Would you join a lawsuit against DVC to stop/revert the 2020 reallocation?

[drusba]

This is Magical Law: sprinkle a contract with enough pixie dust and it can tell whatever you want. Not much different from saying the maximum reallocation is valid only the first year: the contract says explicitly something else.
When I spoke with Yvonne 2 days before the Big Rollback this was one of the two questions I left her with (the other being how they could increase the lockoff premium without balancing it anywhere else, when the contract says any increase must be balanced). I pointed to her paragraph 10.6.3 of the condominium declaration where it says what happens if a unit is damaged so it cannot be rebuilt and it is removed from the system.
This is what the contract says:

In this regard any insurance proceeding resulting from the failure to reconstruct or replace a Unit will be disboursed to affect Owners for their share of the non-reconstructed or replaced Unit resulting in their withdrawal from partecipation in the Home Resort Reservation Component and the DVC reservation component so that members of the Club will not be attempting to make reservations for available DVC Resort Vacation Homes on a greater than "one-to-one purchaser to accommodation ratio", as that term is defined in Section 721.05(23), Florida Statues
(my emphasis)

Nowhere in the POS a reallocation is allowed to rebalance the resort because of the removal of a Unit. A reallocation is allowed only to balance demand. What this paragraph says is that if a Unit and all its owners are removed from the system, then the rest of the resort must be in balance. This is coherent with the one-to-one rule in the Florida laws which applies to each Timeshare Unit, not to the whole resort. I haven't yet found and no one pointed an addendum to the law that for point timeshares it is different.

When she asked me what I wanted, I said they should rollback the reallocation to the 2019 charts (adjusted for floating holidays) and she replied that would not happen because everything had been done in accordance to the law and approved by the relevant authorities. But she promised to call me back in a week and answer to my questions. Well, two days later they rolled back the point charts and I haven't heard from her yet.

I am beginning to believe that Yvonne and DVC have a complete misunderstanding of the legal requirements. It seems she keeps saying that the law statutorily requires the kind of reallocation DVC wants to do to rebalance demand, and that the law therefore overrules anything in the POS, the DVC Membership Agreement, and DVC's representations as to what it is allowed to do. If that is what is going on, Yvonne and DVC are wrong. Let us look at the statutes. There are two potentially applicable statutes:

A. Fl. Stats §721.13 (12)(a and b) which read:

(a) In addition to any other rights granted by the rules and regulations of the timeshare plan, the managing entity of a timeshare plan is authorized to manage the reservation and use of accommodations using those processes, analyses, procedures, and methods that are in the best interests of the owners as a whole to efficiently manage the timeshare plan and encourage the maximum use and enjoyment of the accommodations and other benefits made available through the timeshare plan. The managing entity shall have the right to forecast anticipated reservation and use of the accommodations, including the right to take into account current and previous reservation and use of the accommodations, information about events that are scheduled to occur, seasonal use patterns, and other pertinent factors that affect the reservation or use of the accommodations. In furtherance of the provisions of this subsection, the managing entity is authorized to reserve accommodations, in the best interests of the owners as a whole, for the purposes of depositing such reserved use with an affiliated exchange program or renting such reserved accommodations in order to facilitate the use or future use of the accommodations or other benefits made available through the timeshare plan.

(b) A statement in conspicuous type, in substantially the following form, shall appear in the public offering statement as provided in s. 721.07:

The managing entity shall have the right to forecast anticipated reservation and use of the accommodations of the timeshare plan and is authorized to reasonably reserve, deposit, or rent the accommodations for the purpose of facilitating the use or future use of the accommodations or other benefits made available through the timeshare plan."

That is the statute applicable to DVCMC (now just DVCM) as the manager of the timeshare plan for each home resort and states what DVCM can do in relation to balancing demand at each separate home resort. The statute allows it to use computer methods and analysis to determine the varying demand that might exist at the resort. However, that statute does not allow DVCM to do anything about uneven demand by changing the applicable rules for making reservations at the home resort. That is because anything DVCM can do in that area is controlled by the POS and contracts applicable to the timeshare. The statute instead allows it to rent rooms or deposit them into any timeshare exchange program that the resort may be a part of in order fill unreserved rooms.


