Has anyone projected future dues for each resort thru the end of each contract?

[tjkraz]

Operating cost and Capital cost are separate budgets altogether. The budgets for each resorts are published yearly and are easily searchable. Being an HOA President myself, I've reviewed the SSR budget with great interest.
SSR has a 2024 operating budget of $77.7M and a capital budget of $19.8M with $54M in capital reserves. Operating expenses for the resort such as housekeeping, administrative, front desk, maintenance, etc, are spent and calculate separately differently from capital reserves which are used for roof replacements, interior refurbishments, external refurbishments/painting, pavement resurfacing, etc. Dues are calculated on each budget separately and added together (along with ad valorem taxes) to make up the total due amount assessed each year.

The largest operating cost is housekeeping followed by transportation. Budgeted for 2024, SSR has planned $26M for Housekeeping, $13M for transportation, $9.3M for Admin and front desk, $9M for maintenance, $8.7M for management fee, $3.6M for member activities, $3.6M for utilities, $2M for insurance, $1.1M for security, and just under $1M for taxes. There are a bunch of smaller budget items for DVC reservations, Fees to the Division (haven't researched that one), audit and legal fees.

Those are resort dues in a nutshell.

Yes, I've looked at the budgets many times and am well aware of this.

The point in the post you quoted was that these are still categories over which Disney has some degree of operational control. At DVC's inception, resorts like Old Key West and BoardWalk were budgeted to not have a soft refurb until they were 12 years old and the hard goods refurb would not occur until 25 years. Around 2016, leadership decided rooms could not withstand those timeframes and the schedule was accelerated to soft at 7 yrs and hard 14. This prompted an increase in dues across the board as collections went up to budget for the more frequent refurbishments.

Meanwhile, post-pandemic material and labor costs in the construction industry meant that near term refurbishments would cost significantly more than what resorts had been accumulating in their reserves for upcoming projects.

In the long term, wages, fuel prices, insurance prices, construction costs and a variety of other expenses will only increase. Those in turn will drive up member dues. Aside from playing hard ball with employees on their wages and benefits, the most direct way Disney could control those costs is by cutting staff or services. By running buses less frequently. By delaying refurbishments so that the rooms go longer before being refreshed. And those aren't outcomes that members should necessarily want to occur.

 

[tjkraz]

Annual dues are very similar to HOA dues from what I gather? And having absolutely zero knowledge of condos and HOA fees can someone enlighten me as to whether or not HOA dues have had similar percentage increases over the years as DVC MFs?

edit: I'm assuming Florida to keep it as apples to apples as possible

Buying into DVC is like purchasing your home. You pay the big sum of money up front (or secure a mortgage) and own the land and building.

HOA fees typically cover things like lawn care and landscaping on public areas--some include basic lawn care for residents--snow removal, maintenance of public signage and fencing, care for any water features, community activities, security if it's a gated community, etc. All of those translate to a DVC resort to some degree.

But that's only a small portion of what it costs to be a homeowner. If you want to do the nearest apples-to-apples comparison, DVC dues would also include things like: paying for utilities including electric/gas/water, trash removal, Internet service, TV service, property taxes, property insurance, roof repair, fixing a plumbing leak, renovating your kitchen, refinishing wood floors, replacing the furnace, replacing furnishings which frequently wear out like the sofa or mattress or dishwasher, planting and mulching flower beds, hiring a housekeeper, having someone come to treat and clean the pool, and so on.

Safe to say that homeowners are paying more for those items today than they did 5....10....20 years ago.

 

[kilik64]

Buying into DVC is like purchasing your home. You pay the big sum of money up front (or secure a mortgage) and own the land and building.
.

Minor quibble but you rent land from the government. Try not paying your property taxes and see what happens.

 

[RivShore]

$54M in capital reserves

Slightly off topic question - with the end kind of in site for some properties, what happens with any left over capital reserves? I would guess they would try to get it down to near zero by the end but what if they don't? Would excesses have to be returned to current owners?

 

[Shoktherapy]

Slightly off topic question - with the end kind of in site for some properties, what happens with any left over capital reserves? I would guess they would try to get it down to near zero by the end but what if they don't? Would excesses have to be returned to current owners?

