BCV Maintenance Fee Increase - 5.43%! (and a breakdown of the annual budget)

[StevieD]

This is actually reported in another post, but I bet a few folks didn't see it. Anyway, for those that haven't received their annual meeting notice and estimated operating budget for 2003, BCV maintenance fees have increased to $3.9728 per point - an increase of approx. 5.43% over 2002 fees. This seems a bit high to me given the low level of inflation this year (currently, we are on track for a 2.6% rate of inflation for 2002).

When you look at a budget line item comparison from 2002 to 2003, there's a few things which stand out:

First (and I'm not sure why this is the case), the 2002 budget is based on 208 Vacation Homes whereas the 2003 budget is based on 130 Vacation Homes. Does anyone have any idea why this is so?

Next, when you look at the three most expensive components of the Operating Budget (Housekeeping, Admin/Front Desk, and Maintenance), these three components increased (on a per point basis) by 20%, 23%, and 40% respectively. Other line items which had significant increases included the Management Fee (12%), Member Activities (30%), Insurance (39%), and Security (0.5%). Line items which decreased included Utilities (-26%), Transportation (-244%), Income Taxes (-82%), DVC Reservation Component (-87%), Legal (-104%), Audit (-4%), and Division Fees (-6%). The Capital Reserve Budget decreased by almost 30%, and Ad Valorem Taxes increased by 3.6%.

Finally, you will note that in 2002, the per point value for Operating Budget capped out at $2.4204 per point, even thought the actual estimated budget was $2.5208 per point. This was due to a guarantee from Disney Vacation Development (DVD) to limit the operating budget charged to DVC members to $2.4204 per point. Well, the same thing happened in 2003 - actual estimated budget is $2.8495 per point, but it was capped (per the DVD guarantee) at $2.7376 per point. This was as a result of a guarantee in the Public Offering Statement which can be extended by DVD (and apparently was extended at least for 2003).

In summary, I think the increases seem a bit excessive, but I wish DVD would include a narrative in the budget explaining the reason for the various increases. I can understand Insurance increasing, but the increases in Housekeeping, Admin/Front Desk, and Maintenance seem too high. What does everyone else think??

 

[RobDoc]

Those will all be good questions to ask at the annual meeting- if they are not explained during the meeting reports.

Thanks for reporting the details!

 

[tooncanator]

How much do they usually go up? Did all the resorts go up the same amount?

 

[ncligs]

Rounding to the nearest penny, here are the dues for 2000/2001/2002 by each resort.

OKW - $3.16/$3.13/$3.22
BWV - $4.02/$3.83/$3.92
HHI - $3.26/$3.32/$3.49
Vero - $4.08/$3.98/$4.17
WVL - NA/$3.63/$3.80
BCV -- opening at $3.77

 

[EROS]

Thanks. It will be VERY interesting to see if there is the same percentage increase for BWV and OKW.........

 

[vernon]

With a brand new resort I can understand why maintanance can be a variable, in the first few years it's going to be a "best guess" , IMHO that could easy move up and down in the first few years on unusual or unexpected costs.

I don't know what the reason for the change in the number of vacation homes used for the calculation is but would account for a lot of the "fixed costs" having to go up. The costs that are "unit based" seem to all have dropped ( given the drop in numbers visitting WDW that seems logical)

 

[Dumbo]

>>First (and I'm not sure why this is the case), the 2002 budget is based on 208 Vacation Homes whereas the 2003 budget is based on 130 Vacation Homes. Does anyone have any idea why this is so?<<
__________________________________________________

Maybe because there have only been 130 villas declared into DVD inventory.


Dumbo

 

[vernon]

Maybe because there have only been 130 villas declared into DVD inventory

Does that mean there were 208 declared last year then? Did the BCV gator eat the other 78 "missing" villas or is there another reason they have cut the number.

 

[castleri]

Could the housekeeping, maintenance etc . fees be so much higher because the resort was only open 6 months last year and this year they need to budget for 12 months? Not being an accountant I don't know how they spread the fees since they share the front desk with BC and YC.

 

[StevieD]

Originally posted by castleri
Could the housekeeping, maintenance etc . fees be so much higher because the resort was only open 6 months last year and this year they need to budget for 12 months? Not being an accountant I don't know how they spread the fees since they share the front desk with BC and YC.

