Maui Resort Property Tax increase significantly?

[Fredm]

I'm reading these posts and thinking it's just like home....I live in a seasonal resort area (Cape Cod) and our newspaper editorials are filled with comments like these by second home and seasonal condo owners. Yes, you do add to the economy, but...it is also expensive to have guests every week!! The summer visitors (here on the cape) use lots of services while they are here and we have a lot to do when you are not here, the same as Maui County. One of the largest expenses is road maintenance, there are lots of cars on our little roads that were never designed for the volume traveling over them. I won't detail all of the expenses, they are numerous. Another complaint is that our second home owners don't get to vote at town meeting because they are not residents, but no one gets 2 votes, one at home and one at vacation!! And the seasonal residents always think they pay more for less, after all they don't send their kids to OUR schools.

I don't like to pay more, but lets get real...these are tough times for everyone, if you aren't feeling it, then you are lucky.....if it costs a bit more for paradise, so be it. I don't live or work in the tourist economy here, but I am responsible to help make a Cape Cod vacation enjoyable for our visitors and I know the Hawaiian residents feel the same way. I sit in traffic for 12 weeks out of the year, I drive carefully so that the visitor in front of me or trying to enter the road, who is confused about what direction he's driving in doesn't have a head on collision with the bike riders or the walkers, or the kids going to the beach. People who live in vacation and resort areas do hundreds of kind and thoughtful gestures for the visitors that generally are not appreciated or noticed and that's the way it should be, you are here for vacation. I know my taxes will go up to fix the roads, maintain the bridges, keep the ponds clean, educate the children, care for the elderly and make this a wonderful place to visit or live. I'm willing to do it for my second home as well, and so far I am able to.

Maui is the best!! Aloha

This is not about who places more wear and tear on the infrastructure. By that measure it could be argued that vacation transients impact it the least.
Indeed, Maui County does not use that measure. It establishes the tax rate based on its definition of "highest and best use".

Unlike Cape Cod, Hawaii does not have a "seasonal" transient population. Although one does wonder what the shop keepers would do if the season burden of tourists were to disappear.
The literal economic underpinning of Maui County is tourism.
Also, unlike other tourists, timeshare owners not only pay property taxes, they already pay disproportionately high taxes when compared to other any other tax payers.

Maui is killing the goose that lays the golden eggs.
They do it because it is the most elastic source of tax revenue. Not because it fairly places the tax burden proportionately on those that consume services.

What this myopic action does do is weaken demand for timeshares in the real marketplace. In turn, it lowers resale values. Which, in turn will lower the "fair market value" of the underlying real estate being taxed. Of course, THAT shoe has yet to drop.

 

[Maui_ed]

Any WPORV owners get a similar letter?

I own at both WKORV-N and WPORV. So far, I have only received the letter for WKORV-N, not for WPORV.

 

[keepgoing]

It's just because someone need to continue to feed the ever hungry government.

I agreed with Fredm that whether tourism placed the most tear and wear into the infrastructure is debatable. Every town needs money to survive, whether it is industry, businesses or tourism. If none of those existed, property taxes of resident will be sky high and intrastructure would be worned down also by daily commute of people going out of town to work and back. Tourism is by far the best money generating machine. Would you rather to have factories w/ 18 wheelers, industrial pollutions etc... Nowaday with this economy, every town wants to get people to visit.

I lean towards Starwood would fight to keep the tax down by all means. 1) without the higher tax, Starwood have more room to increase the MF so they can pocket more. 2) Higher tax hurting resales because no one willing to pay $3K MF every year, same principle would apply to retail sale too.

This is just another example of government's greet and creativity on making more money. Just like other pointed out, TS is the best goose to kill to get the golden egg because this goose can't affect their electibility by the next election. They can get the credit of solving the town deficit without raising tax on local, isn't it great? Wait until they reach the threshold of this goose. True, it is a paradise, but there are always others alternatives. With the airfare added in, Maui may no longer offer the best package.

 

[DeniseM]

I own at both WKORV-N and WPORV. So far, I have only received the letter for WKORV-N, not for WPORV.

WPORV is not in Maui County.

 

[LisaRex]

Okay, I'm confused.

"As a result of this change, the 2009/2010 real property taxes for our resort will increase by approximately $5,170,204 (from 2008/2009 real property taxes of $1,218,266 to 2009/2010 real property taxes of $6,388,470).

http://www.mauirealestate.com/blog/2008/05/16/maui-property-tax-rates-fy-2009/

Given that timeshares are assessed at $14 per $1,000 of assessed value, and the property tax is 2010 is $6,388,470....then Maui is assessing WKORV-N at 45 BILLION dollars? Could that be right?

45,631,928,000 divided by 1,000 = 45,631,928.
45,631,928 x 14% = $6,388,470.

EDITED TO ADD: I just redid the math. I have now come to the figure of $456,429,285. I'm wondering if they are using the developer sales price to come up with this figure. If so, they need to include resales in their figures to make the dollar amount truly representative of what the condos are worth on the open market!

Holy mother of gawd. We're sitting on a goldmine!

 

[LisaRex]

OK, Maui County just juiced the tax rate on timeshares. What they did not do was adjust the second component of tax calculation, i.e., "Fair Market Value".

