RE: Subsidized Contracts

[MouseOfCards]

Sister and I were discussing Aulani, which raised some questions regarding subsidized contracts and how they work:

1. I've heard of Aulani and VB using subsidized contracts. Are there other DVC resorts?
2. Does the subsidy last the entire length of contract, or just for a specified shorter period of time?
3. Where does the subsidy come from and was it always considered a subsidy when first sold by Disney?
4. Why does Disney use subsidized contracts?
5. What % of contracts (e.g. at Aulani) are subsidized?
6. How/why/when did Disney stop selling the subsidized contracts and start selling contracts with higher MFs?
7. Has Disney been grabbing all subsidized contracts going through ROFR? Or do some actually pass? Does anyone have some statistics on this?

Hopefully you knowledgeable folks can help fill in the blanks!

 

[disneynutz]

I can fill you in on Aulani. When DVD first started selling Aulani, they made a mistake on the dues rate. They were caught by the State of Hawaii, ordered to stop selling world wide and 3 executives were fired. A long while later they started selling again with a higher dues rate. Original buyers were offered the choice of a contract buy back or subsidized dues for life with Disney paying the difference between the incorrect lower rate and the correct rate.

Bill

 

[Dean]

Sister and I were discussing Aulani, which raised some questions regarding subsidized contracts and how they work:

1. I've heard of Aulani and VB using subsidized contracts. Are there other DVC resorts?
2. Does the subsidy last the entire length of contract, or just for a specified shorter period of time?
3. Where does the subsidy come from and was it always considered a subsidy when first sold by Disney?
4. Why does Disney use subsidized contracts?
5. What % of contracts (e.g. at Aulani) are subsidized?
6. How/why/when did Disney stop selling the subsidized contracts and start selling contracts with higher MFs?
7. Has Disney been grabbing all subsidized contracts going through ROFR? Or do some actually pass? Does anyone have some statistics on this?

Hopefully you knowledgeable folks can help fill in the blanks!

I'm not sure contractually they have to cont the subsidies but realistically I think one can safely assume they will go the entire RTU timeframe. There are no others that I know of other than OKW had some limited adjustments. DVD pays the difference is my understanding though I'm not sure how they do so. The reason for Aulani is because they miscalculated the costs and grandfathered those that had bought already. For VB it's because they scaled down the resort and thus increased the operating costs per point. I can't speak to % of either personally. I'm sure they'd be more likely to take them ROFR but haven't been following that issue.

 

[MouseOfCards]

I can fill you in on Aulani. When DVD first started selling Aulani, they made a mistake on the dues rate. They were caught by the State of Hawaii, ordered to stop selling world wide and 3 executives were fired. A long while later they started selling again with a higher dues rate. Original buyers were offered the choice of a contract buy back or subsidized dues for life with Disney paying the difference between the incorrect lower rate and the correct rate.

Bill

I'm not sure contractually they have to cont the subsidies but realistically I think one can safely assume they will go the entire RTU timeframe. There are no others that I know of other than OKW had some limited adjustments. DVD pays the difference is my understanding though I'm not sure how they do so. The reason for Aulani is because they miscalculated the costs and grandfathered those that had bought already. For VB it's because they scaled down the resort and thus increased the operating costs per point. I can't speak to % of either personally. I'm sure they'd be more likely to take them ROFR but haven't been following that issue.

How interesting - so Aulani subsidized contracts resulted from a mistake! Hard to believe, with a corporation as big as Disney with all their attorneys. So the contracts themselves don't actually state "subsidized"? And why would any owner at the time choose to accept Disney's buy back offer when they can benefit from the mistake for the life of the contract?

Also, have you heard of any Aulani subsidized contract passing ROFR, especially in the last few years? Just wondering if making an offer on one is a complete waste of time.

 

[KAT4DISNEY]

Also, have you heard of any Aulani subsidized contract passing ROFR, especially in the last few years? Just wondering if making an offer on one is a complete waste of time.

There have been reports of them passing.

 

[southerngirl528]

From what I've understood, if a subsidized Aulani contract is sold the subsidized dues do not go to the resale buyer. I've been told that in this scenario the resale owner would be paying the correct dues without subsidization.

 

[MouseOfCards]

There have been reports of them passing.

Good to know. Thanks! That means they may be worth a shot.

 

[KAT4DISNEY]

From what I've understood, if a subsidized Aulani contract is sold the subsidized dues do not go to the resale buyer. I've been told that in this scenario the resale owner would be paying the correct dues without subsidization.

Not my understanding. The contracts are listed as subsidized and the subsidy follows from all accounts.

 

[southerngirl528]

Not my understanding. The contracts are listed as subsidized and the subsidy follows.

You certainly could be right. I will have to check with one of my neighbors that works for DVC sales as I am now curious.....

 

[MouseOfCards]

From what I've understood, if a subsidized Aulani contract is sold the subsidized dues do not go to the resale buyer. I've been told that in this scenario the resale owner would be paying the correct dues without subsidization.

Really? That's sad. Then why even mention that they're subsidized in the listing?

 

[southerngirl528]

Really? That's sad. Then why even mention that they're subsidized in the listi

I could be wrong, MouseofCards, but I would swear I have heard that. If it IS true no one should have it as part of a listing to sell. I'm going to find out for certain in the next few days.

 

[MouseOfCards]

I could be wrong, MouseofCards, but I would swear I have heard that. If it IS true no one should have it as part of a listing to sell. I'm going to find out for certain in the next few days.

Thanks! It would be great to know for certain.

On another note, does anyone know how the subsidized rate is calculated each year? Is it a percentage of the higher dues? Or a specific discount from the higher dues?

Also, are the higher dues paid by non-subsidized owners made even higher to help cover the costs of subsidized contracts?

 

[Dean]

The subsidy goes with it. What I don't know is whether they can eliminate the subsidy if they take it ROFR. If they can't they could sell any other points they hold and keep the subsidized points as the residual.

 

[miTnosnhoJ]

How can you tell if an Aulani resale is subsidized or not? I.e. Before making an offer.

 

[CMNJ]

How can you tell if an Aulani resale is subsidized or not? I.e. Before making an offer.

They put it in the listing-because it gives it an edge over other listings

Edited to add-check out this listing
http://dvc-resales.com/detail.cfm?ID=AR100-04-0228
You will see they have subsided dues capitalized to draw attention