B. Fl Stats §721.56(6), which reads: 

"Prior to offering the multisite timeshare plan, the developer shall create the reservation system and shall establish rules and regulations for its operation. In establishing these rules and regulations, the developer shall take into account the location and anticipated relative use demand of each component site that he or she intends to offer as a part of the plan and shall use his or her best efforts, in good faith and based upon all reasonably available evidence under the circumstances, to further the best interests of the purchasers of the plan as a whole with respect to their opportunity to use and enjoy the accommodations and facilities of the plan. The rules and regulations shall also provide for periodic adjustment or amendment of the reservation system by the managing entity from time to time in order to respond to actual purchaser use patterns and changes in purchaser use demand for the accommodations and facilities existing at that time within the plan. The person authorized to make additions and substitutions during the term of the multisite timeshare plan shall also comply with the requirements of this subsection in ascertaining the desirability of the proposed addition, substitution, adjustment, or amendment and the impact of same upon the demand for and availability of existing plan accommodations and facilities."

This is apparently the statute Yvonne and DVC are relying on to assert the home resort point charts can be changed despite anything in the POS, contracts and prior representations as to what is allowed. It would appear to possibly require a managing entity to adjust the point charts to balance out demand.

If that is DVC’s and Yvonne’s position, it has one major problem: the above section, and all of section 721.56 is inapplicable to home resort reservations. That statute applies to the managing entity of the multi-site portion of the timeshare and what that entity can do to balance demand among the sites. As I have noted before, our official POS’s and applicable agreements create two different managing entities, DVCM, which is responsible for home resort reservations and all operations of each individual resort, and BVTC, the managing entity of the DVC Reservation Component that controls the multi-site timeshare plan and all trading being done by members at 7 months out among the resorts. The documents actually provide that BVTC, not DVCM, is responsible for determining point requirements for reserving at 7 months out using the DVC Reservation Component and those point requirements can differ from the home resort requirements. Historically, BVTC has just followed the home resort requirements of DVCM, but it could choose to do otherwise to balance demand among the resorts.

In essence, it appears the statutory argument Yvonne and DVC are relying on to claim that DVC can change home resort point requirements is simply wrong.

 

[KAT4DISNEY]

I agree it seemed like an answer that didn’t pass the sniff test to me. But in reality the Points in a unit when declared weren’t equal to the number of points that would be needed to reserve the unit for an entire year. So in the end if that unit needed to be removed I suppose they would need to change the point charts to be one to one again.

Though I had the same experience that it wouldn’t roll back either and in a couple days it was rolled back. My main point was the maximum reallocation where I was told it applied the first year only.

As long as they had kept the rebalancing to within a single unit type then it would work. So that seems to point to a misinterpretation that they did not have to balance within a unit type and could reallocate across unit types. Maybe all the advertising and product disclosures were correct and appropriate, not just based on the managements direction at that time. And what they now claim and have done recently is at issue. If so then even if nobody challenged at the time it would still seem to be a course that needs to be corrected back to reallocation balancing within a single unit type and a potential reversal of something like the THV reallocations.

 

[KAT4DISNEY]

Thank you for sharing your call and thoughts on it. Is the quoted membership number accurate? I seem to recall DVC celebrating 100,000 members several years ago. Maybe a digit is missing, either garbled in the call or dropped when you typed the report? I ask because if membership is 65,000 that indicates a drop and would be curious.

Dirk

I'd also think either a typo or a misunderstanding. Or we all have to be very large point holders!

