Old Key West voting on paid extension

[tralden]

OKW just sent out a notice that the board of directors will be voting on a resolution to extend the OWK DVD contract out to 2057 (from 2042).

Before you start rejoicing, here is the kicker... It will cost $25/point to get the extension payable by Feb 29, 2008. Members would have the option to opt out of the extension (in exchange you have to execute a deed to give Disney the rights to your ownership after 2042).

From the notice:
"DVD has revieed the proposed resolutions and considers them to be appropriate for approval. As a consequence, DVD intends to cast each Unit's vote to approve the resolutions..."

I have my own strong feelings about this but wanted to know that other DVC members (or anyone else) thought about "special opportunity".

[AVP]

I don't think I know enough about the pros and cons of this to have strong opinions. What are your thoughts?

AVP

[DVC Mike]

The rumor is that Disney may offer a $10 discount off the $25 per point. I think $25 per point is too high, but $15 a point may be reasonable.

[tralden]

I don't think I know enough about the pros and cons of this to have strong opinions. What are your thoughts?

AVP

Well since you asked...

Points:
DVC members have already paid for the construction of the resort and pay maintenance yearly for upkeep
The only thing this new fee could possibly be for would be for the extension of the use of the land the resort sits on (remember, weve already paid for the construction).
We would be paying for this extra lease of the land 35 years ahead of current lease expiring.
Taking the above into consideration, I think this $25/pt fee is beyond outrageous.

Questions:
This will certainly affect the resale value of ownership for those that choose not to extend. How much?
What will Disney do to the maintenance fees for those that do not extend as we get close to 2042? As you get close to the end, you would normally expect maintenance fees to go down since you no longer have to plan for future expenses and can let furniture, appliances, etc get to the end of their life w/o having to consider funds to replace them.
The original plan expected the resorts life expectancy to only until 2042. What new information does Disney have that makes them believe keeping the resort alive until 2057 is a wise choice?
What will expanding the age of the resort due to future maintenance fees? (Will there be major costs to be able to extend the life of the resort?)

IMHO, this special opportunity they want to offer is motivated by nothing by unbridled greed.
Until now DVC has always been way above the frequent dirty tactics and practices of other timeshares. I have gushed and bragged about how above board DCV is and how they are above the practices of other timeshare companies. I know that Disney is not doing anything illegal here and they are free to do what ever they want with offers after our current contract expires, but after reading this letter and notice I felt like I had to go take a shower. I expect much better from Disney and DVC.

If Disney really wants to celebrate 15 Years of Making Vacation Dreams Come True, then offer us owners a real Magical Moment and lower the fee (by at LEAST half) or better yet, offer it for free.

[Drince88]

Does this bring the expiration of ownership at Old Key West in line with the other resorts?

[GusMan]

Does this bring the expiration of ownership at Old Key West in line with the other resorts?

I believe the extension will take it to '57 (subject to verification), which I also believe the current expiry date for AKV. There appears to be a lot of other information (rumored and otherwise) floating around on other boards. And, while not a shocker, a LOT of speculation.

To be honest, something like this always sat in the back of my mind. After all, there are hotels on property much older than OKW and they are still going strong. It would only make sense to provide an extension of contracts provided that it is predicted that the property itself is viable enough to maintain the level of quality that it has been providing. Regardless if it is $25 a point or less with discounts, if one plans on continuing on using their share beyond the orig. expiry date, or wish to pass it on to their other family members, the cost could almost be considered incremental at best.

One comment about the resale thing... While I know that the DVC has done their best to keep properly values up via the whole ROFR thing, I think that if someone did buy into the extension, it would do nothing but help. Why? Because now someone can buy into a resort on the resale market that does not have a much earlier expiry date as the other resorts. Besides, my take is this... ownership should not be viewed as an investment in of itself outside in investing in future vacations. But at the same time, if I got my moneys worth out of the membership, everything else is gravy if I ever decide to sell it. However, I understand that not everyone may see it the same way, and that is cool too.

[tralden]

My information is not speculation. I am a OKW owner and got a notice in the mail.

I'm sure DVC is hoping for exactly the reaction of some of you: "It's only an incremenatal cost and in line with other properties." My point is that we owners already paid for the properties (at least the buildings). Therefore any incremenatal cost is only for land use (unless this fee will go into building upgrades, which the notice says nothing about).
This fee is WAY to high compared to the real costs to make the offer. I would expect this sort of "offer" from other timeshare operations, but not DVC.

In fact, there are no "real" (hard, out-of-pocket) expenses to Disney for this extension. They could offer it for free and not be out any cash (and would get a lot of good will).

People write that Disney is sucessfull because they create an emotional memory. This offer invokes an emtional response, at least in me, that is not the kind they want customers remembering.

[GusMan]

My information is not speculation. I am a OKW owner and got a notice in the mail.

