2010 Maintenance Fee Thread

[DanCali]

Do you think it appropriate to compare Worldmark with Starwood? I wasn't aware they were on par with each other. A more appropriate comparison may be Marriott (and I believe it's been posted that Marriott resorts haven't increased as much this year). Regardless, we all acknowledge that something fishy is going on with SVN regarding the MFs.

Certainly most Starwood and Marriott properties are a step above most Worldmark properties so they are not comparable in quality. As a result, the level of maintenance fees at Worldmark should be (and is) lower.

I do think that they should be comparable in terms of annual percentage increases, because the reasons/excuses to increase MFs should be similar (energy costs, labor costs, material costs etc). So if the point equivalent of a WM 2BR MFs are $800 and a 2BR SVO unit MFs are $1600, then a 5% increase would result in a $40 increase to the WM owner and $80 to the SVO owner, but percentage-wise the increase should be similar... Inflation in the US is 2%-3% on average so why should increases in MFs be consistently greater than 5%?

 

[Stefa]

Do we know.......is Starwood spreading the cost of delinquent accounts across all properties or are we paying for deliquencies in our own villas? If they are spreading them across all, how are they determining the spread?

Each HOA has to deal with their own delinquencies.

 

[DanCali]

Do we know.......is Starwood spreading the cost of delinquent accounts across all properties or are we paying for deliquencies in our own villas? If they are spreading them across all, how are they determining the spread?

It appears that each property and even phase is on its own. At SVV Key West villas had "only" a 13% increase vs 25% at the Bella Condos.

 

[gregb]

Do we know.......is Starwood spreading the cost of delinquent accounts across all properties or are we paying for deliquencies in our own villas? If they are spreading them across all, how are they determining the spread?

Each property (or phase) is created as a separate entity, so the costs cannot be shared between the properties. If you were a SVV owner, would you like to be paying a higher MF so that we owners and WKORVN can pay a lower one? I think not.

If WorldMark is doing that, I think they can do it because they are a points based system, and all the resorts may be owned by the same entity.

Also, I believe that the laws of the state in which the TS exits are the operative laws. So, for example, SVV is subject to Florida laws, but WKORV is subject to Hawaii law.

Greg

 

[tbonessc]

SVV Bella 1 Bedroom
2010
Maintenance Fee(s) $ 473.07
Tax - If Applicable $ 123.84
Membership Fee $ 109.00
Current Year Charges $ 710.91

2009
Maintenance Fee(s) $ 366.88
Tax - If Applicable $ 97.71
Membership Fee $ 109.00
Total Year Charges $ 573.59

Total fee increase of 24%, if I just look at the maintenance portion of the fees it's a 29% increase.

 

[jerseygirl]

Do we have a potential "Maui" tax issue with Florida as well? There's no way the real estate value of these units is increasing so why the big tax increases? Did Florida raise the tax rates for everyone? I didn't even notice this on mine ... just seeing a pattern in these posts.

Anyone know anything?

 

[gregb]

Do we have a potential "Maui" tax issue with Florida as well? There's no way the real estate value of these units is increasing so why the big tax increases? Did Florida raise the tax rates for everyone? I didn't even notice this on mine ... just seeing a pattern in these posts.

Anyone know anything?

Not sure what is happening in Florida. In Maui, Hawaii, it turns out they didn't change the tax rate, they changed the way they assessed the property value. They used to assess it as if it was a hotel, which meant the value was based on replacement cost. For the 2009/10 tax year, they decided that timeshares should be assessed as if they were regular condominiums. So they are basing the tax assessment on the "Fair Market Value" of the units. It has not been explained how they arrived at the FMV, but it appears they are using the inflated developer sales prices not the resale prices.

Greg

 

[Ken555]

Certainly most Starwood and Marriott properties are a step above most Worldmark properties so they are not comparable in quality. As a result, the level of maintenance fees at Worldmark should be (and is) lower.

I do think that they should be comparable in terms of annual percentage increases, because the reasons/excuses to increase MFs should be similar (energy costs, labor costs, material costs etc). So if the point equivalent of a WM 2BR MFs are $800 and a 2BR SVO unit MFs are $1600, then a 5% increase would result in a $40 increase to the WM owner and $80 to the SVO owner, but percentage-wise the increase should be similar... Inflation in the US is 2%-3% on average so why should increases in MFs be consistently greater than 5%?

Actually, I'm not convinced that MF % increases should be in line across the entire industry as you do. It's more important, IMO, to understand what specifically is changing at the resorts in order to determine an accurate comparison. Even similar size/quality resorts may be vastly different in how they are run, and the activities/expenses (as an example) at one but not the other. I am by no means defending Starwood. I think the MF increases is appalling and a severe lack of judgment on behalf of the owners.