 

[crvetter]

As long as they had kept the rebalancing to within a single unit type then it would work. So that seems to point to a misinterpretation that they did not have to balance within a unit type and could reallocate across unit types. Maybe all the advertising and product disclosures were correct and appropriate, not just based on the managements direction at that time. And what they now claim and have done recently is at issue. If so then even if nobody challenged at the time it would still seem to be a course that needs to be corrected back to reallocation balancing within a single unit type and a potential reversal of something like the THV reallocations.

Well for instance 2 cabins at CCV have ~46,000 points (in total) they declare into the association. However based on the initial point charts for CCV it is about ~82,000 to reserve both cabins for the year. So that shows the units declaring and points to reserve weren’t intended to be tied together. This behavior did exist in other resorts I believe (if I recall correctly) I did this for BLT and the grand villas were in the same situation there. So I’m not entirely sure it is fair to say the points a unit declare were meant to be representative of the number of points it would be to book the Vacation Homes in that unit (which can be any combination of a number of Vacations homes or even fractions of).

I believe based on what you suggest some DVC resorts might have been okay and looked to be this way. Though DVC through years never really operated that way that the points declared to a unit mapped to the number of points used to reserve it.

I initially believed what you stated but when I ran the numbers I saw that the conflict existed from the onset for the resorts. Considering The regulatory agencies review the decelerations and initial ownership plans I suspect on this front everything was probably above board. Perhaps confusing language which did get me initially.

I’m not saying I disagree the original DVC leadership meant for rebalancing to occur across seasons only, I agree with this based on the product understanding checklist at the time. However, I just don’t think that one sentence was what dictated that. I just wanted to say what was relayed to me and what protections DVC said it provided.

 

[KAT4DISNEY]

I'm confused, for whom does Yvonne work? DVD or DVCMC?
If she works for DVD, why is she replying to questions about the points reallocations? If she works for DVCMC why does she says we resale owners haven't benefited DVC? Why should she care since the managing company (ie the people doing the reallocations) are financed with MF by resale and direct members alike?

FWIW I see from Riviera filings that one of Yvonne's titles for DVD is Asst. Secretary.

In addition she also is a Board member for Riviera (and I assume all other DVC resort associations) and holds the board positions of VP and Secretary.

And there's more titles I'm sure.

 

[skier_pete]

Y or if you're Disney and your idiot brother DVD starts shooting himself in the foot (How many owners, resale or otherwise, were considering buying Riviera direct before the restrictions were announced?), you need to take stock and ask yourself if your brother's business practices are good for your business.

I am really, really curious about the decisions around Riviera. Disney usually gets a big initial boost buy from current owners when a new property opens up. The big question in general is does the average DVC member know about the new Riviera restrictions? I look at folks on here - most seem to be saying they were going to buy but now they won't. I actually haven't seen one person say they are going to definitely buy at Riviera.

In fact, I just posted a poll to survey people on whose buying at Riviera. I could see them discovering they've shot themselves in the foot with their members pretty quick. Or I could be completely wrong.

Thank you for sharing your call and thoughts on it. Is the quoted membership number accurate? I seem to recall DVC celebrating 100,000 members several years ago. Maybe a digit is missing, either garbled in the call or dropped when you typed the report? I ask because if membership is 65,000 that indicates a drop and would be curious.

Dirk

I thought that's the number she said - maybe she said 165,000 members. You are right that number is too low.

 

[drusba]

As to number of members, the January 19, 2019 revisions to DVC Multi-Site Public Offering Statement, which were downloaded to this site a little while ago, and were filed with the Florida timeshare agency, show that, as of September 30, 2018, there were 244,767 DVC members.

 

[crvetter]

As to number of members, the January 19, 2019 revisions to DVC Multi-Site Public Offering Statement, which were downloaded to this site a little while ago, and were filed with the Florida timeshare agency, show that, as of September 30, 2018, there were 217,587 DVC members.

I think those numbers were only accurate through September 30, 2017. They are identical to the Multi-Site that I was given in November of 2017. But overall I think that is a fairly close number (give or take for Copper Creek Sales that aren't added likely)

 

[drusba]

^You are correct. In any event Yvonne was obviously just misspeaking when she said 65,000.

