I have had a chance to see the 2010 & 11 Budgets for Vacation Village at Parkway - a popular resort with RCI Points members as it gives great value in Points vs annual costs. But nothing is free. Looking at the budgets there are some very troubling items:
I'll say they spell it all out but why aren't the owners up in arms? This is a monster development that will be in serious financial trouble in a few more years. Now is the time to start planning to replace this management group in 2013 when the next opportunity comes around to do so. The owners are not getting value despite a low fee.
- Reserves are $51.82/week. That is a number that is about where our Orlando resort was at in 1995 - and we were seriously underbudgeted then!
- To get a number that low they have estimated the life of unit furniture & fixtures to be 20 years!!! Can you imagine what it will look like after 10 - not to mention 20 - years of hard, timeshare type use?
- 8 years for exterior painting? Even 5 years in the Florida sun/weather is a stretch for paint no matter what quality/name used.
- 20 years for common area fixtures? Are you kidding? Most are lucky to survive 5 years and look even half decent.
- Less than 3 million budgeted for reserves - a completely unrealistic number for a resort that size (and STILL growing). No wonder reserves are low - they are completely dreaming on future expenses. This is a setup for an unbelievable special assessment when work is actually required. One of the worst cases of Developer artificially holding fees too low I've ever seen
- No estimate of annual real estate taxes. Have they challenged them as the County tends to overvalue timeshares (they base it on 50% retail value rather than the true, open market value for the first 10 years. Then it can be reduced if properly challenged)
- The management contract is on a every 3 year, automatic renewal - the latest being on 10/31/10. There is a 60 day & out clause but it requires a super majority, owner vote.
- But my favorite of all - as they seriously shortchange Reserve contributions with a TOTAL of under $3 million/year they are paying themselves $ 3,383,016 in management fees! When we were able to remove our Developer (auto-renewal too) management in 2001 we were paying them $1.1 MILLION in annual fees. Our new, independent management charged $375,000 in 2001 and we reduced it to $345,000 (plus future, planned increases for the life of the contract averaging 2%) in a new contract penned in 2005.
I'll say they spell it all out but why aren't the owners up in arms? This is a monster development that will be in serious financial trouble in a few more years. Now is the time to start planning to replace this management group in 2013 when the next opportunity comes around to do so. The owners are not getting value despite a low fee.
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