Aulani Dues to be subsidized for 50 years for early purchasers!

[kjd469]

Glad to hear this! Just posted on DVCnews :


Early purchasers of the Aulani timeshare resort in Hawai'i are poised to receive a 50-year reduction in their annual dues payments as a result of the internal bookkeeping error.

Late last week three Disney executives were fired including long-time Disney Vacation Club President Jim Lewis. The terminations were linked to errors made in the annual dues calculations for Aulani, a Disney Resort & Spa and the subsequent halt in resort sales.

Annual dues are currently being recalcuated with new figures earmarked for state regulators by the end of the week. Disney had previously committed to providing a credit to early buyers to compensate for the difference between the original and revised estimates. However, the exact nature and duration of the credit was unclear in initial reports.

In speaking with Hawai'i TV station KITV, Disney spokeswoman Rena Langley clarified that Disney intends to subsidize the dues of initial buyers for the length of the contract:

The Disney spokeswoman said anyone who already purchased time share units at Aulani for the lower rate will not see a dues increase over the life of the 50-year contract that expires in 2062.

"It's the right thing to do," said Langley.

Buyers who purchased Aulani points prior to the halting of sales on July 9, 2011 would presumably see a reduction in their dues liability for the next 50 years. The basis for the reduction would be the difference between the original 2011 calculation of $4.3071 per point and the revised calculation currently being finalized.

Source: KITV.COM

 

[chalee94]

The Disney spokeswoman said anyone who already purchased time share units at Aulani for the lower rate will not see a dues increase over the life of the 50-year contract that expires in 2062.

pretty sure this is worded wrong...

 

[FullAB]

Buyers who purchased Aulani points prior to the halting of sales on July 9, 2011 would presumably see a reduction in their dues liability for the next 50 years. The basis for the reduction would be the difference between the original 2011 calculation of $4.3071 per point and the revised calculation currently being finalized.

Source: KITV.COM

I'm not sure I understand this comment. Can one of our experts elaborate?

Al

 

[TisBit]

As others have said, I believe this is a case of a bad sound bite or bad wording on the DVC spokespersons part. I don't see how ANY owner at any resort can avoid a MF increase over the life of their loan, without that cost being passed on to other owners (the devloper could go bankrupt otherwise with increasing MF's being subsidized).

I believe they may be saying that they will subsidize the difference between the original dues to what they are being adjusted to. So if it is 50 cents a point, you will receive a 50 cent a point subsidy for the life of your loan.

 

[FullAB]

Perhaps you are right.....and I agree with you...but man......dont you think they would be VERY careful to say what they mean at this point? As a business owner and brand new DVC owner this inattention to detail is getting tiresome.

 

[kjd469]

The way I understand it is this -

New MF - old MF = subsidy

We (early purchasers) will always pay the prevailing MF less the subsidy therefore our MF will increase but starting from our orginally contracted price.

Seems fair to me if that's what they're saying.

 

[DisneyFan68]

What would happen if in my situation we signed for 160 points but within the first 10 days we changed our mind and increased it to 220? The day we were to go in our guide called us that morning and said not to come in because they were advised not to proceed with any contracts. I wonder if they'll honor our contract for 160 pts at the original MF and maybe even let us increase to 220 or will we be subject to the new MF?

 

[Breyean]

The way I understand it is this -

New MF - old MF = subsidy

We (early purchasers) will always pay the prevailing MF less the subsidy therefore our MF will increase but starting from our orginally contracted price.

Seems fair to me if that's what they're saying.

I agree. It has to be a mistake on her part. I'm one of the founding Aulani owners, so I would benefit from this, but it's not the right thing to do.

Just keep me at my original base and apply the normal annual dues increases on a percentage basis on that starting point. That seems fair.

She has to be wrong about the no increase thing. I bet she meant no IMMEDIATE increase to the new dues to be announced for new people buying in now, and no catch up increases in the future just on us to equalize things eventually.

 

[thepops]

What would happen if in my situation we signed for 160 points but within the first 10 days we changed our mind and increased it to 220? The day we were to go in our guide called us that morning and said not to come in because they were advised not to proceed with any contracts. I wonder if they'll honor our contract for 160 pts at the original MF and maybe even let us increase to 220 or will we be subject to the new MF?

If you signed everything and were waiting on Disney to complete I think you have a good chance of those 160 being at the original MF pricing. (but then again, you may have not completely "closed" so they might not). You'll just have to wait it out a week and see.

 

[drusba]

As to the report on the subsidy, it has been clarified elsewhere that Langley has already corrected the implication that original purchaser dues will not rise at all in the 50 years.

They are saying that there will be a Disney-covered subsidy for the original purchasers over the 50 years to reflect the difference between the dues as originally stated and what the new computation will show; for example if dues increase to $5.30, there will be a $1 subsidy for this year (actually less because no one will really be paying a full year's of dues this year since the place is not opening until Aug 29). That subsidy will then track year after year for those purchasers in comparison to others. Not clarified whether that will a percentage track or just a dollar amount track, e.g., if the previously represented dues are 80% of the new actual dues and a dollar difference, it is not clear whether that means the prior purchaser will always be 80% of other member's dues per point or $1 less.

