What if the bungalows aren't that popular?

[LauraLea]

I used to think it was a unit, but the SSR reallocation reduced some normal rooms when they increased the THV points... And those THV units weren't in anyone's thought when the other SSR units were declared.

Good point. THV had to have their own declarations and DVC was able to reallocate points for them. They were a lowering of the other villas and an increase in treehouses. PVB would be a lowering of the bungalows and an increase to the studios, if that makes a difference.

Laura

 

[drusba]

Members sometimes speak of Disney's duty to reallocate if there is skewed demand but it is not as simple as that. The portions of the controlling documents dealing with reallocations do not even speak of Disney having any duty to make a change if there is skewed demand. Instead, the documents speak of its right to make a change if in its discretion it determines one is needed in the interests of the members as a whole. In other words, that provision does not require Disney to actually reallocate when demand is skewed. Moreover, it speaks of possibly making changes when there is a demonstrated change in demand at the resort. There will be no "change" in demand at Poly because the bungalows will likely start out with low member demand.

The only place one might find a duty to reallocate is to assert that Disney has a fiduciary obligation to act in the best interests of the members as a whole. But that is an amorphous obligation chock full of discretion that usually results in the fiduciary being found to have acted properly unless it is shown the fiduciary is doing something that is truly harmful to the members as a whole and lacks any benefits or is altering fundamental rights that cannot legally be altered. Disney can easily avoid reallocation under that test even if there is low demand for the bungalows by simply concluding, in its discretion, that lowering bungalow points would require raising studio points and it is not in the best interests of the members as a whole to raise studio points. It is true Disney made such a reallocation at SSR by raising points needed for the treehouses and lowering them for other rooms, but the reality is if it had chosen not to do that reallocation it still would have been acting properly.

Also, though there will likely be low demand for the bungalows, there is unlikely to be zero demand. The points for the bungalows are just low enough to assure likely high demand during the first two weeks of Dec, probably Dec 31 and early Jan, the few days around July 4 and Thanksgiving, race and other special weekends, possibly Sep, and then some demand at many other times although demonstrated in short, two the three night stays.

What Disney will likely have is the ability to rent many of the bungalows more often than it can for other rooms. As to breakage income, it needs to return to the association only that portion of its breakage income that equals 2.5% of the DVC resort's annual budget excluding property taxes. That will likely end up being a small portion of the overall rental income Disney will get if the bungalows have low DVC demand. In doing the rentals, Disney will be able to offer whatever it wants. Despite a designated high rental price, it can create packages with tickets, discount the room rate, add some perks like giving renters access to concierge services at Poly. And meanwhile all the maintenance and repairs of the bungalows will be paid for out of dues paid by all those members who purchase just to be able to get studios.

 

[DVC Mike]

http://i235.*************************************POS.jpg

In order to meet the Club Member's needs and expectations as evidenced by fluctuations in Use Day demand... DVCMC may, in its discretion, increase or decrease the Home Resort Vacation Point requirements for reservation of a given Use Day within a given Vacation Home during the given calendar year by any amount not to exceed twenty percent (20%) of the Home Resort Vacation Points required to reserve that Use Day during the previous calendar year.

 

[quinnc19]

I wonder if it might make sense for a member to rent out their points to a non-member wanting a studio, and then book a discounted bungalow rate through CRO? Might be cheaper than booking with points directly.

Members sometimes speak of Disney's duty to reallocate if there is skewed demand but it is not as simple as that. The portions of the controlling documents dealing with reallocations do not even speak of Disney having any duty to make a change if there is skewed demand. Instead, the documents speak of its right to make a change if in its discretion it determines one is needed in the interests of the members as a whole. In other words, that provision does not require Disney to actually reallocate when demand is skewed. Moreover, it speaks of possibly making changes when there is a demonstrated change in demand at the resort. There will be no "change" in demand at Poly because the bungalows will likely start out with low member demand.

The only place one might find a duty to reallocate is to assert that Disney has a fiduciary obligation to act in the best interests of the members as a whole. But that is an amorphous obligation chock full of discretion that usually results in the fiduciary being found to have acted properly unless it is shown the fiduciary is doing something that is truly harmful to the members as a whole and lacks any benefits or is altering fundamental rights that cannot legally be altered. Disney can easily avoid reallocation under that test even if there is low demand for the bungalows by simply concluding, in its discretion, that lowering bungalow points would require raising studio points and it is not in the best interests of the members as a whole to raise studio points. It is true Disney made such a reallocation at SSR by raising points needed for the treehouses and lowering them for other rooms, but the reality is if it had chosen not to do that reallocation it still would have been acting properly.

