DVC's Old Key West Extension Ordeal

[SpaceMountain77]

When you talk to DVC guides, the OKW extension is described as a wildly successful, $20,000,000 venture. However, on discussion boards, it is described as a "fiasco" and "ordeal."

What happened, exactly, and why would members have a different impression?

 

[Tink-n-Belle]

If it was such a success then why haven't they offered it at the BW?

I do own there and don't know if I do the ext right now, but it would be nice to have the option

 

[pinnocchiosdad]

 

[Deb & Bill]

When you talk to DVC guides, the OKW extension is described as a wildly successful, $20,000,000 venture. However, on discussion boards, it is described as a "fiasco" and "ordeal."

What happened, exactly, and why would members have a different impression?

We own at OKW. When the deal first came out, it was $15 a point for a limited time with the final cost to be $25 a point. A month or so later, it was raised to $20 a point. Then another few months later it was raised to $25 a point where it is now.

We passed on the deal. I'll be 92 when OKW expires (if I live that long). Why in the world would I pay an extra $15 a point for something I have to be 93 before I get any benefit from it? I think a lot of the original DVC members who bought OKW direct from Disney also are a bit older than the ones who are now buying Aulani, AKV, BLT. We bought at $50 a point, so $65 a point still wasn't a bad deal. But I already had 45 years for $50 a point, why spend more?

The rest of problem concerned passing on the deal. Members had to get a document notorized that they were passing on it. There was a deadline to pass on the deal or members were supposed to be billed for the extension. Which didn't sit well with a lot of members. The members were reimbursed $10 on the annual dues to cover the cost and bother of the extension paperwork. I'm not sure DVC ever automatically billed members for the extension if they didn't respond.

All in all, it was a cluster. Not well thought out and I think DVC thought members would jump at the chance which members like us thought it was stupid. Younger members who have bought into DVC might like the extra time since the life of OKW is 29 years now.

 

[RobDoc]

Basically, each contract has already been extended the additional 15 years whether the extension was purchased by the owner or not. Those that paid for their extension don't get the benefit of that purchase until February 1, 2042.

Anyone buying OKW direct from DVC automatically gets the extended contract since any OKW points recovered by DVD (foreclosure, ROFR) will either already have the paid extension or DVD already owns the extension themselves so every direct OKW contract sold the buyer has paid for the extension.

The few resales that have been offered via resale did not have an asking price $15 more than those without the extension, so it's apparent that even those who paid the $15 "bargain" offered did not get their money back when selling by resale.

DVDs problem as I see it, is that on 2/1/2042 they will own a 50+ year-old resort that is partially sold out so they can't just up and close it/tear down/rebuild. Since the deeds are all for a specific % of a building, I don't think they can just maintain enough buildings for those who own at that time and tear down the rest since those buildings are likely still owned by those who have purchased the extension.

My belief is that the recent ROFR activity for OKW resales has gotten rid of some of the unsold extensions and is a major part of the "wildly successful" status reported by some guides.

They have a long way to go though before OKW is sold out thru 2057 especially at $115 per point.

 

[sweetdana]

I think the biggest problem is some owners will and some will not extend at every resort. Meaning they cannot "start over" with points, (per night/views/ect), if 1 person extends, and if they all don't then any point that doesn't needs to be resold once expiration date hits.

The issue is they cannot just say 1/2 the resort extended, clear out 1/2 and start over with a new 50 yr contract. as it is pick and choose which unit/uy/point you actually own.


I cannot think of a logical, and feasible way of "extending"; without hurting there bottom line. Aside from PP mentioned..

Honestly it doesn't make financial sense to extend BWV or BC, due to the increase points per night at other resorts, (like BLT/SSR and I can only assume GF) it makes sense to increase those points per night. Even if they didn't start construction over with these .. though I am sure they will. It would make sense to resell all these rooms at a premium and increase the stays of each room 5-10 points a night. Adding GV at BC/BWV would be huge and might I add profitable..

Right now SSR is more per night than a BWV stand room.. and there are few people who put demand of a studio at SSR over BWV, but they cannot increase without expiring. even if they adjusted the points per night, it doesn't profit them right now.. so it makes sense to pocket the difference.

I also think it makes sense to start construction over with BC, and make it another few stories, and have more rooms. HIGHER HIGHER HIGHER adding views, and points.. It books 1 of the fastest, and it makes no sense to not "sell" what people want. They would have no trouble selling the extra points. though parking and pool capacity would need to be figured out.. it is the most financially rewarding option.

 

[wdrl]

When you talk to DVC guides, the OKW extension is described as a wildly successful, $20,000,000 venture. However, on discussion boards, it is described as a "fiasco" and "ordeal."

What happened, exactly, and why would members have a different impression?

