Hypothetical- dues question

[mlayton14]

I think we can agree that dues should go down next year. We can also agree that some fixed costs like taxes , and other variable costs to maintain the resorts must stay so it can’t be $0 per point

So theoretically if dues came in at 50% of a normal year for 2021 , how could they return to normal in 2022 assuming all costs return ? Isn’t there a 15% cap on dues increases year to year ?

 

[Marionnette]

I think we can agree that dues should go down next year. We can also agree that some fixed costs like taxes , and other variable costs to maintain the resorts must stay so it can’t be $0 per point

So theoretically if dues came in at 50% of a normal year for 2021 , how could they return to normal in 2022 assuming all costs return ? Isn’t there a 15% cap on dues increases year to year ?

Assuming that there is a reduction in 2020 dues, it would be a credit applied to the 2021 dues. The 2021 dues would not be reduced because there will be new owners who purchase in 2021 who would not be entitled to such a reduction. Since 2021 dues would not be reduced, a normal increase in 2022 dues would be possible.

 

[mlayton14]

I’m confused , so let’s try to simplify this - if there were $20million not spent for resort operations in 2020 due to Covid19, where do the savings go?

 

[Marionnette]

I’m confused , so let’s try to simplify this - if there were $20million not spent for resort operations in 2020 due to Covid19, where do the savings go?

Okay. Let’s work with that $20M, and since we’re working with hypotheticals, let’s say that represents 20M points for the sake of easy math.

DVC is not going to reduce the 2021 dues by $1/point. Those dues will still be whatever the projected operational costs for 2021 will be. Those who owned in 2020 would be “credited” $1/point toward their 2021 dues because the 2020 dues were in excess of what was actually spent in 2020. I’ve seen that sort of accounting done in previous years when anticipated costs of a resort exceeded actual costs.

 

[_auroraborealis_]

And it is a big if. When they reopen many costs will increase, and the costs of opening back up will be an issue.

Ever dealt with pipes and toilets not used for more than a month?

MS costs are up right now. Way. Up. CMs are being paid through tomorrow before furlough. Not everyone is on furlough. Some maintenance is ongoing at resorts. Lawns are getting mowed. New hires may be needed, as college program fills in a lot of holes at resorts and that is off until at least fall. So training costs.

I don't think costs decrease nearly so much as you hope.

 

[Marionnette]

And there will be a big leap in housekeeping costs due to the need to “deep clean” villas between guests. (Or at least give the impression of a deep cleaning).

 

[mlayton14]

Ok thanks for all of your replies , makes more sense now. Can Disney refund / credit some owners and not others? Maybe that’s a can of worms not worth opening

 

[drusba]

Can Disney refund / credit some owners and not others? Maybe that’s a can of worms not worth opening

DVC cannot refund or credit just some owners. Any excess of amounts collected during a year over actual costs for the year is called the "common surplus" in the POS and all owners are deemed to own that common surplus, with shares determined based on the the level of ownership interest each owner has. The 2021 budget that will be determined and provided, likely in late Nov 2020, will be for 2021 and not include set-offs due to a 2020 surplus, assuming there is any surplus. What you will then get is a dues bill in late December that decreases from the 2021 budget the amount of dues owed per point by your share per point of the common surplus. It is the budget to be issued in late Nov 2020 for 2021, which does not take into account any 2020 surplus, that is subject to that maximum 15% change rule.

 

[epcotized]

In a normal year if dues are based on projected costs what happens to the difference between projected costs and actual costs? The difference this year would be greater but would therre be an existing method to handle differences?

 

[Sandisw]

In a normal year if dues are based on projected costs what happens to the difference between projected costs and actual costs? The difference this year would be greater but would therre be an existing method to handle differences?

It goes into the capital reserves fund to help with future improvements.

 

[Carlnne]

I thought this was all wishful thinking until DVCs email today. While I still dont think we will see much of anything- I was surprised they atleast addressed dues.

 

[CarolMN]

This was in the email recently sent to Members:

Finally, some Members have had questions about how the closure is affecting their association’s annual dues. While lower operating costs are anticipated for each condominium association because of the closures, there are many unknowns ahead as the resorts return to operation. Our commitment to Guest and Cast safety remains our top priority, and changes may be implemented to the way we operate, which may add some new costs. Given the unique circumstances of this situation, the proposal is to issue a credit to Members in mid-December as part of the distribution of Annual Dues Statements for 2021 if their association has an operating surplus (as opposed to rolling all surpluses into reserves).

 

[_auroraborealis_]

Here's a fun consideration for reopening that is undoubtedly an expense: https://www.reuters.com/article/us-...other-risk-legionnaires-disease-idUSKCN2261AO