In the end, I suspect Starwood's actions will result in the eventual owner control of the Boards. Unfortunately, this may take another bunch of years before it occurs. The sad fact is that most people don't care ~ they'll either pay and complain (but not do anything, which is all too common these days), walk away or sell.

 

[Courts]

What makes me skeptical is that Marriott MFs are coming in with increases of two or three percent. Even the Marriott Maui locations only experienced a 4.3% increase. What's Marriott doing differently that Starwood is not? I'm guessing their pools are still open and their grounds are still being taken care of. Luckily the Starwood unit I own "only" experienced an increase of 7.3%.

This may be a clue, first quarter results:

Starwood;
But total revenue fell 23.7 percent to $1.1 billion, hurt by weakness in luxury brands and abroad.

Marriott;
Revenue fell 15 percent to $2.5 billion.

http://www.gurufocus.com/news.php?id=54057

Could Starwood be using timeshare owners for a ....revenue source ???


.

 

[DanCali]

Actually, I'm not convinced that MF % increases should be in line across the entire industry as you do. It's more important, IMO, to understand what specifically is changing at the resorts in order to determine an accurate comparison. Even similar size/quality resorts may be vastly different in how they are run, and the activities/expenses (as an example) at one but not the other. I am by no means defending Starwood. I think the MF increases is appalling and a severe lack of judgment on behalf of the owners.

Many of the things you point out would be reflected in the level of MFs. For example, one resort may have 4 employees per 2BR and one may have 6 employees per 2BR because the latter provides better service, kids activities, etc. But if labor costs go up 10%, both resorts should have a 10% increase on that line item. This is the point I was getting at. Similarly, if energy costs go up by 20%, all resorts should experience that equally regardless of how much energy they were consuming to begin with.

Of course individual resorts can vary, and things may not be the same, especially so if you are looking at different geographies. Your point that you need to look at what is changing in each particular place is well taken (e.g. there may even be differences between WKORV and WKORVN, or SVV Bella and Key West) but I don't think my logic is wrong as a first level of approximation.

In regards to the point you raised earlier regarding Marriott, even if you take Marriott as the right comparable and compare Marriott Florida vs. SVO Florida, Mariott Hawaii vs. SVO Hawaii, their 2010 MFs (in particular operating MFs) are pretty much flat while Starwood reeks pretty much across the board...

Frankly, I am not sure the house of cards will remain standing until owners can take control of the Boards.

 

[James1975NY]

A 2 bedroom summer season Sheraton Mountain Vista just sold on ebay for $1.00. The listing agent was sellingtimeguys. The MFs were advertised as $1050.17. It certainly appears that as MFs go up the resale value goes down.

Sounds like this is probabaly a sale done through one of those companies that charges 2-3k upfront to sell and then dumping on e-bay for $1.

 

[Synergist]

My 2010 Vistina Villiges Bill

Thought this would help, 29% increase..


2010 Vistina Villages
2 Bedroom

2010 Operating Assessment :884.75
2010 Replacement Reserve : 137.77
2010 Estimated Real Estate Tax :134.02
2010 SVN Membership Fee :109.00
2010 ARDA-ROC PAC Contribution 5.00

Grand Total 1267.54


Then they sent a note saying this :

"2010 OPERATING PLAN AND BUDGET"

As your have read, heard and even experienced, the current economic conditions are impacting us all. Bella Flordia Condominium Assoc, Inc. is also feeling the impact and is not exempt from it's effects. Your Resort Team, Board of Directors and Management Company have collectively worked to find efficiencies in the daily operating costs within the 2010 budget. Some significant expense savings have materialized; however, there has been the need to incorporate additional provisions due to shortfalls in maintenance fee collection. Overall, your average maintenance fee will be increasing 29.0% or $221.25 per ownership week versus your 2009 budget. "

I have full copies of both and post up to the web if neccessary.

Overall. It's BS.

 

[Ken555]

Frankly, I am not sure the house of cards will remain standing until owners can take control of the Boards.

It's been said before, but... if you search back you'll find many of us said the same thing years ago on TUG. We've been waiting for Starwood to make such a blunder that it prompts the majority of owners to take action. Until that occurs, nothing will change.

 

[jerseygirl]

Not sure what is happening in Florida. In Maui, Hawaii, it turns out they didn't change the tax rate, they changed the way they assessed the property value. They used to assess it as if it was a hotel, which meant the value was based on replacement cost. For the 2009/10 tax year, they decided that timeshares should be assessed as if they were regular condominiums. So they are basing the tax assessment on the "Fair Market Value" of the units. It has not been explained how they arrived at the FMV, but it appears they are using the inflated developer sales prices not the resale prices.