 

[skier_pete]

So interesting piece of INFO in my book, first declaration of DVC studios here:
https://dvcnews.com/index.php/resor...era-rooms-declared-into-timeshare-association

What I consider interesting is this;

As with prior DVC resorts, this declaration also lists "maximum reallocation" values which are linked to a potential "'leveling' of all seasons." We interpret these values to be an annualized average point cost, should all seasons and weekday/weekend differentials be eliminated. The values listed for Disney's Riviera Resort are as follows:

• Tower Studio: 15 points
• Deluxe Studio, Standard View: 20 points
• Deluxe Studio, Preferred View: 24 points
• One Bedroom, Standard View: 40 points
• One Bedroom, Preferred View: 47 points
• Two Bedroom, Standard View: 54 points
• Two Bedroom, Preferred View: 65 points
• Grand Villa: 134 points

So If I look at this "maximum Reallocation number" it looks like standard view a 2-BD lockoff is 54 points, while the studio and 1-BD is 60 points - a 10% premium. Preferred it's lockoff is 65 points, studio/1-BD is 71 points, so again a 9.2% premium. Admittedly these are not the actual points charts, it's maximum allocation, but there's some data you can glean from it. What I wanted to point out is that compared to a CURRENT point charts, this is on par or even LOWER than many lock-off premiums (BWV is more around 10-14%, SSR 9-11%, VGF 8%-10%, AKV 9% - 15%). It's interesting that so shortly after having a big turnaround on increasing lockoff premiums 3 to 5 %, they put out a new resort where lockoff premiums are on the low side.

Does this say something about what they decided they could do with lock-out premiums? Or is it rather meaningless and just the fact that they want to start low anyways? I really thought we were going to see them push lock-off premiums up - but it seems they didn't.

Another point to Riviera - there's clearly a lot of dedicated studios and 1-bedrooms, in addition to the usual lock-off 2-bedrooms - though total numbers are not yet released. This is the second resort in a row (after CCV) to have a number of studios and 1-bedrooms dedicated after they did several resorts (SSR, AKL-Kidani, BLT, and VGF) with ONLY lock-offs. This makes it much more difficult for them to raise the lock-off premiums after the fact.

Final mention - the fact they made a declaration means we are probably only a few weeks from seeing actual point charts.

 

[KAT4DISNEY]

Well for instance 2 cabins at CCV have ~46,000 points (in total) they declare into the association. .

Could you remind me where the declared numbers for each size unit are located?

 

[crvetter]

Could you remind me where the declared numbers for each size unit are located?

This is obtained from the Deeds recorded against each unit. You than can see how many points those owners that own the unit own. That gives the idea on the number of points in each one. I believe way back in this thread it was presented by a poster. I'll take a look later if I can find the post that laid out the example.

 

[Matty B13]

If so then even if nobody challenged at the time it would still seem to be a course that needs to be corrected back to reallocation balancing within a single unit type and a potential reversal of something like the THV reallocations.

This would have huge implications at Poly and CCV with the bungalows and cabins. Maybe the owners there, won't be subsidizing the cash stays of non-owners as much.

 

[KAT4DISNEY]

This is obtained from the Deeds recorded against each unit. You than can see how many points those owners that own the unit own. That gives the idea on the number of points in each one. I believe way back in this thread it was presented by a poster. I'll take a look later if I can find the post that laid out the example.

Oh, ok. I was thinking there might be something indicating the points when the units were declared into the association.

 

[crvetter]

Oh, ok. I was thinking there might be something indicating the points when the units were declared into the association.

I’ve looked for this specifically sadly there wasn’t a easy way to find it out. DVC easy access to information seems to be a no, lol.

 

[drusba]

Oh, ok. I was thinking there might be something indicating the points when the units were declared into the association.

