HUGE 2017 MF's increases at SC Resorts / "Disaster Recovery" [Multi-threads merged.]

[SnowDogDad]

Dioxide45 is spot on... Contact your board of directors or your on-site property manager and ask them what is driving this increase. If your reserves are well funded, 17% is almost unprecedented. Hurricane insurance might be a good culprit.

I'm on the HOA board at the Grand Residence Club in Lake Tahoe and I'm active with the HOA at another property that I own. At each meeting, I insist that we include in the minutes of the meeting the key factors that affect budget increases.

Marriott's financial people are very good at reserve budgeting.

Our reserve budget includes projections 20+ years in to the future and not only projects future expenses such as renovations but big ticket items like roof replacements, concrete resurfacing, painting, elevator repairs, pool/spa pumps, etc... A good property manager includes these things in budget plans and thus helps to minimize significant increases in the reserve portion of the budget.

What is more difficult to project year-to-year is things that you can't control. Minimum wage increases are a good example. Satisfying Virginia Graeme Baker Pool & Spa Safety Act is another. Insurance. Lawsuits.

I am curious to hear what you find.

 

[davidvel]

Our reserve budget includes projections 20+ years in to the future and not only projects future expenses such as renovations but big ticket items like roof replacements, concrete resurfacing, painting, elevator repairs, pool/spa pumps, etc... A good property manager includes these things in budget plans and thus helps to minimize significant increases in the reserve portion of the budget.

All these should be included in any reserve budget. In California they are required to be, and I'd hope other states as well.

 

[SueDonJ]

[Content deleted after the included link became disabled due to the TUG board system changes.]

 

[MOXJO7282]

So I went on the MVC website and opened up a chat session with an CSR and stated my issue to see if they could direct me to the right person because when I call the resort they've not been responsive. I will try the Board email that I did locate on the website

This chat person mentioned they were aware of a $200 added charge related to the hurricane but couldn't give me anymore details. If it is a special assessment I'm less concerned because then next year the lower costs apply but if just a straight increase somehow then that will hurt more.

 

[MOXJO7282]

So there is good news at the end of the day that instead of a significant annual increase there is just the one-time payment of $200 for the hurricane damage for the OceanWatch. For the GO it looks like it was $95 and $50 for the SurfWatch. I'm still awaiting my Harbour Pointe MFs and assume they are determining the same special assessment to apply.

Nobody wants special assessments but in this case I'd rather is a 1-time fee than annual increase.

 

[SueDonJ]

So there is good news at the end of the day that instead of a significant annual increase there is just the one-time payment of $200 for the hurricane damage for the OceanWatch. For the GO it looks like it was $95 and $50 for the SurfWatch. I'm still awaiting my Harbour Pointe MFs and assume they are determining the same special assessment to apply.

Nobody wants special assessments but in this case I'd rather is a 1-time fee than annual increase.

Joe, I sent you a PM. Can you please confirm the exact amount that's on the line item in the Operating Budget PDFs for both Monarch and OceanWatch, so that the posts in the MF's thread can be edited to include this information? Thanks!

 

[MOXJO7282]

Joe, I sent you a PM. Can you please confirm the exact amount that's on the line item in the Operating Budget PDFs for both Monarch and OceanWatch, so that the posts in the MF's thread can be edited to include this information? Thanks!

Yes thank you Susan for making me aware of the GO one. I assumed that was just a straight increase so that was welcome news as well.

As for MOW I was told by 2 different MAR CSRs that it was $200 even but haven't seen written confirmation of this yet. When I do I'll share.

 

[SueDonJ]

Yes thank you Susan for making me aware of the GO one. I assumed that was just a straight increase so that was welcome news as well.

As for MOW I was told by 2 different MAR CSRs that it was $200 even but haven't seen written confirmation of this yet. When I do I'll share.

Thanks!

 

[dioxide45]

I am still surprised that these properties are not provisioning to cover for a hurricane deductible in their annual fees. It isn't like they aren't in prime hurricane territory. Sure, this is fairly rare, but chances are sooner or later this would have happened. Had they provisioned for hurricane deductible, they wouldn't be going to the owners asking for a one time SA/payment.

