Anyone extending their OKW contract?

[DVC92]

Setting aside my thoughts on the legality of the extension offer, there is another issue that comes to mind. Disney has yet to grasp the fact that the Board of Directors of the Condominium Association has a fiduciary duty to act in the best interest of the owners in making any decision. The members of Board are all Disney employees and wear two hats (an apparent conflict of interest). They have an obligation to fulfill their employment responsibilities to Disney (i.e., yield profits) in addition to having the sole power to make decisions that affect the Association (us). However, their fiduciary duty takes precedence, and they don’t seem to understand that truth. In speaking with persons in Jim Lewis’s office, I was informed that less than a majority of owners even expressed any interest in the extension prior to their vote at the Special Board meeting. However, the Board unanimously voted to take this action.

Clearly, the Board’s decision collects money for Disney. As for us, I believe it is detrimental to both extenders and non-extenders. With respect to extenders, the extension is a costly upfront expenditure even at $15/pt since it is not useable for 35 years, and the Condo will be more expensive to maintain past the initial 50-year plan. As to non-extenders, they will be forced to contribute to the reserve fund for expenditures past 2042 and will no longer be able to recoup their share of the common surplus upon termination of the Condominium in signing the deed back to Disney. Also, in speaking with Disney, they informed me that they had no intention of addressing this potential problem for non-extenders. Decisions about expenditures will also be made in a different light if the Condo terminates in 2057 in lieu of 2042 (e.g., the newest type of TVs would not be installed in 2039 if the Club ends in 2042 but would be if the end date is 2057).

Therefore, in my opinion, the Board is clearly not abiding by their fiduciary duty to act in the best interest of members.

 

[rsinj]

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[sjcampbl]

... in my opinion, the Board is clearly not abiding by their fiduciary duty to act in the best interest of members.

As Disney owns more than 50% of DVC it seems to me that they are actually acting in the best interest of the MAJORITY of the shareholders. Disney is very smart and have set themselves up for a no lose situation.

 

[Debbie H]

For, some people, Disney makes no mistakes and has our best interest at heart. I guess that's why they sell all that pixie dust. We all have choices to make as it was pointed out, some for the extension and some against it. I don't see why, because some of us happen to not agree with DVD's decision, we are the bad guys here? For those that take the choice to extend, ok, do it, but we are trying very hard to have a discussion and some are trying to make it a debate and "bait" us.

sjcampbl said:
"As Disney owns more than 50% of DVC it seems to me that they are actually acting in the best interest of the MAJORITY of the shareholders. Disney is very smart and have set themselves up for a no lose situation."

Read what that person wrote. Disney owns more than 50% of DVC. They are the MAJORITY! Do you really think they care whether someone owns 50, 100, 1000, 2000, 5000 points? Of course not. They just want $15 per point, paid in full by 2/29/08 or it is $25.

The majority of us did not want a slide at OKW. Guess what ? They put a slide in. They changed the banking rules. We now have to pay $95 if we want to stay at another resort. What's next? As DVC92 said, they can change the rules anytime they want. What will all you do when you can't borrow, or bank? We use every point, every year. We have never borrowed and we never bank. Why? Because they can change the rules.

 

[rsinj]

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[Chuck S]

Disney owns DVD as one of their operating companies. DVC is not "owned 50% by Disney" The members are DVC. But through our agreements we have designated Disney to be the property managers AND we have given them our voting rights...there is a difference. DVC Member could technicaly fire Disney from the management of any DVC resoort...that resort would then cease to be a part of the DVC system.

If Disney owned 50% they could not sell enough point to fill the resort year 'round.

Disney and DVD have agreed to extend the ground lease at OKW to 2057. DVD is now selling those extended memberships to DVC members. Individual DVC members do not HAVE to accept the extension, they can stick to the original end date of 2042.

I don't see what all the fuss is about...if you don't want the extension, don't buy it. If you do want them, extend the contract and pay the $15 per point.

 

[Debbie H]

If you really don't bank or borrow because you fear the rules could be changed and somehow that would have an immediate effect on you, I think you're doing yourself a disservice not taking advantage of that benefit.

I'm not doing a diservice to myself, I go on vacation a lot!

 

[rsinj]

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[dianeschlicht]

Disney owns DVD as one of their operating companies. DVC is not "owned 50% by Disney" The members are DVC. But through our agreements we have designated Disney to be the property managers AND we have given them our voting rights...there is a difference. DVC Member could technicaly fire Disney from the management of any DVC resoort...that resort would then cease to be a part of the DVC system.

If Disney owned 50% they could not sell enough point to fill the resort year 'round.

Disney and DVD have agreed to extend the ground lease at OKW to 2057. DVD is now selling those extended memberships to DVC members. Individual DVC members do not HAVE to accept the extension, they can stick to the original end date of 2042.