Also, though there will likely be low demand for the bungalows, there is unlikely to be zero demand. The points for the bungalows are just low enough to assure likely high demand during the first two weeks of Dec, probably Dec 31 and early Jan, the few days around July 4 and Thanksgiving, race and other special weekends, possibly Sep, and then some demand at many other times although demonstrated in short, two the three night stays.

What Disney will likely have is the ability to rent many of the bungalows more often than it can for other rooms. As to breakage income, it needs to return to the association only that portion of its breakage income that equals 2.5% of the DVC resort's annual budget excluding property taxes. That will likely end up being a small portion of the overall rental income Disney will get if the bungalows have low DVC demand. In doing the rentals, Disney will be able to offer whatever it wants. Despite a designated high rental price, it can create packages with tickets, discount the room rate, add some perks like giving renters access to concierge services at Poly. And meanwhile all the maintenance and repairs of the bungalows will be paid for out of dues paid by all those members who purchase just to be able to get studios.

 

[CarolMN]

.......(snip)..........
While that is how I read the POS's that I have (AKV, OKW, BWV), clearly this was not adhered to with the last 2 yr reallocation or the THV adjustment and it's not in the interest of the owners at a given resort as a whole. That's one of the reasons I felt the THV should have been a separate resort with a shared check in...............

Did they re-do any SSR contracts at that time? I doubt it. I wonder how they kept the total ownership percentage for a unit at 100%?

Maybe they just said the points per unit were reduced / increased proportionately, so the percent owned by each contract stayed the same? If so, I suppose they could do the same for the bungalows if they wanted to do so. It would just be a math problem to make sure the total for the resort didn't change beyond what was sold.

Maybe having the bungalows separate from the studios makes any future reallocations cleaner than if they were mixed.

 

[drusba]

I do not have access to my documents at this time to check on what causes the belief that the change at SSR with treehouses may have been improper because of "unit" language in the documents (a "unit" may be a room or a group of rooms, or at OKW a building). I like Dean and CarolMN questioned whether the reallocation done with the SSR treehouses was proper since the treehouses were separate "units" from the the rest of SSR. But that does not seem to be so clear in some of the documents. For some reason I think, but am not right now sure without looking, that the language changed at some point, possibly when they started SSR, but definitely with AKV, to not tie the change to a particular unit so much but instead to say an increase in points in one vacation home (i.e., the actual rooms) had to be met with an offsetting decrease in one or more other vacation homes. The only unit clause that stayed was simply that the change could not change the total points in a unit, a phrase that likely can mean nothing more than that Disney cannot take action that actually changes the total points that are sold in relation to a unit. Perhaps someone who has an old resort and a newer one can check to see if the language is different becuase I may just be remembering a shift in my thinking of the possible interpretation of the documents rather than an actual change.

 

[disBOBney]

It actually depends on how the bungalows & studios were declared into the condominium.

Technically, the total number of points required to reserve every night of the year for a UNIT can't change. I don't know how the UNITS for PVB were declared. It may be that a UNIT for PVB consists of a single bungalow and no studios. Perhaps another UNIT contains only a group of studios or maybe an entire building of studios. Or perhaps a UNIT consists of a few bungalows and a group of studios. This is a question for someone who follows the declarations - perhaps wdrl will see this and reply.

If you look at the declaration documents you will notice that the bungalows so far consist of 5 units each containing two vacation homes. Of the top of my head I can't tell you exactly how the studios are divided except that 40 units have been declared each unit consist of either 4 or 6 vacation homes. No studios are in a unit with any bungalows, no studios facing the lagoon is in a unit that does not face the lagoon.

 

[DebbieB]

It will be interesting to see the availability. I think there will be people with money to burn who will pay for this unique room.

 

[wdrl]

It actually depends on how the bungalows & studios were declared into the condominium.

Technically, the total number of points required to reserve every night of the year for a UNIT can't change. I don't know how the UNITS for PVB were declared. It may be that a UNIT for PVB consists of a single bungalow and no studios. Perhaps another UNIT contains only a group of studios or maybe an entire building of studios. Or perhaps a UNIT consists of a few bungalows and a group of studios. This is a question for someone who follows the declarations - perhaps wdrl will see this and reply.

If a UNIT contains studios and bungalows, then YES, a reallocation could make studios more expensive and bungalows less expensive.

If a declared UNIT only contains bungalows, then points could not go from bungalows to studios. In that case, a reallocation could only occur between seasons or days of the week for the bungalows. And a reallocation for studios could only involve studio point costs, not bungalow point costs.