Greg

Thanks, but I thought I had read here that a tsowner is paying a much higher rate than a regular homeowner ... hence the lawsuit by ARDA. Did I misunderstand?

 

[DeniseM]

In Maui County, there is a "special" higher property tax rate for TS's.

 

[gregb]

Thanks, but I thought I had read here that a tsowner is paying a much higher rate than a regular homeowner ... hence the lawsuit by ARDA. Did I misunderstand?

Hi JerseyGirl,

In Maui the Timeshare tax rate is $18 per $1000 of valuation. The condo owner pays something like $6 or $8 (I forget exactly) per 1000. So that is a big difference. And when we first heard about the huge tax increase for WKORVN, we thought it was due to this large difference in tax rates. But come to find out, that rate difference has been around for several years. So it was not the tax rate that changed.

What changed is that for the 2009/20010 tax year, Maui decided to change the way they calculate the FMV of TimeShare property. In the past they have set the property value for TimeShares as if they were hotels (based on replacement value). To generate more revenue, this year they decided to base the property value on unit sales prices, just like they do for condos. This has resulted in a huge increase in the valuation of the property for tax purposes and the WKORVN property tax has gone from about $1.6M for 2008/2009 to $6.4M for 2009/2010. That kind of increase gets your attention. Along with the reserves for delinquent MF payments, we have had a 33% increase in MF from 2009 to 2010!

The board says it is appealing the valuation and the valuation method. We will see how that comes out.

Greg

 

[Bucky]

Are these for the new phase (palmetto) or original? Or are they all the same?

All the same.

 

[jerseygirl]

Hi JerseyGirl,

In Maui the Timeshare tax rate is $18 per $1000 of valuation. The condo owner pays something like $6 or $8 (I forget exactly) per 1000. So that is a big difference. And when we first heard about the huge tax increase for WKORVN, we thought it was due to this large difference in tax rates. But come to find out, that rate difference has been around for several years. So it was not the tax rate that changed.

What changed is that for the 2009/20010 tax year, Maui decided to change the way they calculate the FMV of TimeShare property. In the past they have set the property value for TimeShares as if they were hotels (based on replacement value). To generate more revenue, this year they decided to base the property value on unit sales prices, just like they do for condos. This has resulted in a huge increase in the valuation of the property for tax purposes and the WKORVN property tax has gone from about $1.6M for 2008/2009 to $6.4M for 2009/2010. That kind of increase gets your attention. Along with the reserves for delinquent MF payments, we have had a 33% increase in MF from 2009 to 2010!

The board says it is appealing the valuation and the valuation method. We will see how that comes out.

Greg

Thanks Greg. So WKORV/N owners have two problems -- the unfair tax rate (3X the condo owner rate -- that's unbelievable) and the valuations. Owners should be sending the county the results of ebay auctions since Starwood will never admit to the more realistic valuations. Wow, I'm amazed this was considered legal -- makes me want to cancel my trip to Maui next year. I'm so past fed-up with those who are taking advantage of timeshare owners. I probably won't cancel, but we're visiting three other islands. I'll be sure to spend any discretionary tourist dollars on those islands.

 

[LisaRex]

Maui's TS rate is $14.00 per $1,000 of valuation. Private homeowners, including I assume condo owners, pay $2.00 per $1,000, so our rate is seven times that of a homeowner and almost double of a hotel, which pays $8.20 per $1,000.

http://www.mauipropertysearch.com/Maui_20_County_20_Property_20_Tax_20_Rate.html

A. Improved Residential $4.85 $4.85
B. Apartment $4.55 $4.55
C. Commercial $6.25 $6.25
D. Industrial $6.50 $6.50
E. Agricultural $4.50 $4.50
F. Conservation $4.75 $4.75
G. Hotel & Resort $8.20 $8.20
H. Unimproved Residential $5.35 $5.35
I. Homeowner $2.00 $2.00
J. Time Share $14.00 $14.00

I think what changed this year is the language that the assessment would be valued at the "highest and best use."

 

[gregb]

Maui's TS rate is $14.00 per $1,000 of valuation. Private homeowners, including I assume condo owners, pay $2.00 per $1,000, so our rate is seven times that of a homeowner and almost double of a hotel, which pays $8.20 per $1,000.

http://www.mauipropertysearch.com/Maui_20_County_20_Property_20_Tax_20_Rate.html

A. Improved Residential $4.85 $4.85
B. Apartment $4.55 $4.55
C. Commercial $6.25 $6.25
D. Industrial $6.50 $6.50
E. Agricultural $4.50 $4.50
F. Conservation $4.75 $4.75
G. Hotel & Resort $8.20 $8.20
H. Unimproved Residential $5.35 $5.35
I. Homeowner $2.00 $2.00
J. Time Share $14.00 $14.00

I think what changed this year is the language that the assessment would be valued at the "highest and best use."