Something I found out about Grande Vista while I attended the annual meetings this year. They have provisioned for and have a $3 million liquidity fund. These funds are set aside for surprise items that are difficult to forecast. They want to avoid having to go to the owners to ask for more money if something were to come up. Now of course, there are other things the Grande Vista board is doing that I don't necessarily agree with, like spreading the millions of dollars they have in reserves across hundreds accounts at hundreds of FDIC insured institutions. I don't want to think of what their funds management costs are for that.

 

[SueDonJ]

I am still surprised that these properties are not provisioning to cover for a hurricane deductible in their annual fees. It isn't like they aren't in prime hurricane territory. Sure, this is fairly rare, but chances are sooner or later this would have happened. Had they provisioned for hurricane deductible, they wouldn't be going to the owners asking for a one time SA/payment.

Something I found out about Grande Vista while I attended the annual meetings this year. They have provisioned for and have a $3 million liquidity fund. These funds are set aside for surprise items that are difficult to forecast. They want to avoid having to go to the owners to ask for more money if something were to come up. Now of course, there are other things the Grande Vista board is doing that I don't necessarily agree with, like spreading the millions of dollars they have in reserves across hundreds accounts at hundreds of FDIC insured institutions. I don't want to think of what their funds management costs are for that.

Considering how rare it is for them to have to collect following catastrophic incidents, I'm okay with them not keeping the entire insurance deductible amount in reserves. I prefer having my money working for me than working for them, and wouldn't want to have to think about them being tempted to misuse accumulated funds for other purposes. Of course it's the financial histories of my resorts that lead me to be comfortable with this particular item - if I'd felt at any time over our years of ownership that they weren't properly anticipating reserves for routine/responsible maintenance and refurbs, then I wouldn't be as comfortable with this.

I have no idea, though, haven't ever thought about, how they bank the reserves. What would be the purpose of spreading it all around like GV is doing?

 

[Fasttr]

What would be the purpose of spreading it all around like GV is doing?

Sounds like they want to assure themselves that all of the funds are fully covered via FDIC insurance, which generally limits coverage to $250K in deposits per depositor, per bank. So as dioxide45 described it, it sounds like they have $250K in total deposits at a lot of banks.

 

[dioxide45]

Sounds like they want to assure themselves that all of the funds are fully covered via FDIC insurance, which generally limits coverage to $250K in deposits per depositor, per bank. So as dioxide45 described it, it sounds like they have $250K in total deposits at a lot of banks.

It is exactly that. They have funds in individual $250K accounts at multiple (hundreds) of institutions. I don't think they do this with the operating fund, just reserves and perhaps taxes. It seems like they are trying to protect against a doomsday scenario.

 

[stans2000]

Insurance Deductible

The Insurance Deductible is $3.6 million. When you divide that by the 18,592 units at Oceanwatch it come to $196 per unit. This is all disclosed in the letter from the Owners Association.