Actually the opposite. You want the capital reserves to cover the replacement costs for all of your assets. There is an appraisal value set for the entire resort and broken down into categories. This is done by having a capital reserve study performed every few years. The goal is to have enough in the capital reserves to cover the complete replacement cost of these but because they are aging it is a constant battle as the association will and should be performing refurbishments along the way which deducts from this account.

 

[Cabius]

Actually the opposite. You want the capital reserves to cover the replacement costs for all of your assets. There is an appraisal value set for the entire resort and broken down into categories. This is done by having a capital reserve study performed every few years. The goal is to have enough in the capital reserves to cover the complete replacement cost of these but because they are aging it is a constant battle as the association will and should be performing refurbishments along the way which deducts from this account.

That's true for rolling refurbishments, but in 2042 a lot of these resorts cease to exist. If the association has $50 million sitting in their capital reserve account, what do they do with that money? Pay it out to owners?

I imagine that owners of an expiring association wouldn't want to fund a major hard goods refurb in the last year of the property's existence, just so they are in effect subsidizing DVD's ability to turn around and re-sell the property to the next set of owners. I know I wouldn't!

 

[Shoktherapy]

That's true for rolling refurbishments, but in 2042 a lot of these resorts cease to exist. If the association has $50 million sitting in their capital reserve account, what do they do with that money? Pay it out to owners?

I imagine that owners of an expiring association wouldn't want to fund a major hard goods refurb in the last year of the property's existence, just so they are in effect subsidizing DVD's ability to turn around and re-sell the property to the next set of owners. I know I wouldn't!

I think that’s a great question - in theory but I don’t think these resorts will actually cease to exist and I believe IMO that DVD will most likely address that situation in the coming years if not sooner.

But let’s say that they are planning cease to exist and have a planned end of life day. Then the capital reserve study would factor that target date in and contributions to that fund would essentially stop. As refurbishments and other work ceased, credits would be issued against the operating portion of the dues to offset the total amount of yearly dues assessed until the account was, in effect zeroed out on the last day the association ceased to exist.

 

[Cabius]

I think that’s a great question - in theory but I don’t think these resorts will actually cease to exist and I believe IMO that DVD will most likely address that situation in the coming years if not sooner.

But let’s say that they are planning cease to exist and have a planned end of life day. Then the capital reserve study would factor that target date in and contributions to that fund would essentially stop. As refurbishments and other work ceased, credits would be issued against the operating portion of the dues to offset the total amount of yearly dues assessed until the account was, in effect zeroed out on the last day the association ceased to exist.

That makes sense, and might help offset climbing costs in some of those aging resorts as they near end-of-life.

And of course, I don't think the physical resorts will be knocked down or anything, but once the existing DVC Resort expires, Disney will be able to renovate them (if needed/wanted) and re-sell them to a new set of owners. Rinse and repeat in 50-year cycles, a perpetual money machine!

 

[Shoktherapy]

That makes sense, and might help offset climbing costs in some of those aging resorts as they near end-of-life.

And of course, I don't think the physical resorts will be knocked down or anything, but once the existing DVC Resort expires, Disney will be able to renovate them (if needed/wanted) and re-sell them to a new set of owners. Rinse and repeat in 50-year cycles, a perpetual money machine!

But why would they do that when they have owners paying for the operating and capital costs of the asset? They can just extend the contract dates or roll them up into a new product offering such as a trust and sell them that way vs the debt. financing, construction, and selling of a whole new asset - not to mention multiple of them. I just don’t see the knock down and rebuild thing happening. I could very possibly be wrong though.

 

[Cabius]

But why would they do that when they have owners paying for the operating and capital costs of the asset? They can just extend the contract dates or roll them up into a new product offering such as a trust and sell them that way vs the debt. financing, construction, and selling of a whole new asset - not to mention multiple of them. I just don’t see the knock down and rebuild thing happening. I could very possibly be wrong though.

I think we're saying more-or-less the same thing.

They aren't going to knock down and rebuild any of the physical buildings unless there is a compelling reason (e.g., they want to add capacity by replacing a low-rise with a much larger structure so they can sell more units).

