Why special assessments? Let me count the ways
I am not an owner there but this caught my eye because we own at Harborside which is having phase 1 renovations and we are not having any assessment. In my mind a properly run timeshare should have this all worked in to the replacement budget--what is the replacement budget for if you also have to pay an assessment?
As other posters have said I also thought that assessments had to be approved?
When I say the $1700 figure it seemed high to me and when I multiplied it by the number of owners per unit (52) it is even more staggering.
We have only owned since 2001 (Harborside) and our more recent Frenchman's Cove purchase so maybe others who have owned longer can give more light on assessments.
With a properly operated resort HOA there should be no Special Assessments except in extremely unlikely circumstances. But many, it may be most, resorts are operated on a relative shoestring on the "future needs" side (reserves) due to a number of factors.
- If the developer remains in charge of operations (manages) there is a very strong push to hold fees down to help sales efforts. Plus the resort may be nearly new - look great - so the obvious need for money set aside for improvements or replacements isn't there.
- Many resorts are far more lax than they should be about collections. For every week that doesn't pay the fee for those that do go up and the reserves are that much more underfunded. It is incredible but many developer based managements tend to gloss over delinquencies - again to help sales by not upsetting customers (even though those same customers may be willing to upgrade they often also end up defaulting with yet another hit to the resor bottom line)
- Even when the owners take control - with or without an independent management - the reserves are an easy place to hold low thus holding down overall fees. In times of rising costs operations may need an additional $20-$30 per week so adding $20-$30 annually or more to fully fund reserves becomes a big hurdle. Until they know what the reserve needs are (a current reserve study) and fund at or above that estimate Boards are flying blind. Not many are willing to do the sales job needed to make owners understand why in the long run that is a better way and the numbers needed are large.
- Catch up. In some cases things are so bad that the resort is actually in debt (a no-no in any condo/timeshare world). A SA may be needed in those cases to get the Association into financial compliance with the law.
- High taxes / management fees. Despite their shortcomings as management groups many developer based management companies charge unbelievably high fees often tied to the annual fee rate. They get paid more if fees go up! In some cases I've seen it can get to a staggering 20% of the total resort budget just for management. And in FL (as well as other States) taxes can be a significant portion of the annual fee bottom line. Many groups don't bother to challenge them thus leaving needlessly high income taken from owners for that portion every year.
- Too late to do it slowly. When a resort is already 10-15 years old and in desperate need of renovation there just isn't time to wait 5 years and collect slowly from the owners. Poor planning and underfunding has led to an "emergency" SA. It really isn't but they have no choice if the work is to get done.
Looks like Vistana owners may have been hit with many of the factors above.
$1700 is one of the highest assessments I've ever heard of. Owners had better hope they are getting a top quality job including top end furnishings (far too many I've seen are middle of the road quality or less despite high costs) as well as physical improvements to the units themselves not just whats in them. Many times too much money is going to design firms, contractors, overhead to management ($$$ wasted) rather than the actual work needed. Tigh control is required and again I've seen too many developer based managements take plenty of money but do little to properly control large projects such as this will be.
And even bigger is hearing that this won't happen again. That the Board/Management has a plan in place - meaning even more increases in annual fees in all likelihood if they haven't been collecting enough all these years - so that in 5-7 years there WILL be money to properly do the next renovation without another SA. Again too many resorts act like this time the work will last forever (it didn't before and it won't now) and they don't need to look to the future needs of the resort until far down the road.
That may be the most important commitment of all for owners.