I'd like to know this myself!

The configuration of the Residential Units has nothing to do with how points are allocated on the point chart. Conversely, how the points are distributed on a point chart has nothing to do with the configuration of the Residential Units. All that matters is the total number of points that represent the real estate interest at the resort.

DVD can mix and match different types of vacation homes in a single Residential Unit, and even if they are the same type of vacation home they don't have to have the same view classification. Nor do the Units have to be of equal size.

Each DVC resort has a single formula that translates the Units into points based on the size of the Unit's real estate interest. It doesn't matter what kind of vacation home(s) comprises the Unit, only how much residential space is allotted to the Unit.

Let me use AKV to illustrate. AKV's Residential Units have eight different configurations containing various combinations of studios, two-bedrooms, or grand villas. The number of points allotted to each AKV Unit follows a set formula: Studios are allotted 5,485 points, two-bedrooms are allotted 16,290 points, and grand villas are allotted 36,130. Because there are eight different Unit configurations, there are eight different sizes of Units with point sizes ranging from 16,290 points to 48,870 points.

Based on the size of the total real estate interest and the point formula used, AKV contains a total of 7,400,270 points. Once the real estate interest-to-point formula has been establish, DVD has never altered it at any DVC resort. This is why the total points shown on a point chart never changes for the life of the condo association.

It doesn't matter what view classification a vacation home may have for booking purposes. Around 2010 some Savanna View two-bedrooms were downgraded to Standard View but they still contribute 16,290 points to the resort's total points.

In PVB's initial declaration, there are five Units containing two bungalows each, 19 Units containing four studios each, and 11 Units containing six studios. It doesn't matter that some of the studios are Lake View and others are Standard View. All studios contribute the same number of points to PVB's total. Once we see at least one deed from a bungalow Unit and one deed from a studio Unit, we can determine the total number of points for the entire resort, even the parts that have not yet been declared.

This is premature on my part, but I have reason to suspect that each bungalow and studio contributes about 53,655 points and 8,322 points, respectively to PVB's resort total. These numbers result in a resort point total of 4,069,020. Those 4,069,020 points (or whatever the final numbers end of being) can then be distributed on the point chart however DVC deeds appropriate, with one limitation: The Standard View studios must have at least one night on the point chart no higher than 22; the Lake View studios must have at least one night no higher than 26 nights; and the bungalows must have at least one night no higher than 147.

So, DVC could reallocate the point chart requirements of the bungalows downward if it deems necessary, and raise point chart requirements the studios an equivalent amount.

 

[wdrl]

At this point they could also adjust downward but not upward for the entire resort by altering the undeclared component. They did this at BWV after it was completed but before it was fully declared. Some think it was planned up front at BWV but I don't believe that is true personally.

No, they didn't do that at BWV. All BWV Residential Units have the same real estate interest-to-point conversion ratio, regardless whether they were part of the initial declaration in June 1996 or were part of the last declaration in May 2003. If you look at each of the 123 Residential Units at BWV, they all adhere to the same ratio.

 

[Dean]

Did they re-do any SSR contracts at that time? I doubt it. I wonder how they kept the total ownership percentage for a unit at 100%?

Maybe they just said the points per unit were reduced / increased proportionately, so the percent owned by each contract stayed the same? If so, I suppose they could do the same for the bungalows if they wanted to do so. It would just be a math problem to make sure the total for the resort didn't change beyond what was sold.

Maybe having the bungalows separate from the studios makes any future reallocations cleaner than if they were mixed.

They didn't, they clearly did it by resort as they did to a lessor degree with the 2 year reallocation a few years ago. The reality is that holding it per "unit" is not a workable plan. Whether the wording changed after BWV or OKW, I'm not sure.

No, they didn't do that at BWV. All BWV Residential Units have the same real estate interest-to-point conversion ratio, regardless whether they were part of the initial declaration in June 1996 or were part of the last declaration in May 2003. If you look at each of the 123 Residential Units at BWV, they all adhere to the same ratio.

They opened without the standard view unit charts and then added them later but very shortly. It did not appear as if this was originally planned though I know some held that view. I haven't gone back to try to reconcile that to the POS and one would actually need to get the original version since this change would be to the benefit of the membership, they could have changed the entire formula had they wanted.

 

[wdrl]

They opened without the standard view unit charts and then added them later but very shortly. It did not appear as if this was originally planned though I know some held that view. I haven't gone back to try to reconcile that to the POS and one would actually need to get the original version since this change would be to the benefit of the membership, they could have changed the entire formula had they wanted.

