Can’t find language discussing limit on annual dues

[grease1739]

I’m signing my DVC contract today direct and can’t find anywhere in the contract that expressly states annual dues are capped at a certain percentage each year.

Pretty alarming considering many people claim it’s around 15% a year and inflation is an elephant in the room.
Unless I’m missing it, the contract never mentions this.

Can someone find it in their contract or add some clarity here?

Thank you!

 

[floribr1]

I think what you are looking for is included in the Multi-Site Public Offering Statement, section 10(b):

Description of Cap Upon Multi-site Common Expenses. Pursuant to Florida law, the total amount of multi-site common expenses that may be assessed against a Club Member in a given calendar year shall not exceed one hundred twenty-five percent (125%) of the total multi-site common expenses assessed to Club Members in the previous calendar year; provided, however, that component site common expenses and ad valorem taxes shall not be included in calculating the total multi-site common expenses for purposes of the one hundred twenty-five percent (125%) cap.

I'm not sure why most reference 15% versus the 25% mentioned in the above quote... Perhaps because of the "component site common expenses and ad valorem taxes?"

 

[grease1739]

Thank you! Scary your dues could double every 4 years if things got bad enough for DVC.

 

[floribr1]

I just looked a bit further down in the multi-site POS and saw the following, section 10(g):

Annual Increase Limitations. Purchasers should refer to the component site public offering statement and the DVC Resort Budget for their Home Resort for a description of any annual increase limitations on Annual Dues.

I checked the Public Offering Statement for the VDH (I purchased a contract earlier this month). In the POS for that condominium association, in section 6(a):

As set forth in paragraph 4 of the Master Cotenancy Agreement, DVD as the voting representative of a Unit may not cast the Unit’s vote at a meeting of the Association to increase the Estimated Budgets in excess of one hundred fifteen percent (115%) of the previous year’s Estimated Budgets, excluding capital reserves, without the prior concurrence in writing of the Owners who own sixty percent (60%) of the Ownership Interests in that Unit. If the requisite approval to increase the Estimated Budgets beyond the fifteen percent (15%) cap is not obtained, DVCM as the Management Company would be forced to reduce services to keep expenses within the approved budgeted amount.

I interpret this to mean that the overall cap/limit would be 25%, but the individual DVC resorts limit that further to 15%.

 

[sethschroeder]

Thank you! Scary your dues could double every 4 years if things got bad enough for DVC.

Except that means hotel prices at Disney are going up that much as well.

Dues are a vast majority for actual costs of running the resort and a tiny portion that is for the management company which is Disney to take as profit.


DVC is:
Upfront buy-in = PROFIT
MFs = Operational Cost

Cash is:
Profit + Operational Cost

Difference is Cash is going to see the Profit number keep raising every year while your DVC side is locked in because you prepaid it.

 

[tjkraz]

Thank you! Scary your dues could double every 4 years if things got bad enough for DVC.

What sequence of events could lead things to being "bad enough" that operating costs would rise that drastically?

 

[grease1739]

Not saying it would but it could and with DVC we are a captive group..at least more so than cash paying guests who can just decide to not show up.

I highly doubt(hope) that wouldn’t be the case but with timeshares you always have to consider worst case.

 

[grease1739]

Except that means hotel prices at Disney are going up that much as well.

Dues are a vast majority for actual costs of running the resort and a tiny portion that is for the management company which is Disney to take as profit.


DVC is:
Upfront buy-in = PROFIT
MFs = Operational Cost

Cash is:
Profit + Operational Cost

Difference is Cash is going to see the Profit number keep raising every year while your DVC side is locked in because you prepaid it.

Hotel prices go up that much and people stop coming to the parks.

DVC dues go up that much and members are stuck paying them…or at least trying to sell an unattractive deeded real estate interest with skyrocketing dues.

Again not likely to happen but also in the realm of possibility based on the contract terms.

 

[tjkraz]

Hotel prices go up that much and people stop coming to the parks.

DVC dues go up that much and members are stuck paying them…or at least trying to sell an unattractive deeded real estate interest with skyrocketing dues.

Again not likely to happen but also in the realm of possibility based on the contract terms.

Dues are based upon the actual operating expenses of the resorts. They aren't an arbitrary number of Disney's choosing. It's whatever they pay out for staff salaries, utilities, property taxes billed by the county, the cost of providing theme park transportation, and so on.

A higher minimum wage for cast members will cause dues to go up. Inflationary prices of building materials will cause an increase in capital reserves collections so that the funds are available when it's time to refurbish. Those are realistic increases, which members have been dealing with for years.

Suggesting that dues could double in 4 years strikes me as rather unrealistic. Unless you can point to specific areas and indicate how the underlying costs will increase so dramatically in such a short period.

 

[supa20001]

Dues are based upon the actual operating expenses of the resorts. They aren't an arbitrary number of Disney's choosing. It's whatever they pay out for staff salaries, utilities, property taxes billed by the county, the cost of providing theme park transportation, and so on.

A higher minimum wage for cast members will cause dues to go up. Inflationary prices of building materials will cause an increase in capital reserves collections so that the funds are available when it's time to refurbish. Those are realistic increases, which members have been dealing with for years.