LisaRex, I think that apartments are a better comparison for TimeShares. That or Hotels.

From a fairness and comparable impact on the local economy/environment, it really only seems fair that the Time Shares and Hotels pay the same rate. But that is not the case. I believe that Maui may be within their rights to set the tax rate at whatever they feel the market will bear. That doesn't make it fair, but I think they can probably do it.

On the other hand, I believe there are rules about how to value property and I believe that they have gone beyond the pale in the increased property values they have set for the Maui time shares.

Greg

 

[LisaRex]

LisaRex, I think that apartments are a better comparison for TimeShares. That or Hotels.

I would agree, though I also think it would be fairer to tax privately owned condos that are used as a primary or even secondary "residence" at a lower rate than those who rent it out most of the year.

I stayed in a privately owned 2 bdrm condo at Kaanapali Shores back in '06 and it was equivalent in size and amenities to my timeshare. If Maui county is arguing that timeshare owners are escaping paying our fair share of taxes, then folks who rent from private condo owners or private homeowners (who I believe only have to pay a $2 per $1000 rate, though it's possible the the condos are taxed at the apartment rate), should be taxed at an equivalent (but much lower IMO) rate.

But, honestly, I don't think that Maui county has a beef with timeshare owners. Rather I believe that they're ticked at the developers, who are reaping huge profits while the locals are suffering. Similar situation is happening on St. John.

I work for a large corporation and we work hard to maintain a positive standing in the community. We contribute millions of dollars to the arts, United Way, and local schools each year, in addition to the millions we contribute through earnings taxes. We donate millions of dollars of product to the troops, to flood, hurricane and fire victims. And we enjoy a stellar reputation in the community.

What has Starwood done for Maui? Maui's schools might have to chop 5 days off their school year because they can't afford to pay for teachers. How much could Starwood improve their reputation in Hawaii if they made a sizable donation to the school district? They made a fortune on those villas, and continue to make a fortune in management fees. Share the wealth, Starwood! It's the right thing to do AND it certainly couldn't hurt our cause when we go to appeal the assessment.

 

[rickandcindy23]

Maui did come down hard on those people who were renting their condos and were not collecting sales taxes. And Maui was making it difficult to get new permits for those who were doing it. This was when the huge increase in property taxes hit about 3 years ago.....

Hono Koa doesn't have nearly as high property taxes as the Westin, but the property is not comparable, by any stretch of the imagination.

 

[LisaRex]

Maui did come down hard on those people who were renting their condos and were not collecting sales taxes. And Maui was making it difficult to get new permits for those who were doing it. This was when the huge increase in property taxes hit about 3 years ago.....

But the sales tax would come from the renters, not from the owners, no? The owner would pay no sales tax if they used the unit themselves or it sat empty, and then they also enjoy subsidized rates on their property taxes at the expense of timeshare owners and hotels.

On the other hand, TSs are taxed on the "highest and best use" which means, I assume, that we're taxed as if the complex is 100% full and if they can command $800 a night for Christmas week, then they extrapolate that rate for the entire year. That's where the huge increase came in, I believe.



Do I have that right?

 

[Ken555]

On the other hand, TSs are taxed on the "highest and best use" which means, I assume, that we're taxed as if the complex is 100% full and if they can command $800 a night for Christmas week, then they extrapolate that rate for the entire year. That's where the huge increase came in, I believe.

Do I have that right?

I believe the nasty tax in question is based on sale price which Maui is now basing on the developer sale price of the unit, not the actual price you paid or the rental rate of the unit. If I understand this correctly, this really impacts reseller purchasers since they pay significantly less yet are now being forced to pay taxes as if they spent a fortune on the t/s. The assessed value of the property is inaccurate under this new interpretation, based on the little I understand to date.

 

[gangofthree]

HUGE MF increase

I just got my bill for my Sheraton Vistana Villages 2bd and it went from 978 to 1264 . I haven't received the bill for the 1 bd PGA and I'm worried! That is over 30%!!! I am beginning to see that it is much cheaper to just pay upfront wherever I want to go. I would walk away if I owed anything on them but I "own" them outright. It looks like they are going to punish the ones who stick it out until even we begin to wonder if it's worth it. Does anyone know if they buy back?