Reallocations are described in the POS document for each resort in "Exhibit G - Disney Vacation Membership Agreement for XXX RESORT"
For Saratoga Springs Resort (SSR, my Home Resort), the reallocations are authorised as follows:
“In order to meet the Club Members’ needs and expectations as evidenced by fluctuations in Use Day demand at the Condominium experienced by DVCMC during a given calendar year, DVCMC may, in its sole discretion, increase or decrease the Home resort Vacation Point requirements 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 a Use Day during the previous calendar year; provided, however, that the total number of Home Resort Vacation points existing within a given Unit at any time may not be increased or decreased because of such reallocation. The twenty percent (20%) reallocation limitation shall not apply to increases or decreases of Home Resort Vacation Point reservation requirements relating to designated periods of high demand which do not occur on the same Use Day each year. 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 increase or decrease for another Use Day or Use Days.” 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.
For a long time we have thought that Disney could do whatever they wanted with the point charts as long as the total points needed to book the whole resort for the whole year remained unchanged. Reading the POS is seems this is not the case.
The first highlighted sentence seems to restrict reallocations only to balance demand during the year, not across different vacation home sizes. If bungalows seat empty and studios fly off the shelves at 11 months, a reallocation cannot be used to balance demand.
The second sentence says points can be shifted only "within a given Vacation Home". A Vacation Home is defined as "portion of a unit designed and intended for separate use and occupancy". This allows to move points only within the same room type. They can lower points for a studio for weekends and increase week days, they cannot increase studios and 1BR and lower 2BR.
The third sentence says the total points allocated to a Unit cannot change. It seems the reallocation they did for the SSR treehouses is not legal, as all the treehouses are declared in their own units. Polynesian Bungalows are in different units from the studios, so the 2020 reallocation is not legal. Also, usually a unit includes different room types and different units within the same resort can have different compositions. If a unit includes 2 dedicated studios and 2 lockoffs, another might include only dedicated 2BR. Balancing units with different compositions might prove impossible if points are moved across different vacation home types.
In the first years of DVC, when a balancing act was needed to balance demand within the same room types, DVC created different booking categories with the same price point. This applied to Boardwalk view (same points as garden), and Old Key West "near Hospitality House" (same points as the rest of the rooms).
Those separate booking categories are a good advantage for owners, because they can book the better rooms before the 7 months window without paying a premium in points. Later DVC started moving points around balancing the points across the new booking categories. It might have been in good faith (at the beginning), but it doesn't seem to be allowed by the POS and it opened the way for strategic point allocations like the Poly bungalows: the high point cost for the bungalows allowed DVC to sell a lot of points while showing the points required by studios to potential owners.
The forth highlighted sentence reinforces that the reallocation can only happen to balance seasonal demand, not demand for different room types.
According to this definition, the 2020 reallocation is partially justifiable. On average Adventure and choice seasons went up, while Dream season saw the biggest decreases. However studios have only gone up and while they saw some decrease in some seasons, 1BR on average went up.
At the same time, larger rooms went down. In particular the Polynesian bungalows saw the biggest decrease at the expense of studios. Many had seen this coming since the Poly point charts have been announced. Bungalows cost an incredible amount of points to stay there per night, while the average contract sold allow people to only book studios. Now that the resort is sold out, bungalows go down and studios go up, most people who bought at that resort cannot afford to book their vacation anymore in any season!