Dont get me wrong, I know that part is not speculation. The letter is posted in other places around the 'net.

My comment regarding speculation revolves around things such as discounts on the extension costs, what the extension really means, if this will be done for other resorts as well, and other questions. (Some which you touched base on earlier.)

Here is the deal... If people dont choose to purchase an extension, nothing changes. The contract expires and that is that. Heck, in '57, I will be in my 80's and who knows if I will be pushing up flowers by then. Chances are, my kids and/or grandkids will (hopefully) be enjoying it by then.

If they do choose to extend, hopefully it will be worthwhile to them and their families as it gets passed down or even sold off.

I will agree that it would be interesting to hear all the different questions, comments, and concerns addressed. But like what AVP mentioned earlier, not enough of the pros and cons have been brought forth for a good analysis. But as an owner myself, I may hit up against those very questions if they decide to do this to SS. But to some, it may not be all that big of a deal.

[smjj]

We are also OKW members with two contracts. We are not going to do the extension. We will both be into our 80's by then and do not want to assume our kids will be interested in it. The $25.00($15.00 with the discount) per point is too much..smjj

[Chumpieboy]

What concerns me is the speed of this.

We got our letter this week, about a vote on property in September, and we have to fully pay the extension by 1Q 2008? Why the rush? Why no additional information from WDW/DVC about this? There's nothing on the DVC member site about this.

And is the "discount" real? There was nothing in my letter about a discount...

[DVC Mike]

What concerns me is the speed of this.

We got our letter this week, about a vote on property in September, and we have to fully pay the extension by 1Q 2008? Why the rush? Why no additional information from WDW/DVC about this? There's nothing on the DVC member site about this.

And is the "discount" real? There was nothing in my letter about a discount...

There's really no vote either, as Disney controls the board. They are going to approve a Special Assessment, and if you don't want it, you have to sign-away your rights past 2042 or pay up.

[tralden]

What concerns me is the speed of this.

We got our letter this week, about a vote on property in September, and we have to fully pay the extension by 1Q 2008? Why the rush? Why no additional information from WDW/DVC about this? There's nothing on the DVC member site about this.

And is the "discount" real? There was nothing in my letter about a discount...

I agree with this concern as well. Everything about this is not the quality and customer (owner in this case) experience I expect from DVC.

BTW, you anyone else feels like writing to the DVC President, as I did, here is his email address: James.M.Lewis@disney.com

[efoxx]

Something seems really fishy about this...

I have a strange feeling.

small print somewhere that says that if you reject the extension you can only sell your DVC points back to Disney or maybe something even more sinister.

[GusMan]

small print somewhere that says that if you reject the extension you can only sell your DVC points back to Disney or maybe something even more sinister.

Agreed!!
The best piece of advice is simple... if you have to sign anything, read and understand everything. It may seem like a keen grasp of the obvious, but it had to be said.

If you are declining the extension, make sure the document you are signing in regards to that only impacts future interests and does not modify or amend your current, existing contract. While I am an optimist, I would like to think any contract that is currently in place will not change at all until it expires.

[spectromen]

I think that they're seeing a decrease in OKW bookings from non-DVC members and are trying to remove some of the stigma that it's becoming tired and undesirable.

Also, I'd think that the added $4000 would be in anticipation of major remodeling and redecorating needs that will come up in 2042. Although I have to admit, isn't OKW still on it's original 1991 furnishings? I think if I owned there that I'd expect soft goods in the rooms to be updated more than this.

[smjj]

We have even thought about giving our son the option of purchasing the extension(pay for it) and then when the time comes we will sign the whole thing over to him. Kind of an investment in the 15 additional years since he and his family are quite a bit younger than us. Of course this is just a thought and he probably won't want to do it but he is very interested in DVC and has used ours in the past...smjj

[ilyswak]

I purchased a reslae for OKW this year and $25.00, per point is a lot lower than the going resale rate. Then of course it is an extended contract for only 10 years, so it should be in that range or lower.

I think it is a good idea to extend if you ever plan to sell because as the years pass by your ownership is not as vaulable as the newer resorts with a 2057 exp. date.

However, I have read that room mainentance at OKW could use some upgrading. In fact, I read some pretty bad reviews on the room conditions.

I wonder if WDW plans to use the monies to make some improvements.

I do not know if I will take the extension. Do not know if I feel like shelling out the bucks. I will deed it to my daughter and her children, but again if she ever wants to sell it would be more appealing to a buyer with a 2057 exp. date.

[ilyswak]

I just read on Disboards that if you do not take the extension then they will put a lien on your contract that will give them ownership from 2042 - 2057.

That in itself is not a problem. The problem is that if you want to sell your deed on the resale market you will not be able to do so unless you purchase the extension first.

If that is true it really is unfair to people who may want to sell. They seem to have you between a rock and a hard spot.

