, is replaced every 25 years, and once it is replaced, assuming it exactly used up the entire roof funding reserve to do it, the budget for that item they collect per year would be (Estimated Replacement cost / Estimated useful life in years) = $22,551,142 / 25. Which comes to $902,045/year or $902,045/46,350 intervals = $19.5/interval (what each unit owner pays). Again assuming the estimates don't change.

So basically , because of the fully funded definition, they are having to pay more per year for 4 years ($1233/year), which is due to the minimum remaining useful life item ( 4 years for the furniture/fixtures), and then decreasing after that each year down to that stable value of $252/year after 14 years, for the maximum remaining useful life of an item (the 14 years for CommonAreaRehabilitation). Again assuming the estimates don't change except for estimated remaining years of life decreases by 1 year each year).
Thus they are not paying $1233 forever.

Yes, they collected $374 in 2023 for the reserves but they also didn't meet the full funding criteria either with that budgeted amount. They picked something over $252 to meet some funding criteria they had, with what funding balances they had, which was less than the fully funded criteria.

As for villa renovations for Furnature and Fixtures, Marriott has, and still until recently renovated entire villas at a time. Nearly 75% of the resort has been renovated in the past two years. Perhaps this is why the reserve balance is low. 24 years could just be used as a calculation to determine the funds needed over that time even though they renovate every 5/10 years.

Yes they are most likely replacing certain furniture/fixture items in that furniture/fixture category more often and then scaling the cost to 24 years. So for example if they did a certain item in all units every 6 years then they multiply the cost by 4 to the get the cost for replacing that item (4 times) in 24 years. As someone mentioned in a post maybe they are using the longest estimated life item in that category for some reason for the table.

I still point out that those other resorts collecting the same aren't really doing anything different than Grande Vista is with the same amount of money. If Grande Vista were to collect $1233 per unit interval in 2024 and every year thereafter. there would certainly be more money there than is needed. Otherwise, if the $1233 is really what is needed, then you would think those other resorts are undercollecting also.

Possibly they are if they are not meeting the full funding definition. Would need to see the reserve budget for them to determine that. Possibly they are staggering/doing partial replacements and thus the reserve funding balances are lower? Note that the laws requirement starts in 2025 so maybe they are waiting until then?

 

[dioxide45]

Yes, I added in a column to show Estimated replacement cost per year of Estimated Useful life to make a point/observation, otherwise all the other data shown is present in the 2024 MGV reserve budget table



Yes, I used the wrong term "fully funded". What I meant to say is that if the reserve funding balance had been the (Current Age of item in years) * (Estimated Replacement cost / Estimated useful life of item in years) the cost per interval per year would be (Estimated Replacement cost / Estimated useful life in years) = $252
The point being, once an item is replaced, assuming it uses up the exact reserve funding for that item, the budget cost for it each year would ideally be (Estimated Replacement cost / Estimated useful life in years) per year , assuming , for the purpose of this point, the estimates don't change over the years (except for the estimated remaining useful life decreasing by 1 year). In reality those estimates will probably change, although hopefully not increase or increase by much per year (other than inflation, etc). As those estimates change each year the budget cost for that item for that year also changes, and that will most likely be the case in reality.

The roof, for example, is replaced every 25 years, and once it is replaced, assuming it exactly used up the entire roof funding reserve to do it, the budget for that item they collect per year would be (Estimated Replacement cost / Estimated useful life in years) = $22,551,142 / 25. Which comes to $902,045/year or $902,045/46,350 intervals = $19.5/interval (what each unit owner pays). Again assuming the estimates don't change.

So basically , because of the fully funded definition, they are having to pay more per year for 4 years ($1233/year), which is due to the minimum remaining useful life item ( 4 years for the furniture/fixtures), and then decreasing after that each year down to that stable value of $252/year after 14 years, for the maximum remaining useful life of an item (the 14 years for CommonAreaRehabilitation). Again assuming the estimates don't change except for estimated remaining years of life decreases by 1 year each year).
Thus they are not paying $1233 forever.

Yes, they collected $374 in 2023 for the reserves but they also didn't meet the full funding criteria either with that budgeted amount. They picked something over $252 to meet some funding criteria they had, with what funding balances they had, which was less than the fully funded criteria.



Yes they are most likely replacing certain furniture/fixture items in that furniture/fixture category more often and then scaling the cost to 24 years. So for example if they did a certain item in all units every 6 years then they multiply the cost by 4 to the get the cost for replacing that item (4 times) in 24 years. As someone mentioned in a post maybe they are using the longest estimated life item in that category for some reason for the table.


Possibly they are if they are not meeting the full funding definition. Would need to see the reserve budget for them to determine that. Possibly they are staggering/doing partial replacements and thus the reserve funding balances are lower? Note that the laws requirement starts in 2025 so maybe they are waiting until then?

Do you own Marriott resorts? You don't seem to understand how they do renovations. They don't do piecemeal type of renovations like you are suggesting where they change out the sofa this year and then the mattresses next year and the carpeting three years down the road. Marriott does a complete soft goods overhaul ever 5-6 years then at the next 5-6 year mark they do a case goods renovations and appliances and other hard goods (think headboard, side tables, dresser) will usually be replaced. Cabinets and other hard fixtures, like tile, might make it 15 years or more, but not always. Soft goods usually has new paint, floor covering, drapery and furniture being replaced.