Suggesting that dues could double in 4 years strikes me as rather unrealistic. Unless you can point to specific areas and indicate how the underlying costs will increase so dramatically in such a short period.

Since Disney isn't paying for it, what's stopping them from giving crazy salary to keep the staff happy?
Do a major reno every couple years and charge consulting fees?

 

[lovethesun12]

Since Disney isn't paying for it, what's stopping them from giving crazy salary to keep the staff happy?
Do a major reno every couple years and charge consulting fees

A lot to unpack here, so to sum up I can't see any benefit to Disney (financially) doing either of those things. They would lose money in both instances as well.

 

[tjkraz]

Since Disney isn't paying for it, what's stopping them from giving crazy salary to keep the staff happy?
Do a major reno every couple years and charge consulting fees?

I don't see the point of charging DVC owners for excessive renovations...which will only benefit DVC owners. They cannot charge the DVC budget for hotel room renovations.

If you're suggesting that Disney would somehow budget for a $15 minimum wage for Grand Floridian hotel employees and a $25 minimum wage for Grand Floridian Villa employees, my only response is that would be blatantly illegal. Timeshares are a regulated industry and DVC's books are independently audited each year.

Even in a slow month, DVC generates upward of $30m in revenue from new point sales. If they want to keep that revenue stream going, probably best to avoid pursuing massive timeshare dues fraud. That said, there is a degree of faith involved in buying a DVC timeshare. There will never be full transparency on the resort budgets. If you don't trust Disney to act properly, it wouldn't be wise to enter into a long term relationship of this nature.

 

[Sandisw]

Since Disney isn't paying for it, what's stopping them from giving crazy salary to keep the staff happy?
Do a major reno every couple years and charge consulting fees?

The staff that run the DVC resorts are Disney employees so any salary they give those placed there would apply to all staff in the same unions and positions at the non DVC resorts…so Disney would be paying for it for other staff.

AFAIK, the schedule for refurbishments are part of the contract…or guided by standards….so, it makes no sense for them to do things in that Way. Matter of fact, some owners probsbly wish refurbs were more often than they are.

 

[DonMacGregor]

The staff that run the DVC resorts are Disney employees so any salary they give those placed there would apply to all staff in the same unions and positions at the non DVC resorts…so Disney would be paying for it for other staff.

AFAIK, the schedule for refurbishments are part of the contract…or guided by standards….so, it makes no sense for them to do things in that Way. Matter of fact, some owners probsbly wish refurbs were more often than they are.

Correct. Under Florida statutes, the Association must provide, as part of the annual budget, a schedule for all capital expenditures and deferred maintenance (refurbs):

61B-22.003 Budgets

(e) Unless the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the association shall include a schedule stating each reserve account for capital expenditures and deferred maintenance as a separate line item with the following minimum disclosures:
1. The total estimated useful life of the asset;
2. The estimated remaining useful life of the asset;
3. The estimated replacement cost or deferred maintenance expense of the asset;
4. The estimated fund balance as of the beginning of the period for which the budget will be in effect; and
5. The developer’s total funding obligation, when all units are sold, for each converter reserve account established pursuant to Section 718.618, Florida Statutes, if applicable.
(f) If the association maintains a pooled account for reserves required by Section 718.112(2)(f)2., Florida Statutes, the association shall include a separate schedule of any pooled reserves with the following minimum disclosures:
1. The total estimated useful life of each asset within the pooled analysis;
2. The estimated remaining useful life of each asset within the pooled analysis;
3. The estimated replacement cost or deferred maintenance expense of each asset within the pooled analysis; and
4. The estimated fund balance of the pooled reserve account as of the beginning of the period for which the budget will be in effect.

 

[sethschroeder]

Hotel prices go up that much and people stop coming to the parks.

DVC dues go up that much and members are stuck paying them…or at least trying to sell an unattractive deeded real estate interest with skyrocketing dues.

Again not likely to happen but also in the realm of possibility based on the contract terms.

So you think the cost of running the hotel will go up so much Disney will be left with all these empty rooms on the cash side leaving the parks deserted? Also all the other hotels around WDW will likely have similar increases because Disney isn't paying more to upkeep their hotels than Hilton or others really.

In your future outlook WDW is shutting down and the world is in dire straights for the US so it wont matter.

 

[sethschroeder]

Since Disney isn't paying for it, what's stopping them from giving crazy salary to keep the staff happy?
Do a major reno every couple years and charge consulting fees?

Nah because why would anyone work at Poly then if they can go work at the Poly DVC for more money? They essentially would be poaching their best employees away from their cash side?

As far as larger renovations more often it would make pretty much no sense. Not sure if its enclosed anywhere but its fairly outlined regarding the typical refresh cycle.

I would say some DVC members actually think its not refurbished enough already so a slightly quicker timeline they would view as a benefit.

 

[tom1944]

There is a history for the increases why should we believe Disney would now artificially increase dues for some reason?

 

[Genie+]

It’s in Disney’s best interest to keep dues reasonable. These aren’t perpetual timeshares. Even if they build the max amount of DVC resorts, sales will continue to matter as they start to flip 2042s and beyond.