[DVC Mike]

I just read on Disboards that if you do not take the extension then they will put a lien on your contract that will give them ownership from 2042 - 2057.

OKW owners have two choices:

1. Accept the extension and pay DVC the cash for the additional years
2. Decline the extension and sign-over their rights to the additional years to DVC

If you don't pay for the extension or sign over your rights, a lien will be placed on your contract. This makes perfect sense to me.

[Mark Goldhaber]

The rumor is that Disney may offer a $10 discount off the $25 per point. I think $25 per point is too high, but $15 a point may be reasonable.

Just received my packet.

$15 per point if paid in full (or financed in full) by 2/29/08.
$25 per point if paid in full (or financed in full) after 2/29/08.
Otherwise, deed back the extension to DVD.

Financing is 10% down, the balance at the current add-on interest rate at the time of payment.

While the discount is only good through the end of February, there is no stated deadline for remittance of the yes/no decision or payment for the extension.

The Board of Directors and the Members of the Disney Vacation Club Condominium Association (Association) voted during a special meeting on September 24, 2007, to give Members the opportunity to extend their Membership from January 2042 to January 2057 through an extension of the ground lease. All Members must remit the special assessment of $25* per Vacation Point to take advantage of this offer, or return a witnessed and notarized deed to Disney Vacation Development, Inc. (DVD) to decline the offer.

*For those Members who elect to accept the extension, DVD will pay $10 per Vacation Point towards each Members special assessment if paid in full by February 29, 2008. Members remitting payment after February 29, 2008, will not be eligible for a DVD subsidy and shall be required to pay the full amount of the special assessment of $25 per Vacation Point.

Also, those paying by 2/29/08 will get a limited-edition lighthouse Memory Capsule and a lithograph of Disney's Old Key West Resort.

I expect to be interviewing somebody at DVC about this next weekend, so we'll see what I can find out about the other unanswered questions. If you've got something that you'd like me to ask, post it here and I'll see what I can do about getting answers.

[DVC92]

I expect to be interviewing somebody at DVC about this next weekend, so we'll see what I can find out about the other unanswered questions. If you've got something that you'd like me to ask, post it here and I'll see what I can do about getting answers.

Any update on questioning DVC about the extension?

[DVC92]

BTW, you anyone else feels like writing to the DVC President, as I did, here is his email address: James.M.Lewis@disney.com

tralden

Please check your private messages.

[Mark Goldhaber]

Any update on questioning DVC about the extension?

They didn't have answers ready for me when we met. They've assured me that they'll get back to me with answers. I'll try to follow up this week.

[tralden]

They didn't have answers ready for me when we met. They've assured me that they'll get back to me with answers. I'll try to follow up this week.

I think all DVC owners should be concerned by this. They want to rush us into a decision, but don't already have good prepared answers for questions like what will happen to maintenance fees? This whole thing seems very poorly planned and managed. If this is an example of the type of planning and management we can expect to see in the future for DVC I'm not sure I want to be a member for an additional 15years. One thing is certain, I'm not going to be recommending DVC to any more of my friends any time soon (and I was a big promoter before).

For those concerned with resale, this is my prediction of resale values in the short term (say mid next year):
Assume that before the extension offer the resale of DVC pts was $75 (just as an example, not sure this is the actual current going rate). After the extension offer, those people that did not pay for the extension will only be able to sell for $65/pt. Those that did buy the extension will only be able to sell for $85/pt.
Essentially my prediction is that it does not matter if you buy the extension or not, you will loose at least $5/pt in resale value (note in my example to get the extra $10/pt you had to spend $15/pt). This comparison of course assumes that we will even be able to sell if you don't buy the extension.

[Mark Goldhaber]

I got the response today. It'll be on Thursday's MouseStation podcast and in next week's Park Update, but you folks get the answers first.

Can those who elect not to extend their ownership interest change their mind and repurchase their extra 15 years from DVD later on?
Members are being give the option to add on to their membership or not at this time. We do not have plans at this time to extend the offer again. However, we reserved the right to do so.

If they don't extend, what will that do to the resale value of the points?
We cannot speculate on the resale value of points.
(Note that I've reframed this question in terms of whether they expect it to affect the price at which they would exercise their right of furst refusal. I'll post the answer when I receive it.)

Why is Old Key West the only one receiving this offer?
This is our flagship resort and this offer was in celebration of our 15th anniversary.

What about the rest of the 2042-class resorts (Hilton Head, Vero Beach, BoardWalk, Beach Club and Wilderness Lodge)?
Disney's Old Key West Resort is the only property where this offer is being extended at this time.

Why are they forcing this decision on DVC members (who have about five months to make up their minds, complete their financing and pay in full) 35 years in advance?
It is a Member's choice to add on or elect not to do so. Members are able to finance the extension amount through Disney Vacation Development the same terms we offer for financing of new purchases.