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Maui News article on County of Maui's appeal on WKORV WKORVN tax ruling

Discussion in 'Vistana Signature Experiences (formerly Starwood)' started by WahooWah, Nov 6, 2018.

  1. WahooWah

    WahooWah Guest

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    PamMo and controller1 like this.
  2. PamMo

    PamMo Tug Review Crew: Rookie TUG Member

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    Interesting article, WahooWah. Thanks for posting. It looks like Maui is doubling down on the current convoluted timeshare property tax structure. They haven't set aside any money for the $34M+ liability, feeling certain they'll prevail in the end. The comments from Chairman White are sadly telling. He doesn't like timeshare developers and owners in Maui.
     
  3. taterhed

    taterhed TUG Member

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    If they let Maui Co. 'cherrypick' their tax rates....timeshares, luxury residences, part-time resident homes, businesses that cater to locals, tourist industries etc... we know who they will tax and who they won't. I'm sure they'd love to place an even higher tax on 'luxury fractionals' and 'celebrity ownership' properties.

    I'm betting that Nanea contributes a lot of income and wages to the local economy: Nanea-390 rooms, KBH (Mr Whites property) 400 rooms. Nanea hired over 150 employees prior to opening...I'm sure that puts the number near 250 total. KBH is listed with 200-300 employees at various citations. Pay? I'm sure they are similar...I believe the hotel workers are union.

    Timeshares? much of that money goes into groceries and liquor...I'm sure. Hotels? I'm still betting that much of that money goes into liquor and groceries...albeit a bit more into the restaurants.

    Sorry, but this was a Maui money-grab and I only hope it can be settled without causing undue upset to all the parties involved.
     
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  4. taterhed

    taterhed TUG Member

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    Here's another great point: Who generates more revenue, a 96% occupied 390 room timeshare, or an 80% occupied 400 room hotel? Given the Nanea and KBH, I think I know the answer.

    Timeshare properties in Maui County averaged a 95.6% occupancy rate for the first three months of 2018, according to the Hawaiʻi Timeshare Quarterly Report released today by the Hawaiʻi Tourism Authority. By comparison, hotel properties in Maui County averaged an 80.2% occupancy rate for the same quarter.

    The Maui timeshare occupancy rate was the highest among the islands and represented a 1.5 percentage point increase compared to the prior year.

    The average Maui County timeshare visitor had a 10 day length of stay during the first quarter, also the highest among the islands. Maui County welcomed 70,042 timeshare visitors during the first three months of 2018, a 4.5% increase from the prior year. Timeshare visitors represented 9.7% of Maui County’s visitor market during the quarter.

    Owner occupancy accounted for 61.6% of occupied room nights at Maui timeshare resorts during the quarter. Marketing use represented 9% of occupied room nights in Maui County timeshares, the highest share among the islands. Transient Guests contributed 13.8% of occupied room nights, the lowest share among the islands during the quarter.
     
  5. emuyshondt

    emuyshondt TUG Member

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    I think the argument against timeshares (right or wrong) is that they don't spend as much in the local economy as hotel tourists. Timesharers eat in much more, and many don't partake as much of the tours and paid activities because they've likely already done them in the past. Thus, timeshares need to be taxed more to pay their fair share of their use of the local infrastructure. Both timeshares and hotels use more of the roads, electricity, wastewater, etc., than a typical local home.
     
  6. bizaro86

    bizaro86 TUG Member

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    The argument that is being made is that TS should be taxed at the hotel rate, which is already much higher than the local rate.

    As for a TS occupant eating out less, I think the occupancy being higher (% of the year) probably offsets that. Also, because TS units are bigger, they are more valuable, so pay more tax. However, 4 people in a WKORV 1 bedroom probably don't use the roads or other infrastructure more than 4 people in a sheraton black Rock hotel room. However, because the TS is more valuable they'll pay more property tax, even if the rate was the same.
     
  7. Fredflintstone

    Fredflintstone TUG Member

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    I wonder if these sane argument could be applied to an Airbnb condo? I know one place I was in was a million dollar plus condo. I do see the tax higher than a condo worth 200 k, but higher because it’s an Airbnb? Not sure.


    Sent from my iPad using Tapatalk
     
  8. emuyshondt

    emuyshondt TUG Member

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    Hotels are today taxed at $9.37 per $1000 valuation. Timeshares are taxed at $15.41.

    The big issue with Maui County, not mentioned in the story, is that they made the tax retroactive several years. I don't see how that can be justified by any argument. Timeshares wouldn't cause any more pressure on the infrastructure than a fully occupied condo. Maybe you could argue for treatment like a hotel.

    I think the suit and the money the county has to refund is for the unfair retroactive taxes, not just for the taxes collected at the new rate after the date it was enacted. We'll see how this all works out.
     
    Last edited: Nov 7, 2018
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  9. Fredflintstone

    Fredflintstone TUG Member

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    Thank you. I re read the article and misunderstood the different tax rates for different classes of property. I would think the fairest way would be to charge the same rate to hospitality real property whether it be a timeshare or hotel or Airbnb based on the value of that property. Resource usage is charged by utility bills and waste charges. Fuel taxes pay fair share of road usage. So, the amount of usage is already being paid for through other charges and taxes. I can see why they were sued on this issue. In my view, good on them for bringing this issue to the courts. It keeps the locality accountable.