Dear Marriott’s OceanWatch Villas at Grande Dunes Owner,
Thank you for continued prompt payment of your annual maintenance fee. It allows the Association to
manage cash flow needed to provide the best vacation experience possible for all Owners throughout the year.
Your 2017 Maintenance Fee is due in January. As always, you have the option of paying by check, electronic
bank transfer or by credit card. However, we would like to request that you pay by check or by electronic bank
transfer. Credit card fees are estimated to cost the Association more than $336,000 in 2017. If all owners paid
their maintenance fee by check or electronic bank transfer, this would save the Association approximately
$18.07 per unit week in credit card fees, and would allow us to continue to improve your resort while reducing
your maintenance fee by 1.3% per unit week. Many Owners are paying their maintenance fee by check or
electronic bank transfer, and we would like to encourage all Owners to as well to help reduce the maintenance
fee.
As you are probably aware, in October 2016, Hurricane Matthew caused significant damage all along the east
coast, including the Myrtle Beach area. Due to the amount of damage sustained at OceanWatch, the 2017
Maintenance Fee includes a “Disaster Recovery” fee of $200 per unit week to cover the expected insurance
deductible from this event. The total cost of that damage has not yet been determined as work is still being
completed. However, the total cost of repair is expected to far exceed the deductible of $3.67M. The damage
at the resort was considerable and included:
 Four of the five buildings sustained roof damage
 The vast majority of villas sustained water damage causing the need to replace carpeting, remove and
replace drywall, replace baseboards and paint baseboards and walls to prevent mold growth and make the
villas habitable
 The lobby carpet and some drywall has been replaced due to water intrusion
 Water damage to the external walls of the buildings
 The pergola sunshade in front of the Starfish building was destroyed
 A 30-foot stretch of the new beach boardwalk was washed away
 Fallen trees and landscaping damage
The OceanWatch Team has worked tirelessly on our behalf to get the resort back up and running. The resort
started a staged reopening on Friday, October 28, 2016; 20 days after Hurricane Matthew hit and is not
expected to be fully operational until November 19, 2016. Because of the amount of work being done to
reopen, the scheduled refurbishment of the Starfish and Maple buildings has been pushed back to begin in
January 2017 with completion as originally scheduled in March 2017.
Insurance claims are underway to recoup all possible funds from this natural disaster. We hope that you
understand the need for the Disaster Recovery fee. Thank you in advance for your continued support.
If you have any questions regarding your 2017 Maintenance Fee, please email the Board at
mvwowownerboard@vacationclub.com.
Sincerely,
Brian Myers Elizabeth Matthew Birgit Koellner-Gozlan
President Vice President Secretary
Glenda Sanderson Donald Mulligan
Treasurer Director
OceanWatch Villas Owners Association
Board of Directors

 

[MOXJO7282]

So the hurricane ended up costing us $790 in disaster recovery fees for our MOW and GO weeks. This makes the true MOW MFs $1215.30 that includes a 3.49% increase over 2016. For such a wonderful resort that is a manageable cost and increase.

 

[tgropp]

Marriott acquires Starwood/Sheraton and suddenly Marriott MF's go skyward. What a coincidence !

 

[SueDonJ]

Marriott acquires Starwood/Sheraton and suddenly Marriott MF's go skyward. What a coincidence !

Actually, now that the higher-than-expected fee increases at the SC resorts have been fully explained by Marriott, it appears as though most of us who own there understand the situation and don't find fault with Marriott for it.

Other than that, the Marriott, Int'l hotel company's purchase of Starwood's hotel company has nothing whatsoever to do with either of the timeshare companies, Marriott Vacations Worldwide or Vistana Signature Experiences, which were both spun off of the parent companies before the hotel company acquisition was completed. Other than MVW paying a Management Fee to MI, there is no connection or correlation to the timeshare companies that would enable a MF's spike that would benefit MI and could be hidden.

 

[pedro47]

I feel the letter from Marriott was a good start explaining the increase.

 

[SueDonJ]

The Barony Beach Operating Budget has been posted today with a similar letter/explanation about the "Disaster Recovery" fee, which at Barony equals $75.00 of the $119.13 increase.

 

[aka Julie]

Two things that have always bothered me about MF fee invoices:

1. We have to go look for them if we want to be able to spread out our payments for multiple weeks. Eventually MVCI will get around to notifying us via email or snail mail. And then it's been hit or miss for at least the last 3 years to be able to pay online.
2. Why can't they publish the budget the same time as the invoice is issued. They obviously have it finalized, but it always comes a week or 2 after invoices. I like to know what I'm paying for. Guess they think us dumb stooges don't care and pay up for whatever they decide.

 

[GreenTea]

I went to the owner's session at GO two weeks ago. The speaker said once a storm is named that deductibles change and the GO one was higher than the damage incurred. I think our extra fee was $97. He said each of the HH resorts would have a one time recovery fee based on their damage. He noted Myrtle Beach was much worse with water in a lot of units. GO only had one unit with water intrusion.