I don't see what all the fuss is about...if you don't want the extension, don't buy it. If you do want them, extend the contract and pay the $15 per point.

The voice of reason!

 

[salmoneous]

If the ship is sinking get off as soon as possible. But if you think it will be safe stay aboard.

Give a ship that is sinking, many of us prefer a 3rd option - encourage the captain to fix the leak - over your two choices of leave or assume everything is OK.

Personally, I don't think it unreasonable to ask Disney to obey the terms of its contract with members. Do you? Nor do I think it unreasonable to ask if a particular action is in violation of the contract instead of just assuming that "because it's Disney, and Disney has lawyers, it must be legal".

 

[salmoneous]

Disney and DVD have agreed to extend the ground lease at OKW to 2057. DVD is now selling those extended memberships to DVC members. Individual DVC members do not HAVE to accept the extension, they can stick to the original end date of 2042.

I don't see what all the fuss is about...if you don't want the extension, don't buy it. If you do want them, extend the contract and pay the $15 per point.

First, let's put the "fuss" intro perspective. It's a heck of a lot less than, say, the "fuss" created by pool temperatures. This is the DIS. We debate things here. That goes for the color of new carpets or for the legality of contracts. The notion that people shouldn't complain, or that they should either blindly accept what Disney has done or sell their membership is absurd (and, yes, I realize you didn't say any such thing Chunk - just answering a number of posts in this paragraph.)

As for what the fuss is all about, let's go over it again. Disney is NOT "selling those extended membership to DVC members." Had Disney structured the deal that way, people wouldn't be questioning it. They've structured the deal is a way that looks like an offered sale, but is different in some ways. In particular, there are costs and consequences for turning down the offer.

What are those cost and consequences? We don't know. It is unreasonable to ask?

Finally, I think it important to insist that Disney's management company (that works for us) legally fulfill the requirements of their contract. Is that unreasonable?

 

[Chuck S]

First, let's put the "fuss" intro perspective. It's a heck of a lot less than, say, the "fuss" created by pool temperatures. This is the DIS. We debate things here. That goes for the color of new carpets or for the legality of contracts. The notion that people shouldn't complain, or that they should either blindly accept what Disney has done or sell their membership is absurd (and, yes, I realize you didn't say any such thing Chunk - just answering a number of posts in this paragraph.)

As for what the fuss is all about, let's go over it again. Disney is NOT "selling those extended membership to DVC members." Had Disney structured the deal that way, people wouldn't be questioning it. They've structured the deal is a way that looks like an offered sale, but is different in some ways. In particular, there are costs and consequences for turning down the offer.

What are those cost and consequences? We don't know. It is unreasonable to ask?

Finally, I think it important to insist that Disney's management company (that works for us) legally fulfill the requirements of their contract. Is that unreasonable?

How do you KNOW there are costs and consequences to not accepting the extension, other than the contract reverting to Disney in 2042 as originally written, or that Disney/DVC will not fulfill the legal requirements of the original 2042 contracts if not extended?


And a reminder that the DVC boards are NOT a debate forum, the Debate board was closed long ago. While we are certainly free to agree and disagree, and express a point of view, a free for all debate will result in this thread being closed.

 

[salmoneous]

How do you KNOW there are costs and consequences to not accepting the extension,

At an absolute minimum, members will have to send in a postcard, fill out paperwork and send in the paperwork to not buy. We know this because Disney has told us.

As for what the additional costs and consequences are, we don't know because Disney hasn't told us.

Note - I apologize for describing this as a debate. I'm just expressing my opinion.

 

[Chuck S]

At an absolute minimum, members will have to send in a postcard, fill out paperwork and send in the paperwork to not buy. We know this because Disney has told us.

True, there will be a little paperwork no matter whether you accept or decline the extension. I haven't received anything, other than the postcard/announcement so far, though. An extra trip to the bank for notarization (if required) isn't much of an imposition for me, but I understand it could be problem for some members.

As for what the additional costs and consequences are, we don't know because Disney hasn't told us.

So, we don't know if there are any or not. Pure speculation, which is fine, but please don't present it as a true fact.

 

[salmoneous]

Pure speculation, which is fine, but please don't present it as a true fact.

Let me clarify my statement, in case I wasn't clear. What I presented as fact is that there will be some cost/consequences. We already know about some cost/consequences - the hassle of getting/completing/returning the paperwork. I don't think of that as speculation, but as something that can appropriately be presented as true fact. No?

I haven't states as true fact what the additional consequences would be, if any. I have said it reasonable to ask what those cost and consequences are.

Hope this is clear,
Sal

 

[gblast123]

In quickly reading the prior entry’s, I didn’t spot anyone with an economic analysis of the resale value on people who opt in vs. people who opt. out.
Rather than divert this very lively and informative thread, I will make this post and also start a new thread.