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  10. CalGalTraveler

    CalGalTraveler TUG Member

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    IMHO. I am new to this topic but the Maui arguments in this article about the tax assessment seem really weak to me.

    Maui County may be out $34 million and in perilous financial shape if they lose the appeal. However isn't that $34 million money that they already collected from the timeshares?
    • So they overcharged with an unfair tax assessment with poor legal justification and precedent. (shouldn't they have sought a legal opinion before pursuing this? Wouldn't someone at the County have considered that the timeshare companies would respond? i.e. they wrongfully believed that because the owners are not local and are small that there would be no battle and this would be an easy source of revenue because they don't vote.)
    • They collected and spent the $34 million incremental revenue rather than keeping it in reserve or managing their budget accordingly. (if they had hired counsel, the counsel may have warned them that they were on shaky legal ground.)
    • Now they blame the TS industry for the suit and having to refund money they shouldn't have collected in the first place?
    Do I have this right? Seems like inept Maui County management to me.
     
    Last edited: Nov 8, 2018
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  11. DannyTS

    DannyTS TUG Member

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    Timeshare owners are more likely to come back year after year. It is rather odd that the local government is treating this way the most loyal visitors to the island.
     
    Last edited: Nov 8, 2018
  12. Fredflintstone

    Fredflintstone TUG Member

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    Governments main role is to control money. When they find an angle to increase revenue, they tend to use it. Every little increase helps in the goal. I think in Hawaii military is their number one revenue followed by tourism so it makes sense to get more from the visitors. They will pay it. My friends in Hawaii say, “Staying in paradise has a price” and they are right.

    No matter. Still worth it. It’s a gorgeous place!


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  13. controller1

    controller1 TUG Member

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    I know I will be in the minority here, but this tax suit is a reason to make that optional contribution to the PAC that is on the annual MF statement. Regardless of what one thinks, money speaks to a politician and we timeshare owners need "friends" on the Maui County Council.
     
  14. taterhed

    taterhed TUG Member

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    I believe that the main legal point of the case is thus: Timeshares and hotels are not materially different in their use as it impacts the community. Conjecture and supposition is fine, but laws and rulings are made based on facts, studies and documented 'bottom-line' impacts to revenues and facilities.

    Maui didn't document the impact......they just collected the revenue.

    Truth be known..... I'm guessing that timeshare and hotel guest behaviors are remarkably similar. I'm also guessing that the financial investment in the community (spending) is quite high for both groups; albeit thru different channels. In any case, no studies, no numbers, no dice.

    Remind me what the purpose of the TOT was in the first place?
     
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  15. DannyTS

    DannyTS TUG Member

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    you are absolutely correct, the distinction they make seems completely arbitrary.

    Also, from the numbers I have seen at Lagunamar, 1 out of 3 visitors rent directly from the developer through Expedia, SPG etc. so how can they make the distinction there?
     
  16. CalGalTraveler

    CalGalTraveler TUG Member

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    Based on their argument of not helping the local economy bc timeshare owners don't eat out as much as tourists, then what about all the condos such as Honua Kai next door and in Kihei that rent out their units regularly on AirBnB and have kitchens? Are they charged the same rate as hotels? (I doubt it.)

    What happens if WKORVN / WKORV loses? Will the owners have to cough up more in assessments to pay for the County legal bills or further taxes?
     
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  17. maph

    maph TUG Member

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    As an owner of Maui weeks, I'd be willing to forgo any payment due to me if this lawsuit is successful, as long as the tax rates are fixed going forward. Maybe spare Maui county some financial pain.
     
  18. controller1

    controller1 TUG Member

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    Since "fixed" has more than one meaning, let me ask for some clarification.

    Are you saying you would be ok if the current rate stays the same ie. is fixed or are you saying you would be ok if the current rate is corrected to the lower rate ie. is fixed?

    I'm hoping the latter.
     
  19. GregT

    GregT TUG Member TUG Member

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    I interpreted the original statement to be that the poster would ignore any past correction (payment) as long as future tax bills were at the lower rate. I agree with that view -- not trying to recoup past dollars (and cause pain to Maui's finances) but hope that the rate is lowered.

    I don't see how Maui could lower the rate though, without increasing it on existing owners to offset the loss of revenue. This is a tough (but avoidable) situation for them.

    Best,

    Greg
     
  20. maph

    maph TUG Member

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    Lower the current rate to something more reasonable.
     
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  21. LisaH

    LisaH TUG Lifetime Member

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    I feel your pain, but I am so glad that I sold my Maui timeshare before all this happened...
     
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  22. controller1

    controller1 TUG Member

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    Even with the pain, I'm happy I have four weeks of Maui ocean front.
     
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  23. TravelTime

    TravelTime TUG Member

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    I am really confused by people’s views on taxes. People say they want lower taxes yet they also want all the social and public services that require high taxes. This is very contradictory.

    I agree with controller1...even with my whining about our crazy high taxes in California and all our expensive timeshares in high cost places like Hawaii, I am happy to have them.
     
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  24. controller1

    controller1 TUG Member

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    As a timeshare owner, I want equitable taxes. The tax rate difference between the "hotel" category and the "timeshare" category is not equitable and there are no concrete reasons to have the difference and force timeshare owners to shoulder the larger burden of taxes in Maui County.
     
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  25. TravelTime

    TravelTime TUG Member

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    Yes that makes sense. I was making a general statement about people’s views on taxes. Not specific to this tax problem which in this case, makes no sense at all.
     

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