Sun Sentinel Palm Beach Edition
Timeshare industry could save millions
Tax break may come from plan to rewrite rules Florida appraisers use to decide value
The timeshare industry could save millions of dollars in taxes under a mysterious property tax change that has been proposed in Tallahassee.
The potential tax break — which has yet to be filed publicly even though the Florida Legislature is more than halfway through its 60-day session — would rewrite the rules that county property appraisers must follow when determining the value of timeshare resorts.
Appraisers say the changes would lead to far lower taxable values for timeshares — and much lower tax bills.
“In my view, the impact would be millions,” said Katrina Scarborough, the property appraiser in Osceola County, where timeshares represent nearly $3 billion worth of taxable property value — and more than $40 million in annual property taxes.
The multibillion-dollar timeshare industry — which is led by corporate giants such as Wyndham Destinations Inc., Marriott Vacations Worldwide Corp., Hilton Grand Vacations Inc. and the Walt Disney Co.’s Disney Vacation Club — is even bigger in neighboring Orange County.
Timeshares account for more than $9 billion in taxable property value in Orange County — and roughly $175 million in annual property taxes, according to the Orange County Property Appraiser’s Office.
“If passed, this [potential] legislation will negatively impact tax assessments on timeshares,” said Orange County Property Appraiser Legal Advisor Robert Grimaldi.
It’s not yet clear who is behind the potential tax break. The language leaked out publicly last week after Scarborough, the Osceola County property appraiser, was alerted to it by Bill Furst, the property appraiser in Sarasota County.
Furst said the proposal was sent to him by a state legislator in his local delegation — either Rep. James Buchanan, R-Osprey, or Sen. Joe Gruters, R-Sarasota, though Furst said he could not recall specifically whom.
Buchanan, who is currently sponsoring an unrelated piece of property tax legislation in the state House, told the Sentinel he could not recall anything about the timeshare proposal, which could surface as an amendment to another bill at any point before the March 13 end of the legislative session.
Gruters, who is sponsoring an assortment of tax breaks for various interests this session, did not respond to a text message seeking comment.
The proposed tax changes involve some of the same issues raised in a property tax lawsuit between Osceola County and the world’s largest timeshare company — Orlandobased Wyndham Destinations, which has more than 220 timeshares in its network and rings up more than $2.3 billion in annual timeshare sales. A trial court judge ruled in favor of Osceola County last summer, but Wyndham is appealing the decision.
A spokesman for Wyndham said the company is not involved in the proposed legislation.
The company has recently made several moves in Tallahassee. On Feb. 3, Florida Gov. Ron DeSantis received a $5,000 contribution from Wyndham. On Feb. 4, Dean Cannon, a former House speaker and Republican state lawmaker from Central Florida who is now a lobbyist in Tallahassee, registered to represent Wyndham before the Legislature.
Also on Feb. 4, an attorney for Wyndham emailed an attorney for the Osceola County property appraiser to ask for more time before Wyndham files a brief outlining its legal arguments in its appeal in the lawsuit against the county.
While the origins of this year’s proposal are murky, local property appraisers say the impact would be clear — lower tax bills for timeshares.
The measure deals with the way appraisers determine the property values of timeshares. Under current law, appraisers are supposed to first look at comparable sales on the resale market — such as when an owner who bought into a timeshare years ago sells it to someone else.
But there must be an adequate number of resales that property appraisers can use as comparable sales. If there aren’t, appraisers are allowed to base their appraisals on the sales of new timeshares, which are much higher.
Appraisers say the proposal would do two main things. First, they say it would require them to base their assessments on resales even when there may only be two or three legitimate resales — against thousands of new sales. And second, they say it could prevent them from relying on resales at newer timeshares and instead force them to use sales only from the oldest, least desirable and least valuable properties.
In Central Florida — the center of the global timeshare industry — property appraisers have long argued that there aren’t enough legitimate resales to use as accurate comps for the value of a timeshare. They say the vast
majority of resales are distressed sales, driven by owners trying to dump their timeshares simply to stop paying the annual fees.
Timeshare developers themselves have been complaining for years of rampant fraud in the resale market, pointing to examples of shady “exit” companies that charge desperate owners upfront fees and then do nothing to actually help those owners sell. And the timeshare companies, who don’t want the resale market to undercut their own sales, have taken many steps to suppress the desirability of resales, such as by restricting various perks and special features only to people who buy their timeshares directly from the developer.
Some timeshare industry advocates say appraisers should be forced to stop using sales by timeshare developers as the basis for appraisals.
Rob Kelley is the attorney representing Wyndham in its litigation with Osceola County. He said has not had any involvement with the legislation that is being shopped in Tallahassee right now.
But Kelley said the values set by property appraisers are supposed to reflect an amount an owner could reasonably expect to get if they sold that property on the open market. And the reality is that individual timeshare owners can’t sell their timeshare interests for anywhere near the prices that they’re being assessed at for tax purposes.
“With timeshare assessments, the present scheme is like solid gold for the taxing authorities,” Kelley said. “Because they’re reaping a tremendous amount of tax paid by people who don’t live and vote here.”