 

[pedro47]

Dumb question. I just read that Westgate Resorts insurance was going to cover 100% of the fire damage at their Westgate Smoky Mountain Resort located in Gatlinsburg, Tn.
The disaster that hit HHI and TN was both cause by natural forces (water, wind and fire). What is the difference in insurance cover? Westgate is cover and not Marriott.

 

[dougp26364]

Dumb question. I just read that Westgate Resorts insurance was going to cover 100% of the fire damage at their Westgate Smoky Mountain Resort located in Gatlinsburg, Tn.
The disaster that hit HHI and TN was both cause by natural forces (water, wind and fire). What is the difference in insurance cover? Westgate is cover and not Marriott.

Many insurance policies have special deductibles for high risk perils in different areas. Where we live, wind/hail damage is something that we know will eventually happen, and the deductible for those loses is considerably higher than are standard deductible for losses from other perils such as fire or theft. I believe California property insurance that covers earthquakes has a separate deductible for that loss vs other losses. Coastal resorts have a separate deductible for hurricane's because they KNOW they will eventually suffer that type of loss. Loss by forest fire likely wasn't one of those things that you know is going to happen in TN. Thus the standard deductible likely applies.........or I could be wrong and Westgate had adequate reserves to cover any deductible but, I sort of doubt that knowing how Westgate operates.

 

[dioxide45]

Dumb question. I just read that Westgate Resorts insurance was going to cover 100% of the fire damage at their Westgate Smoky Mountain Resort located in Gatlinsburg, Tn.
The disaster that hit HHI and TN was both cause by natural forces (water, wind and fire). What is the difference in insurance cover? Westgate is cover and not Marriott.

Also, since the loss was more than the deductible at the Westgate, it makes sense to file a claim. For many of the HHI properties, the loss wasn't more than the deductible, or if it was, they are just collecting enough to cover the deductible. I would bet that for the Westgage, the owners will need to cough up a special assessment to cover a deductible unless they have it in reserve. Insurance for the Westgate is not covering 100%, there will still be some deductible and I would expect it to still be a sizable sum. This isn't a $200,000 house they are insuring.

 

[Finntastic]

I am a points owner. My maintenance fees did increase of course. My question is will we also have a special assessment or some sort of fee?

 

[JIMinNC]

I went to the owner's session at GO two weeks ago. The speaker said once a storm is named that deductibles change and the GO one was higher than the damage incurred. I think our extra fee was $97. He said each of the HH resorts would have a one time recovery fee based on their damage. He noted Myrtle Beach was much worse with water in a lot of units. GO only had one unit with water intrusion.

Many insurance policies have special deductibles for high risk perils in different areas. Where we live, wind/hail damage is something that we know will eventually happen, and the deductible for those loses is considerably higher than are standard deductible for losses from other perils such as fire or theft. I believe California property insurance that covers earthquakes has a separate deductible for that loss vs other losses. Coastal resorts have a separate deductible for hurricane's because they KNOW they will eventually suffer that type of loss. Loss by forest fire likely wasn't one of those things that you know is going to happen in TN. Thus the standard deductible likely applies.........or I could be wrong and Westgate had adequate reserves to cover any deductible but, I sort of doubt that knowing how Westgate operates.

Exactly. A neighbor of ours owns a house in Hilton Head and he said that for a typical storm - like a hail storm or wind storm - standard deductibles apply. But when there is a "named" storm, deductibles shift to a schedule based on a % of the value of the insured structure and are much higher. I think that is because named storms tend to impact very large geographic areas (as did Matthew from Ft Lauderdale north through Virginia Beach) and that results in large potential losses for the insurance underwriters. As a result, they write policies for such events with high deductibles to mitigate those losses somewhat and keep premiums from being even higher than they are already. As dougp said, this might also explain why the Westgate insurance may not have provisions for similarly high deductibles for fires - it's not a peril that is specifically excluded from the standard deductible provisions.