As for roofs at Grande Vista. Those certainly won't be replaced all at one time either. The resort was built out over a 10 years period. Some of the buildings are over 20 years old and others are only about 16. They don't need all the money there to replace all the roofs at once. Just enough money to replace the ones that are coming up on replacement. So for roofs, they will never need to have $22 million in cash.

As for the $252, the last time they collected less than that was in 2015. So it would seem they have been over collecting for about 8 years?

The problem seems to be that none of us here really understand the fully funded calculation, myself included.

 

[Greg G]

Do you own Marriott resorts? You don't seem to understand how they do renovations. They don't do piecemeal type of renovations like you are suggesting where they change out the sofa this year and then the mattresses next year and the carpeting three years down the road. Marriott does a complete soft goods overhaul ever 5-6 years then at the next 5-6 year mark they do a case goods renovations and appliances and other hard goods (think headboard, side tables, dresser) will usually be replaced. Cabinets and other hard fixtures, like tile, might make it 15 years or more, but not always. Soft goods usually has new paint, floor covering, drapery and furniture being replaced.

No I don't own a Marriott, and yes that's good how they do the replacement and makes sense and thanks for pointing that out. I was saying a possible way to do it, admittedly exaggerated, to illustrate a point as to how to reduce having larger reserve balances than needed at any one time, not how they actually do it. The way they actually do seems like it should also reduce the maximum reserve balances needed.

It seems like because the table is using long estimated useful lifetimes for some categories (like furniture/fixtures) where some subgroups of items in these categories may actually have much shorter lifetimes and thus are replace more often (like the soft goods you mention) causes the reserve funding cash pile to be larger than it needs to be if the definition of fully funded is being used on just solely those table numbers. If these could all be broken out into individual line items to help account for these differing useful lifetimes then it would better reflect things and the fully funded definition would be applied to each line item.

I agree they also don't need money to replace all the roofs at once, as you indicated, just attempting to show the avg cost/year for that item.

As for the $252, the last time they collected less than that was in 2015. So it would seem they have been over collecting for about 8 years?

I suppose it depends on what reserve balance funding they had and their estimates in those prior years , but based solely on the numbers in the table, that is the value you could use once the appropriate reserve funding balance has been reached as I indicated, or all items have been replaced. That is once I have replaced an item you budget (estimated replacement cost of that item / estimated useful lifetime of that item in years) each year so that at the end of estimated useful lifetime years you have a cash pile reserve balance equal to estimated replacement cost of that item to be able to replace it. They can always collect more if they want to, possibly to smooth out short falls if the estimates are off later on.

It's also possible behind the scenes they are actually breaking down a category into several subgroups each (like soft goods, cabinets and hard fixtures, etc) and coming up with a budgeted amount for the year from that, and we can't see how they got the budget amount.

The problem seems to be that none of us here really understand the fully funded calculation, myself included.

I think I understand, although could be wrong, the fully funded calculation as applied to an item that has an estimated replacement cost , an estimated useful lifetime, an estimated remaining useful life, and a reserve funding balance as

budget for that reserve item for the year = (estimated replacement cost - reserve funding balance) / estimated remaining useful life.
So that by budgeting that amount per year from now until the useful life of the item has occurred (i.e. from now for remaining useful lifetime years) you have exactly the estimated replacement cost as a funding balance so you can replace the item (again excluding changes that occur in the estimates from year to year as the item gets older). I think that is what they are trying to enforce with the law so that we know by the end of an items useful life we have the money to replace it.

Now they could be doing things behind the scenes such as actually breaking down a category into several subgroups each (like soft goods, cabinets and hard fixtures, etc) each with differing useful and remaining lifetimes and coming up with a budgeted amount from that, and we can't see what is going on.

 

[evonlef]

We own 2 Marriott timeshares in CA. Both had significant financial losses in 2022 with large reductions in Reserve. In CA there were very high increases in wages and unit renovations. I expect high maintenance fee increases. Both Boards have majority owner members that clearly want luxury facilities, although one President works for MVCI.

 

[Red elephant]

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?

I am at Sheraton Vistana Villages and was just told these reserves are for all condos in the country not just Florida . So all our maintenance fees will go up. Is this true?

 

[claraj]

So all our maintenance fees will go up. Is this true?

This statement is probably true ... that maintenance fees are going up (don't they generally go up every year with a few exceptions?) I have not heard anything about the first statement (that all states require fully refunded reserves).

 

[rickandcindy23]

We own 2 Marriott timeshares in CA. Both had significant financial losses in 2022 with large reductions in Reserve. In CA there were very high increases in wages and unit renovations. I expect high maintenance fee increases. Both Boards have majority owner members that clearly want luxury facilities, although one President works for MVCI.

Is this Shadow Ridge, by any chance?

 

[pedro47]

Does this law also applies to hotels and condominiums in the state of Florida?