I know very little about the OKW extension, other than OKW owners were offered a chance to extend their deed expiration dates from 2042 to 2057 at a discounted rate of $15 a point.

I also don't know what the DVC Guides might have meant when they described it as a $20,000,000 venture.

However, I do know that OKW has about 7,678,935 total points. IF (and that is a pretty big IF) the Guides meant that the extension offer generated $20,000,000 in revenue, then about 1,333,333 points were extended at the price of $15 a point. That means that about 17.36% of OKW's total points were extended.

Absent any shred of corroborating evidence from other knowledgeable sources, I give this percentage virtually no probative weight in accessing the success or failure of the OKW extension project.

When I read about unscripted comments made by Guides, the first thing I think of is "Those who don't know talk, and those who do know, don't." DVC Guides are usually on a pretty short leash as to what they can say to the general public. Furthermore, DVD usually doesn't tell Guides much about what has happened in the past or, in more importantly, what may happen in the future.

 

[RobDoc]

In July, 2007, the DVD Board held a special meeting to "discuss" and vote on accepting an extension of the land lease for the OKW property and then to vote on "offering" an extension to OKW owners at $25 per point. Advance notice of that meeting was properly sent to all OKW owners.

For a brief period of time, they discounted the extension to $15 per point until the end of February, 2008. Special meetings were held for OKW owners in early December, 2007 (coinciding with the DVC annual meeting) to explain the extension with a very sugar coated presentation. The legal language in the extension itself stated that those owners who failed to either purchase or offically decline the extension would have a lien placed against their membership. When asked about that component at the meeting a very brief dismissal was offered saying they were sure that would not be necessary (but the threat was definitely part of the legalese in the contract).

Since every contract was automatically extended with the vote in July, 2007 their responsibility was to collect the $15 per point or the signed waiver (turning that extension over to DVD). We never had a report on the DIS by anyone stating they never signed the waiver or so we have no way to know if that ever happened of if anyone challenged DVD with this issue.

I do know that at least one OKW owner did get a concession from DVC that payment into the Capital Reserve fund (for all owners) will be curtailed at some point near the end so that owners without the extension are not contributing any more $$ into the fund for dates beyond 1/31/42. So, according to that, those who expire 1/31/42 will have lower dues at some point than those who own the extension.

Stay Tuned.

 

[wdrl]

Even now, a few OKW Quitclaim Deeds still appear every month on the OCC website, signifying that the owner is finally turning over their points to DVD for the period from 2042 to 2057. I suspect some of these Quitclaim Deeds are being filed because the original owner -- who never acted on the extension -- is currently selling their deed and DVC is requiring that the Quitclaim, or payment for the extension, be on file before the sale can become final.

 

[DougEMG]

I'm an OKW owner, but bought resale and don't have an extended contract Given the large prices increases coming on Mar 20th, I wonder how many current OKW would be interested in getting an extension if the $15 offer was made again. I think I would have to give it serious consideration, not that I would use it myself, but my daughter would.

It would seem to me that for BWV/BCV that Disney would make more money by letting the contracts expire and rebuilding and selling a new resort at new sky high prices rather than extending. One problem would be how much to spend on maintenance those last few years before the contract all expire. How run down would Disney let the resorts get if they planned to tear them down vrs how much would owners want to spend on MF to keep something up that was scheduled to be torn down.

 

[wdrl]

One problem would be how much to spend on maintenance those last few years before the contract all expire. How run down would Disney let the resorts get if they planned to tear them down vrs how much would owners want to spend on MF to keep something up that was scheduled to be torn down.

DVC has a fiduciary responsibility to the Condominium Association that requires it to place the interests and needs of the Membership ahead of Disney. Since all expenses for maintaining a DVC resort are covered by maintenance fees, it costs Disney nothing if DVC decides its in the best interest of a resort's condo association to spend money on maintaining resorts to a certain standard.

 

[Caren90]

Why would I want to extend my OKW contract when Florida and Disney may be under water (literally) in 2042.

Actually I will be 76 in 2042 and will not even know my name at that point let alone be able to book a trip to Disney...

Stephen

 

[SpaceMountain77]

It would seem to me that for BWV/BCV that Disney would make more money by letting the contracts expire and rebuilding and selling a new resort at new sky high prices rather than extending. One problem would be how much to spend on maintenance those last few years before the contract all expire. How run down would Disney let the resorts get if they planned to tear them down vrs how much would owners want to spend on MF to keep something up that was scheduled to be torn down.

That is precisely why I did not purchase a BLT contract. The Contemporary resort will be 89 years old when the contract expires. After 40+ years, the tower is already showing its age and is in desperate need of attention.