Although the first point chart may not have had displayed values for it, the Standard View booking category was part of the initial BWV Master Declaration that was filed on August 6, 1996. In Exhibit “G” to the Declaration, Section 3.3 Home Resort Vacation Point Reservation Values, there was clear evidence of the existence of the Standard View booking category:

Any increase or decrease in the Home Resort Vacation Point reservation requirement for a given Use Day pursuant to DVCMC’s right to make this Home Resort Vacation Point adjustment must be offset by a corresponding decrease or increase for another Use Day or Days. . . . However, with respect to the Condominium, each Club Member will always be eligible to reserve at the Condominium, subject to availability: at least one (1) Use Day in a Studio Vacation Home with a Standard View for every fifteen (15) Home Resort Vacation Points; at least one (1) Use Day in a Studio Vacation Home with a Preferred View for every eighteen (18) Home Resort Vacation Points; at least one (1) Use Day in a One-Bedroom Vacation Home with a Standard View for every thirty (30) Home Resort Vacation Points; at least one (1) Use Day in a One-Bedroom Vacation Home with a Preferred View for every thirty-six (36) Home Resort Vacation Points; at least one (1) Use Day in a Two-Bedroom Vacation Home with a Standard View for every forty (40) Home Resort Vacation Points; at least one (1) Use Day in a Two-Bedroom Vacation Home with a Preferred View for every forty-six (46) Home Resort Vacation Points; or at least one (1) Use Day in a Grand Villa Vacation Home for every one hundred (100) Home Resort Vacation Points. . . .
​

I think there are some long time DVC members who believe that is was due to their protestations that DVC agreed to offer the Standard View at a reduced point requirement. However, the documents show that the Standard View category was factored into BWV from Day One.

 

[Dean]

Although the first point chart may not have had displayed values for it, the Standard View booking category was part of the initial BWV Master Declaration that was filed on August 6, 1996. In Exhibit “G” to the Declaration, Section 3.3 Home Resort Vacation Point Reservation Values, there was clear evidence of the existence of the Standard View booking category:

Any increase or decrease in the Home Resort Vacation Point reservation requirement for a given Use Day pursuant to DVCMC’s right to make this Home Resort Vacation Point adjustment must be offset by a corresponding decrease or increase for another Use Day or Days. . . . However, with respect to the Condominium, each Club Member will always be eligible to reserve at the Condominium, subject to availability: at least one (1) Use Day in a Studio Vacation Home with a Standard View for every fifteen (15) Home Resort Vacation Points; at least one (1) Use Day in a Studio Vacation Home with a Preferred View for every eighteen (18) Home Resort Vacation Points; at least one (1) Use Day in a One-Bedroom Vacation Home with a Standard View for every thirty (30) Home Resort Vacation Points; at least one (1) Use Day in a One-Bedroom Vacation Home with a Preferred View for every thirty-six (36) Home Resort Vacation Points; at least one (1) Use Day in a Two-Bedroom Vacation Home with a Standard View for every forty (40) Home Resort Vacation Points; at least one (1) Use Day in a Two-Bedroom Vacation Home with a Preferred View for every forty-six (46) Home Resort Vacation Points; or at least one (1) Use Day in a Grand Villa Vacation Home for every one hundred (100) Home Resort Vacation Points. . . .
​

I think there are some long time DVC members who believe that is was due to their protestations that DVC agreed to offer the Standard View at a reduced point requirement. However, the documents show that the Standard View category was factored into BWV from Day One.

Thanks.

 

[Shamus]

To Support the Day 1 BWV Standard Points position further:

1. As wdrl points out the declared points are the same "ratio" for a given room type regardless if it is in a standard or preferred view units.

2. In 1997 DVC stated standard view points charts were going to be released for 1998 as they expected to start selling those units during 1998.

3. There were no changes made to Preferred View Points Charts when Standard View was added.

We did the math a number of years ago and I do not have the exact figures in front of me, but for simplicity lets say that the "ratio" used for a BW Studio was 100 points each and that there are an equal number of Preferred View and Standard View Studios.

Since Day 1 (1996) the points chart had a points allocation over the ratio for each PV Studio (say 110 points) . When Standard View was added they were allocated under the ratio (say 90 points each). No changes were made to Preferred View when Standard View was added.

If not part of the original plans, the Preferred View would have had to have been 100% of the ratio or 100 points on Day 1 and then would have needed to have been raised when the lower SV was added.