Maintenance Fee Increases, are they capped?

[meier56013]

Does anyone know, is there a limit to the amount our fees can go up(or down) each year? I don't recall reading this, but there has to be a cap.

 

[Chuck S]

Yes, I think it is 15% max per year, by Florida law, unless approved by a majority of owners.

DVC has never been anywhere near that.

 

[tjkraz]

15% is the maximum annual increase.

 

[pumpkinboy]

I don't think DVC dues have gone up by more than 5% in any year, have they?

 

[Dean]

I think the 15% only applies to the actual maint fee portion and not the taxes themselves. We might find out with VB depending on the level of damage there.

 

[daddiojiggy]

they better use their insurance instead of looking to us to bail them(disney-not vb) out!

 

[DebbieB]

Originally posted by daddiojiggy
they better use their insurance instead of looking to us to bail them(disney-not vb) out!

Florida property insurance has high windstorm deductibles and they are per occurrence (they had 2 occurrences). Also rates will probably increase. They may have a policy that covers all the locations, in which case everyone may take a portion of the rate increase (rates will probably increase for all Florida properties).

OKW had an 8% increase in 2003.

http://www.disboards.com/showthread.php?s=&threadid=620620

 

[Dean]

Originally posted by daddiojiggy
they better use their insurance instead of looking to us to bail them(disney-not vb) out!

The resort is currently owned by the owners there, not Disney or DVC. Any direct costs incurred will come from insurance and the owners unless DVD (not DVC) decides to bail them out. Which they might do under the terms of the agreement where they pay NO maint fees on the points they own. They could use the reserves up to a point then recapture those over a couple of years with the maint fees. Certainly if general insurance rates go up in FL, that will affect all resorts but still likely VB and possible HH to a greater extent.

 

[Horace Horsecollar]

Originally posted by daddiojiggy
they better use their insurance instead of looking to us to bail them(disney-not vb) out!

It's not "their insurance" (meaning the Disney Company's insurance) -- it's our insurance (meaning the members at each DVC resort). We pay for the insurance. That's how a timeshare works.

Our annual fees pay for actual operating expenses, taxes, and reserve fees. There's a modest management fee of about 2%, which is profit for Disney. (The management fee is not to be confused with the administration cost, which is an actual expense.) If the fees go up, it's only because the expenses are going up. For example, Disney can't legally add a extra dollar per point and pocket that money as profit.

That's the advantage of the a timeshare resort -- and that's the disadvantage of the a timeshare resort. The fees are relatively modest after you pay for the timeshare, compared to paying by the night. But, if insurance, taxes, labor, and electricity go up, the fees have to go up.

 

[Beca]

Originally posted by DebbieB
They may have a policy that covers all the locations, in which case everyone may take a portion of the rate increase (rates will probably increase for all Florida properties).

http://www.disboards.com/showthread.php?s=&threadid=620620

That would be really interesting to know. I cannot imagine that would be the case...if DVC were interested in "sharing costs evenly" wouldn't it seem that dues would be priced evenly? I always thought insurance costs were part of the reason VB had really high maintenance fees. I thought the resorts "footed" the bill for their actual expenses. While I think that all DVC resorts' insurance fees will go up after two hurricanes, I think VB is certainly more at risk because of location.

If someone knows the answer to this...please post.



Beca

 

[Gdoody]

A whole lot of thoughts on this thread:

1) Our resorts do have insurance - paid by us with a portion of our annual dues. This is what will pay for a majority of any damages. In the event of significant damages or destruction, DVD has the right to decide not to re-build and pay us out from the insurance settlement.

2) DVD, like almost every timeshare does have the right to ask for special payments to cover unique circumstances - such as this. For example - if the cost of the deductible is high, then DVD can ask members to pay this as a one time top on on our annual fees. DVD typically charges higher fees to avoid these type of circumstances. Many time shares keep their fees unreasonably low, and when the time comes to re-furbish the pool or other ammenity, they then asses a one time surcharge. The problem is that over the years there are many of these. Odds are DVD may have the funds in reserve to cover the costs - but don't be surprised if we do get the sur-charge.