If you read some of the better texts on Disney's history, you will see that US Steel and Welton Becket did not design the Contemporary and Polynesian to be one day registered on the National Register of Historic Places. Their shelf life was only to be for a few decades.

The South Garden Wing is surviving on borrowed time and the tower will eventually require significant attention.

 

[lilpooh108]

That is precisely why I did not purchase a BLT contract. The Contemporary resort will be 89 years old when the contract expires. After 40+ years, the tower is already showing its age and is in desperate need of attention.

If you read some of the better texts on Disney's history, you will see that US Steel and Welton Becket did not design the Contemporary and Polynesian to be one day registered on the National Register of Historic Places. Their shelf life was only to be for a few decades.

The South Garden Wing is surviving on borrowed time and the tower will eventually require significant attention.

I'm confused. What does the age of the Contemporary have to do with whether you buy into BLT? B/c the monorail is there?

 

[luckyman_apd]

I'm confused. What does the age of the Contemporary have to do with whether you buy into BLT? B/c the monorail is there?

There is that, but as a resort in general, what is at BLT without the CR? No restaurants, no pantry market? Without the CR, the BLT is really just a hotel, not a resort.

The rumors of the south garden wing will have something replacing it in the future. If not DVC, something else.....at least the ones I've heard.

 

[KAT4DISNEY]

I would never worry about the age of the CR. Either something will be there or WDW itself will be closed.

 

[YourEveryDayAdam]

I would never worry about the age of the CR. Either something will be there or WDW itself will be closed.

BINGO. CR is prime real estate in every single definition of the word. Quite simply, it's the best physical location for staying on property for access to all of the rest of Disney World, particularly the main park...The Magic Kingdom.

If they had to tear down the CR because of some issue with the building, then Disney would almost certainly build something in it's place. It's simply too valuable to just tear it down.

 

[Dean]

Info suggests that only a fairly small portion of the contracts that could have been extended were, some suggested less than 25%, my guess is far less. The problem they had is that the RTU is tied to the land lease legally so if they extend the land lease, they are actually extending all contracts. I understand and sympathize with their dilemma. However, their approach was to issue a special assessment and place a lien, something that I do not believe they have the legal right to do based on the wording of the POS or FL timeshare law. Again, I sympathize with their situation. The other problem was they overpriced it. Even at $15 it was well overpriced. I'd say that $5-8 was a far more reasonable price, likely on the low end. I suspect they would have made more money long term at that price as well. It will be interesting to see how they handle the resort in 2042 with most owners being 2042 and the rest 2057. I don't think they can tear down any "unit" that has an owner but they don't have to use it for reservations purposes. Regardless, it should be interesting as will any possible future resort extensions for other resorts.

 

[luckyman_apd]

Info suggests that only a fairly small portion of the contracts that could have been extended were, some suggested less than 25%, my guess is far less. The problem they had is that the RTU is tied to the land lease legally so if they extend the land lease, they are actually extending all contracts. I understand and sympathize with their dilemma. However, their approach was to issue a special assessment and place a lien, something that I do not believe they have the legal right to do based on the wording of the POS or FL timeshare law. Again, I sympathize with their situation. The other problem was they overpriced it. Even at $15 it was well overpriced. I'd say that $5-8 was a far more reasonable price, likely on the low end. I suspect they would have made more money long term at that price as well. It will be interesting to see how they handle the resort in 2042 with most owners being 2042 and the rest 2057. I don't think they can tear down any "unit" that has an owner but they don't have to use it for reservations purposes. Regardless, it should be interesting as will any possible future resort extensions for other resorts.

I'm not sure you will see future extensions unless there is some reason for them to believe most owners would buy it. If the initial sales of the resort pay for the construction, then tearing down (while not the most environmental) is the most economical solution. As a BLT owner, and planning to really start enjoying my retirement (hopefully) in 29 years, I'm curious to see what happens in 2042 as resorts close. I'll be just a few years into retirement when the other resorts end date occurs, so I'll be sitting with my popcorn from the balcony of BLT

 

[Dean]

I'm not sure you will see future extensions unless there is some reason for them to believe most owners would buy it. If the initial sales of the resort pay for the construction, then tearing down (while not the most environmental) is the most economical solution. As a BLT owner, and planning to really start enjoying my retirement (hopefully) in 29 years, I'm curious to see what happens in 2042 as resorts close. I'll be just a few years into retirement when the other resorts end date occurs, so I'll be sitting with my popcorn from the balcony of BLT

I go back and forth but I am certain that if you see future extension options it will be MUCH later and/or much different than OKW was structured. The reserves will not pay for any removal or destruction. The one issue that pushes me to think they have to extend at least the on property resorts is the infrastructure they have built up. There's no way to pay for all of that without the 2042 resorts on board even with planned reductions late in the course of the 2042 resorts.