But they also aren't going to extend existing owners' contracts. Even if Disney doesn't incur any costs from maintaining the DVC resorts, they also aren't earning significant process once the resort is sold. Selling the resort is where they make their money. (They actually tried to do something like this with Old Key West, offering a paid 15-year extension. It didn't go well, as a lot of owners didn't opt into the extension, and there's some uncertainty as to what happens to the points of the owners who didn't opt in.)

So in 2042, when Boardwalk Villas expires, ownership reverts to Disney, and they can re-sell that building to a new set of owners for a lot of money. They may or may not renovate it first, but they are not going to sit on it or give it away for free.

 

[tjkraz]

Slightly off topic question - with the end kind of in site for some properties, what happens with any left over capital reserves? I would guess they would try to get it down to near zero by the end but what if they don't? Would excesses have to be returned to current owners?

This hasn't been directly addressed, but it kinda, sorta was (informally) when the Old Key West extension was offered about 15 years ago. Original ownership ends in 2042 and the option was given to extend to 2057. Some people asked what would happen to dues if they decided not to extend. Supposedly they were told by DVC representatives that their dues would be adjusted so there were no collections for work set to occur after 2042. A 2042 owner would hypothetically pay less toward capital improvements in the (approx) 2038-2041 timeframe than a 2057 owner. The '57 owner would pay the normal budgeted amounts because they still have 15+ years left in their ownership. '42 owners would pay less because they shouldn't be contributing to expenses occurring after they no longer own.

I'm not going to dig thru the Florida statutes, but I suspect there are rules requiring developers to follow this path. Disney certainly cannot renovate Boulder Ridge throughout 2041 at owners' expense, and then immediately start selling to new buyers on 2/1/2042. I suspect the proper approach would be to wean off the capital improvements in latter years with plans to close the resort for a major refurb before selling again.

But we'll have to see exactly how they manage things in the latter years of each resort. For example, BoardWalk is being refurbished now. As such, it will be due for a soft good refurb around 2031. And then another hard goods refurb would be targeted for 2038. The dilemma becomes whether or not Disney should actually perform a massive renovation which owners will only be able to enjoy for 3-4 years before their contracts end in early 2042. If not, members should benefit from the savings...but it means seeing rooms potentially deteriorate even more than normal in those final few years.

 

[NY Pirate Princess]

This hasn't been directly addressed, but it kinda, sorta was (informally) when the Old Key West extension was offered about 15 years ago. Original ownership ends in 2042 and the option was given to extend to 2057. Some people asked what would happen to dues if they decided not to extend. Supposedly they were told by DVC representatives that their dues would be adjusted so there were no collections for work set to occur after 2042. A 2042 owner would hypothetically pay less toward capital improvements in the (approx) 2038-2041 timeframe than a 2057 owner. The '57 owner would pay the normal budgeted amounts because they still have 15+ years left in their ownership. '42 owners would pay less because they shouldn't be contributing to expenses occurring after they no longer own.

I'm not going to dig thru the Florida statutes, but I suspect there are rules requiring developers to follow this path. We'll have to see exactly how things play out in the latter years of each resort. For example, BoardWalk is being refurbished now. As such, it will be due for a soft good refurb around 2031. And then another hard goods refurb would be targeted for 2038. The dilemma becomes whether or not Disney should actually perform a massive renovation that owners will only be able to enjoy for 3-4 years before their contracts end in early 2042. If not, members should benefit from the savings...but it means seeing rooms potentially deteriorate even more than normal in those final few years.

This is what I have been trying to say but I have been more clumsy than this poster. OKW is different than other 2042 resorts because of the 2042/2057 split. I shouldn't be asked to pay into reserves for calculations beyond my expiration date. However, all of those buildings will continue to exist and require longer reserves for calculations of useful life that extend after my term.

 

[maui22]

This hasn't been directly addressed, but it kinda, sorta was (informally) when the Old Key West extension was offered about 15 years ago. Original ownership ends in 2042 and the option was given to extend to 2057. Some people asked what would happen to dues if they decided not to extend. Supposedly they were told by DVC representatives that their dues would be adjusted so there were no collections for work set to occur after 2042. A 2042 owner would hypothetically pay less toward capital improvements in the (approx) 2038-2041 timeframe than a 2057 owner. The '57 owner would pay the normal budgeted amounts because they still have 15+ years left in their ownership. '42 owners would pay less because they shouldn't be contributing to expenses occurring after they no longer own.