 

[Sammie]

pretty sure this is worded wrong...

it has been corrected on DVCnews.com

DVCNews.com contacted Rena Langley to clarify the above quote from KITV. Langley stated that dues for early buyers will not be permanently fixed at the $4.3071 level as suggested in the passage above. Disney plans to calculate a subsidy based upon the difference between the initial projection and the final dues figures.

Have to wonder how much all this will cost Disney.

Lately when I was so hard on Jim Lewis, I am sure many were questioning why I was so hard on him. Lots of what was going on I knew from friends from Disney. I am just so glad they fired him and did not ask him to resign.

 

[TisBit]

As to the report on the subsidy, it has been clarified elsewhere that Langley has already corrected the implication that original purchaser dues will not rise at all in the 50 years.

They are saying that there will be a Disney-covered subsidy for the original purchasers over the 50 years to reflect the difference between the dues as originally stated and what the new computation will show; for example if dues increase to $5.30, there will be a $1 subsidy for this year (actually less because no one will really be paying a full year's of dues this year since the place is not opening until Aug 29). That subsidy will then track year after year for those purchasers in comparison to others. Not clarified whether that will a percentage track or just a dollar amount track, e.g., if the previously represented dues are 80% of the new actual dues and a dollar difference, it is not clear whether that means the prior purchaser will always be 80% of other member's dues per point or $1 less.

I would be amazed if they took a percentage off of the MF's, in the end DVC would lose hand over fist during the life of the contract and could negatively affect the entire resort. It will be a straight dollar amount, under the theory that there was a misrepresentation of MF's, it would have been a specific dollar amount not a percentage.

Now, if it was something like Vero where a percentage of the resort was not developed...you would have a case for a percentage based reduction...because there is percentage of owners missing from paying the upkeep, etc.

 

[saintstickets]

I wonder what will happen on the resale market for those early Aulani purchasers? Will the reduced MF's carry forward with the contract when sold or will the new owner be subject to the higher MF's?

 

[CarolMN]

I wonder what will happen on the resale market for those early Aulani purchasers? Will the reduced MF's carry forward with the contract when sold or will the new owner be subject to the higher MF's?

AFAIK, the subsidy will go with the contract to the new owners. Vero Beach contracts work that way. So I think Disney will exercise ROFR on those contracts, just like they did for most of the VB subsidized dues contracts that came up for resale.

 

[OrangeCountyCommuter]

Perhaps you are right.....and I agree with you...but man......dont you think they would be VERY careful to say what they mean at this point? As a business owner and brand new DVC owner this inattention to detail is getting tiresome.

The DVC news article is not an official press release just a compilation of earlier info and even they have posted that the original person misspoke. She may be joining the DVC execs in unemployment at this rate.

Remember DVCnews.com is NOT a Disney owned site. Just another version of the DIS

 

[ramkam]

I have not heard anything about how this will affect the transient tax. Please correct me if I am wrong, but is my understanding that dues are part of the calculation of the tax. So will the early Aulani owners pay tax at the lower rate they bought at or will they get stuck with a higher tax rate based on the new dues structure. The whole subsidy concept makes it sound like early Aulani owners will have their dues rate raised to the new rate and Disney will pay the difference between the new and old rate. So will Hawaii calculate the tax rate for the early Aulani owners using the new higher dues rate and will Disney also subsidize the difference for the higher tax? In my opinion, early Aulani owners should not have their tax rate increased due to Disney's mistake. It is only fair.

 

[TheRustyScupper]

. . . Have to wonder how much all this will cost Disney . . .

1) Nothing.
2) Disney does not pay for ANYTHING.
3) I am sure it will be in the maint dues for the other members.

 

[Sammie]

1) Nothing.
2) Disney does not pay for ANYTHING.
3) I am sure it will be in the maint dues for the other members.

 

[Dsnybob]

1) Nothing.
2) Disney does not pay for ANYTHING.
3) I am sure it will be in the maint dues for the other members.

I disagree. If Disney is subsidizing the dues, they will, in fact, have to pay for it out of their development profit or management profit over these 50 years. If the whole purpose of terminating the executives, halting sales and revising the documents is to protect the development and the brand, playing any kind of accounting games by shifting this cost to later purchasers would be foolhardy. The cost to Disney will be the number of points sold prior to July 9th multiplied by the incremental difference in maintenance fees multiplied by 50 years and adjusted to present value. When its all said and done, the number would be large to any person, but probably not even material to Disney and may not even warrant an SEC disclosure.

Additionally, I will be surprised if the Transient Tax is addressed at all. This tax will certainly be charged based on the non-subsidized maintenance fee, as the subsidy will be most likely be treated as a credit against the dues statement and to regulators will appear that the purchaser paid the full amount of the dues.

 

[firstcruise]

someone should have checked, double checked and tripple checked the MF fees before signing off. Clearly those three executives had the final say and sign off on the MF and now they are gone due to the expense this error caused.