Assumptions for analysis
I. OKW 200 pt. contract
Currently, most of the listings for OKW on the TSS site show prices in the $75+ range. So, for the sake of argument, let us assume that you can now either buy or sell your timeshare for $75 per point.
Let us also assume that you own 200 points. Currently, that would establish a "value" of $15,000.00 (200 x $75)
Let us compare this with resale of SSR on the TSS website. ( I know that SSR ends a few years earlier than OKW with the 15 yr. extension but let us save that for later)

II. SSR 200 pt. contract
As to Saratoga, prices are in the $82+ range. Currently that you establish SSR for $16,400

III. OKW with extension
If you choose to buy OKW and buy the extension (OKW-E), it would cost you approx. $90 per point ($15 + $75) right now or a total of $18,000. ($15,000 + $3,000)

IV. OKW + buy 40 additional points
$3000 would buy you (if available) a 40 pt. contract that you could use right now and have a total of 240 OKW points that you could use right away. (OKW 240) (total cost would be $18,000)

V. Additional assumptions
This is a right now or within 5-7 year period. Please try to stay away from subjective parameters like which resort is nicer, bigger, older, newer, and things like maintenance, etc. I am trying to see what the resale market would be if you were the buyer under these scenarios. Also, please try to ignore the opportunity cost of using the money for something else. Also, ignore the 3 year difference in the expiration date of SSR and OKW-E. Although there is one effect that would have some relevance, ie it is much cheaper in points to stay at OKW for most nights compared with SSR, which I invite comment on.
Thus, we need to analyze the comparative resale value of OKW-E with OKW, SSR, and OKW240.

VI.Questions for analysis
1) Will the value of OKW contract go up or down or stay where they are?
2) What do you think the resale price of a OKW-E contract will be?
3) Would you rather buy additional points or extend your current contract?

My short analysis of this is
1) Current resale values of OKW contracts will drop by at least a few dollars right now and will drop a lot more after Feb. 29th.
2) OKW-E resale prices will be higher than $76 but will not exceed the price of SSR
3) I would rather have an additional 40 points right now which I could rent or use now rather than pay for the extension.

My opinion (for what little it is worth)
Why? Well, SSR is currently being heavily marketed by Disney. Everyone hears about it when they come to the park. This marketing increases demand, obviously, so between OKW-E and SSR, SSR is being promoted. I don’t think that anyone will pay more for an OKW-E resale vs. SSR. Also, I spoke with 2 different resale reps, and both agreed with that assessment.
Bearing that in mind, if you can get an OKW-E contract for about $82, what would you pay for a normal OKW contract? Certainly a less than $75.00, more in the range of about $70-73.
If I decided that I would use the extra $3000.00 to enjoy DVC more, I would buy an additional 40 points. I could always rent those extra points for $400 per year and get a total of about $240 per year income, which would be about 8% per year return on my money or just go for longer vacations.
Please feel free to let me know what you think

 

[OKW Mom]

When I got the letter I thought it was an apology for a rotten trip we had in May....to open it up and see they wanted to hit us up for more money peeved me to no end.

I don't think I'll be mobile at 97 and by then our kids will be in their 70's......

We'll pass.

 

[DVC92]

Is there anyone who has returned their postcard saying NO to the extension and received the documents that need to be executed? If so, could you please post a copy of the documents and set forth the details necessary to complete the transaction (e.g., deadlines, compensation, etc.)?

 

[Just Giddy]

I purchased 220 pts earlier this year for $80 pp at OKW. ( Wish I had the $$ when it was first sold for $51- but was too young and poor.)
If I pay the additional $15 per point that will make my price $95 per point.
I don't honestly think OKW will ever be worth $95 per point. On the other hand if I don't extend my resale value will contine to decrease.

No matter what I do my value will be less than I paid. I can throw more $$$ into a sinking "investment", but that just ups my cost, and increases my risk. I think it's a mistake to think of these as "investmnets"- they aren't - as Disney says they are pre-paid vacations. If you can resell and make $, super, but it's by no means a given.

So here's how I plan to look at it- $ 17,600 for 35 years ($485 per year + maint fees). The best thing for me to do is to use it for 35 years, and enjoy every minute of it. I'm going to decline to lend Disney $3300, interest free for 35 years.

 

[Pa@okw95]

Is there anyone who has returned their postcard saying NO to the extension and received the documents that need to be executed? If so, could you please post a copy of the documents and set forth the details necessary to complete the transaction (e.g., deadlines, compensation, etc.)?

I sent my response back with a "no" as soon as I received it. I have not heard anything yet. I think it will be near the dead-line or after before we receive anything.