I'm not going to dig thru the Florida statutes, but I suspect there are rules requiring developers to follow this path. Disney certainly cannot renovate Boulder Ridge throughout 2041 at owners' expense, and then immediately start selling to new buyers on 2/1/2042. I suspect the proper approach would be to wean off the capital improvements in latter years with plans to close the resort for a major refurb before selling again.

But we'll have to see exactly how they manage things in the latter years of each resort. For example, BoardWalk is being refurbished now. As such, it will be due for a soft good refurb around 2031. And then another hard goods refurb would be targeted for 2038. The dilemma becomes whether or not Disney should actually perform a massive renovation which owners will only be able to enjoy for 3-4 years before their contracts end in early 2042. If not, members should benefit from the savings...but it means seeing rooms potentially deteriorate even more than normal in those final few years.

I'm not going to phrase this very well, but hopefully someone understands what I mean.

With a leasehold, does the condition need to be the same as when the leasehold was initially sold or can it be worn down?

Example, they sold Riviera as new/pristine in 2019. When it expires, is there any language indicating the condition the resort/association needs to be when the leasehold ends?

What about the trust? Did they put any language in for this?

My fear is they have language in there allowing them to say it must be returned to Disney in the same condition when the leasehold started. I never gave it a thought until reading this thread.

 

[tjkraz]

I'm not going to phrase this very well, but hopefully someone understands what I mean.

With a leasehold, does the condition need to be the same as when the leasehold was initially sold or can it be worn down?

Example, they sold Riviera as new/pristine in 2019. When it expires, is there any language indicating the condition the resort/association needs to be when the leasehold ends?

Good question. I don't know.

For me, the presumption has always been that Disney would want to perform some rather substantial refurbishments before selling again. Maybe not demolishing buildings entirely. But thinking back to the Poly, they ripped those old buildings down to the steel before renovating and selling as DVC. I'm struggling to see where Disney would be able to perform a substantial renovation in the latter years. Especially with availability pinched by everyone trying to use points before they expire. Plus there's a lot of wiggle room between returning to original 1990s condition vs having them in appealing condition to re-sell in the 2040s.

A lot of people would just walk away from the points / dues if Disney tried anything particularly unseemly. But I admit I may be giving them too much credit for assuming they'll play fair across the board.

 

[DonMacGregor]

"I am worried that my future wages won't increase proportionate to dues increases, which are due in large part to CM wages increasing."

 

[Tatebeck]

I'm sure it's impossible to predict what the dues will be long in the future, but is there a list or ranking of the resorts that seem to have or will probably have lower dues increases due to lower maintenance and upkeep costs? I've heard that tower style resorts seem to keep lower dues than sprawling resorts, etc. Has anyone seen a ranking or list like that?

 

[Massachusetts]

Here is s snapshot of my dues tracking spreadsheet. Top row is 5 year average percentage increase.

 

[RivShore]

I'm not going to phrase this very well, but hopefully someone understands what I mean.

With a leasehold, does the condition need to be the same as when the leasehold was initially sold or can it be worn down?

Example, they sold Riviera as new/pristine in 2019. When it expires, is there any language indicating the condition the resort/association needs to be when the leasehold ends?

What about the trust? Did they put any language in for this?

My fear is they have language in there allowing them to say it must be returned to Disney in the same condition when the leasehold started. I never gave it a thought until reading this thread.

I was just going to ask this same followup question. What condition must it be turned back in and will Disney charge the capital budget for not turning it back in the proper condition? Think returning a car back after a lease - charging you for every dent and stain! LOL

 

[Tatebeck]

Here is s snapshot of my dues tracking spreadsheet. Top row is 5 year average percentage increase.

Thanks! That's very helpful! Any chance you have the data for first 5, 10, etc years for each resort? To account for older resorts probably requiring more TLC than recently built resorts possibly

 

[Cabius]

Thanks! That's very helpful! Any chance you have the data for first 5, 10, etc years for each resort? To account for older resorts probably requiring more TLC than recently built resorts possibly

I think you're looking for this:

https://dvcnews.com/dvc-program-menu/financial/annual-dues-by-resort