Regards!

Glenn

 

[DebbieB]

Originally posted by Beca
That would be really interesting to know. I cannot imagine that would be the case...if DVC were interested in "sharing costs evenly" wouldn't it seem that dues would be priced evenly? I always thought insurance costs were part of the reason VB had really high maintenance fees. I thought the resorts "footed" the bill for their actual expenses. While I think that all DVC resorts' insurance fees will go up after two hurricanes, I think VB is certainly more at risk because of location.

If someone knows the answer to this...please post.



Beca

I don't know how DVC's insurance policy is setup, but I work in commercial insurance and large property owners like this usually buy 1 policy that covers all the locations with a blanket limit (get a better rate that way). Again, I don't know how DVC is setup, it's possible they bought a separate policy for each location, although I doubt it. Even though they may have a blanket limit, they could choose to apportion out the total with a higher portion to Vero. I would hope that they set aside some money in the reserves for Vero to pay insurance wind deductibles in case of a claim. Usually wind deductibles are 2% to 5% of the total property value, so that figure is going to be very high. And they now have 2 occurrences, which could mean a second deductible.

 

[nickglover]

I can tell you, if the dues go up any more than about 3%, or there is a special charge for VB, it will probably be enough to convince us to sell our membership. The VB dues are at the borderline of being too excessive right now, for what you receive in return.

 

[tjkraz]

VB dues have always been high, so I'm not sure what you expected going in. Not to mention the 25% chance that the resort will be totally destroyed by a hurricane in before the end of the contract, which I believe is stated in the POS.

I wouldn't be surprised to see Cat 4/5 hurricanes strike the resort a handful of times in the next 40 years.

 

[DebbieB]

Originally posted by nickglover
I can tell you, if the dues go up any more than about 3%, or there is a special charge for VB, it will probably be enough to convince us to sell our membership. The VB dues are at the borderline of being too excessive right now, for what you receive in return.

Even without the hurricanes it probably would have gone up more than 3%. It was almost 7% this year. I think you will have a hard time selling Vero points unless you sell low. It will be interesting to see what happens with ROFR, if DVC will prop up the price or let them go low.

 

[Maistre Gracey]

If I had to pick between high quality, and low fees.... high quality would win EVERY time!

MG

 

[threegoofys]

Here's another question. If a DVC resort didn't receive any damage from the past hurricanes, will their insurance rate go up just because the other resorts received damage and might have insurance increases? As far as I know, HH didn't receive any damage, therefore their insurance shouldn't go up. Could it be possible that HH owners might not take on a bigger increase rate on maitenance fees this year compared to other home resorts? Or is it a cross the board kind of thing when it comes to DVC? Just a thought.

 

[manning]

If they are buying insurance on the open market don't be surprised to see insurance rates go up all over america. It will be higher in Florida.

 

[pumpkinboy]

OK, so I am looking at our DVC closing documents right at this moment. Right in the Product Understanding Checklist, item #4:

Each Member pays Annual Dues on a calendar year basis, which include real estate taxes. Annual Dues (except for replacement reserves and real property taxes) cannot by law, be increased by more than 15% from the preceding year without the approval of a majority of owners.

Chuck S is right on the money again with this one.
Now "replacement reserves" is the interesting term. I imagine that in such a hurricane prone area, that a big reason for VB's currently high dues are replacement reserves, ie stashing away a big wad of cash in case it all gets washed away and needs to be rebuilt. I imagine that part of these might be available to effect repairs not covered by insurance (under the high deductable).

Interesting topic in any case.

 

[Beca]

Well...either way, it will be very "interesting" to see what are dues are next year!! I'm sure they will ALL see a significant "bump"!!!

tjkraz....Did the POS REALLY state that there would be a 25% chance that the resort would be blown away over the life of the contract?!! How scary!! I wonder how many people who bought resale know that? (I know that I did not get nearly as much info when I bought as I would've received via DVC...at least when buying at a "new" resort).



Beca