For the exercise you need to go through to learn more about your "unit," see my post, #7, in this thread https://www.disboards.com/threads/ownership-interest.3733127/

 

[d396]

I would 100 percent agree with going forward with a suit. I believe there are other issues that can go in. If anyone has gone on sites when asking for housekeeping the prices and what we get charged are not the same. Also, why would we get charged for trash still when the do it for free? As someone already stated earlier the unethical pushiness of sellers to sell and when they know a family of 5 could not realistically stay at the poly for long, because they think we will have to add on points. The issues you put fourth sound like a class action suit. Im not saying when we are there the cm's don't make it right, but we have to make phone calls, wait for towels and be inconvenienced. I was advised (by a Disney broker) on how many points and a home resort, all wrong for me and now I am stuck. I am sure others are in the same situation.

 

[TLinden16]

I'm going to start with a disclaimer. I haven't read every post on this thread, but I have been checking in periodically since it was started. And I thank everyone who has been researching about this, and speaking to DVC about this for their hard work and for sharing this information with all of this.

I have been a member since 2004, and I have only booked studios because I typically travel alone or with one other person, so I have no need for a larger accommodation. I have definitely noticed the change in demand for studios in the past couple of years (especially when trying to book something other than one of my home resorts at the 7 month window--I couldn't get a four night stay at any resort other than SSR when I tried for something with a flexible start date anytime the first week in May. Luckily I had pieced together four nights in a standard studio at the BW about eight or nine months out so I did have something—I had just wanted to switch things up. I never had a problem getting what I wanted in early May before. I'm just glad that in 2004 when my guide was trying to sell me on SSR by telling me I would never have a problem booking BW or BC at the 7 month window, I had the sense to realize that it wasn't the case and pushed to buy BWV points instead.

The more I think about the point reallocation, the more I realize how it was an attempt by DVC to solve a problem that they created. Studios are in demand because DVC made them more appealing by add a fifth bed. Studios are in demand because DVC lowered the direct buy in, allowing new members to buy small contracts that are probably only used for studios.

Well, she did also point that SOME 2-bedrooms were lowered. The theory (I think) is that by getting more members to book two bedrooms that this will overall balance the occupancy rate. I see where it COULD in theory work. The problem is that because studios book up so much faster than either 1- or 2-bedrooms, raising the studios may slightly make the 2-bed lockoffs last longer but I think you will find the studios will still book very quickly. And once the studios are gone, the lock-off 2s are gone as well - so I think while the THEORY may work - I think the REALITY is that it doesn't work. Because she did say that the intent is to not increase breakage but to reduce it, and that's when I asked about what would happen if the effect they intend doesn't happen - would they revert back. And she said they would re-evaluate at that point, and they are constantly re-evaluating every year.

I just don't see how lowering the two bedroom point total will balance occupancy. Most members who are booking a studio or one-bedroom don't need the space of a two-bedroom, so why would they spend more points to have more space when they can use less points and get more nights? It just doesn't make sense.

If the studios are truly the highest in demand, than DVC should be increasing the ratio of studios to 1 and 2 bedrooms in future resorts to meet the demand. Of course, that doesn't help the issues they have now in the current resorts.

 

[Donna M]

The more I think about the point reallocation, the more I realize how it was an attempt by DVC to solve a problem that they created. Studios are in demand because DVC made them more appealing by add a fifth bed. Studios are in demand because DVC lowered the direct buy in, allowing new members to buy small contracts that are probably only used for studios.

I so agree with this. They created the situation just as you explained and now we have a problem. They never should have sold such small contracts unless they were add-ons, but the price is so high per point that they can't sell large contracts either.

 

[TLinden16]

I so agree with this. They created the situation just as you explained and now we have a problem. They never should have sold such small contracts unless they were add-ons, but the price is so high per point that they can't sell large contracts either.

When I bought in, the minimum buy in was 150 points. Now it is 75. Wasn’t it 50 at one point? Maybe DVC is selling these small contracts in hopes people will add on in the future. It used to be that DVC was a bargain for those of us who could afford the buy in. Now it is a luxury item.