That was my initial thought - but the actual dollar amounts for these categories went down from the 2002 budget. It was only the per point amounts which went up - directly as a result of the change in the number of units going from 208 Vacation Homes to 130 Vacation Homes. In other words, the actual dollar budget dropped from the 2002 budget, but this amount was spread over a much smaller # of points - therefore we saw an increase in the Maintenance Fees per point.

That's why the question about why the # of Vacation Homes declared in the 2003 budget dropped dramatically from 2002 is so important - anyone going to this meeting needs to get an answer on this one.

 

[MJS]

Maybe management is going to replace those awful thermostats and shower heads (fix the water pressure)!

 

[sgtpet]

Maybe they are just sticking it to us.

 

[Maistre Gracey]

Originally posted by sgtpet
Maybe they are just sticking it to us.

I don't understand this.
Most DVCers likely expected a 3% increase. If the average DVCer has 300? points, that is only an additional $2.29 per month more than expected. I, for one, will not complain about this. I hope others don't complain too much, as I would not want to see pressure on DVC to reduce quality in any way due to lack of reserves. I also have confidence that DVC is not stealing the loot.

 

[StevieD]

Originally posted by Maistre Gracey
I don't understand this.
Most DVCers likely expected a 3% increase. If the average DVCer has 300? points, that is only an additional $2.29 per month more than expected. I, for one, will not complain about this. I hope others don't complain too much, as I would not want to see pressure on DVC to reduce quality in any way due to lack of reserves. I also have confidence that DVC is not stealing the loot.

I agree with you - I don't believe DVC is "stealing the loot". That said, however, I do want to understand how the budget is calculated, and at least have some explanation of the reasons for increases/decreases. When you have a situation where many of your costs are allocations as opposed to direct costs incurred by BCV, it becomes very important to understand how costs were allocated to members.

 

[Maistre Gracey]

Originally posted by StevieD
I agree with you - I don't believe DVC is "stealing the loot". That said, however, I do want to understand how the budget is calculated, and at least have some explanation of the reasons for increases/decreases. When you have a situation where many of your costs are allocations as opposed to direct costs incurred by BCV, it becomes very important to understand how costs were allocated to members.

Agreed. I trust DVC to do the right thing, but I will still scrutinize the budget. Although I don't mind the increases, it would be foolish not to see what we are paying for.

 

[StevieD]

Well, I guess we got off lucky based on the % increases being reported for VWL and OKW!

 

[BCVOwner2002]

I questioned the number of units DVC listed in the report too! My question is for those who purchased at other resorts when they first opened. Did you notice a change in units from the first year of operation to the next? If not, then this doesn't make a lot of sense. I won't be going to the annual meeting but I'm sure someone from DIS will be there to ask our questions. I appreciate any information you can provide. Annmarie

 

[wdeversole]

Well, they are counting the two-bedroom lockoffs as one unit instead of two - is this consistant with the 2002 budget, or did they count them as two units last year??

 

[Cruelladeville]

This is a new resort--why would the maintenance fees be higher?? It would seem to me that there would be far less in maintaining a brand new resort compared to an older one, say OKW, for instance. I don't know much about this sort of thing, but if I bought a brand new house, I would expect that it would cost far less to maintain in the first few years than my old house, which might need a new roof or new carpeting, for example. Now, I can understand that they might have dellayed the payment of those items to this year, but a few lines in the statement explaining the circumstances might have been nice. If anyone is going to the meeting, please report back to the rest of us. I certainly don't begrudge the extra few cents this is going to cost per month, but I want to be sure that it's actually needed, and not just put in some bank for future needs that may or may not occur.

 

[vernon]

Cruella, with the established resorts like OKW they have had a long time to build up a reserve, BCV hasn't had that opportunity so, for example, if they have had a maintanance bill come in that they weren't expecting it has to be paid for immediately ( and recovered immediately) as there is nothing in the bank to cover it. Again, BCV is brand new, but I would expect they also have to pay a share of joint facilities ( like SAB pool area) so while I think it's sensible to ask the questions, it is possible they have a genuine reason for the rise.