According to this article, the TS rate of $14 per $1,000 of assessed value was set back in '08.

http://www.mauirealestate.com/blog/2008/05/16/maui-property-tax-rates-fy-2009/

 

[Fredm]

According to this article, the TS rate of $14 per $1,000 of assessed value was set back in '08.

http://www.mauirealestate.com/blog/2008/05/16/maui-property-tax-rates-fy-2009/

Yep. It was decided in 08. for the 2009 tax year, which begins July1, 2009.

So, the reality just hit.

 

[thomasro3]

This is definitely disturbing.

Was this letter received in the mail or was this an email? I did not receive either yet so just curious what to expect. If paper letter - props to the original poster for typing all that in!

I got this by email. x4... Man this is going to hurt the budget in the years to come. Seriously at these prices and without the Starwood Headache... with hotel prices/deals right now, I could stay in a hotel room for a comparable price. Hopefully all the markets straighten out. Housing, Stocks and pertaining to this thread HOA Timeshare Maintenance fees.

 

[KECH]

re: fair market value

after I read the initial posting, the thought of fair market value did cross my mind and sure enough, more than one of you good people have mentioned it in this thread since. So, what about it? Seems to me that would be a very strong case for lowering the property taxes based on fair market value via ebay resales, etc. rather than developer purchase price. It would be ironic for Starwood to raise that point, being that they would be admitting a very steep depreciation of their TS properties. I'm wondering how strongly Starwood objected to this change and esp. whether or not they made this point (I doubt it). Another argument could be made that part of the developer purchase price builds in the ownership 'perks' and does not represent the value of the property itself ie. SPG membership, ability to exchange via StarOptions, ability to convert to StarPoints.

So what do you think? And if this has merit, what are the next steps and by who?

 

[DavidnRobin]

USVI is doing the same thing - Kauai will follow suit. We will be spending less money while out in these places - and eating in more.

 

[Darwin]

As a local township tax assessor (mainly land), your best avenue is to argue the Fair Market Value of the condo. Ask what comparision sales the tax department has used to arrive at this valuation (date of sale, unit size, week, etc). If the comparison sales are high or just from the developer to a new owner, point the tax department to sales that have closed on units with lower prices (ebay, etc.). You may have to challenge the assessment in court. I would think each owner could challenge their assessment to the Maui Real Property Tax Department. Not sure.

Darwin

 

[KECH]

As a local township tax assessor (mainly land), your best avenue is to argue the Fair Market Value of the condo. Ask what comparision sales the tax department has used to arrive at this valuation (date of sale, unit size, week, etc). If the comparison sales are high or just from the developer to a new owner, point the tax department to sales that have closed on units with lower prices (ebay, etc.). You may have to challenge the assessment in court. I would think each owner could challenge their assessment to the Maui Real Property Tax Department. Not sure.

Darwin

thanks for your thoughts, which is consistent with my earlier posting re: fair market value vs. tax based on developer prices. Not hearing too much from others here... is everyone feeling resigned to the fact that we'll have to pay more property taxes or just waiting it out to get more details and/or doing more research? I'm just feeling that we may be really getting bilked here but don't have the hard numbers to know for sure what they are basing the new taxes on (and frankly have not had too much time lately to dig on this). I've read some philosophical thoughts on re-investment of this money into roads, etc. and I don't disagree or am concerned with the USE of funds, but this is a more basic question on the valuation of property..

Anyone else have other thoughts on this?

 

[Darwin]

A few answers on web site

Web site = http://www.co.maui.hi.us/FAQ.aspx?TID=27 FAQs

6. Can I view my property’s information on the web?
Yes, you can view your property information at the Real Property website. Real Property Tax Website
13. How does the County determine my assessment? Using cost and market approaches to value, properties are assessed at 100% of fee simple market value using comparable fee simple sales during a specific period preceding the assessment year. The assessed value will reflect what your property is worth based on the sales at that specific time period.
14. Why a big increase in value from the previous year? The County determines value by using actual sales of comparable properties from specified time periods. If there is a big jump in the real estate market during that period, you may see a corresponding jump in the assessed value
19. You say the properties are assessed at market value. Why doesn’t the assessed value reflect today’s market? Why are current sales not used? The current assessment reflects the real estate market for a specified time period. As an example, for the 2008 assessment year, the sale period used is from July 1, 2006 to June 30, 2007. Any sales occurring after this time frame will be reflected in the following year’s assessment.

There is a lot of info. on their web site. I will check more in a few days.

Darwin

 

[LisaRex]

Trust me, I'm concerned. Certainly we should fight Maui county on this as it is unfair to tax us based on an unrealistically high figure. I know I bought my TS at 40% less than what Starwood was asking. To appraise the property based on developer rates is unfair because it doesn't represent reality, namely resales.

I am waiting to see if Marriott Maui owners get a similar letter. Because if Marriott can manage to absorb the increase in its normal MFs, which are slightly less than Starwoods, then I think we owners are going to have to make some hard decisions about what course of action to take. $300+ a night in MFs was too high already. $300 a night + a special assessment to cover property taxes that the HOA knew were going to skyrocket this year is a double slap in the face.

Many of us were sold on the notion that buying a TS meant that we paid a large amount of money upfront and that the remaining years we'd simply have to pay a nominal MF. "Pre-pay for fabulous vacations!" Starwood is trying to make money on BOTH ends. And it's unfair. A HOA should act part and parcel like a non-profit organization -- the fees should cover the necessary expenditures along with a modest reserve for emergencies. MFs should not be collected in order to pad exorbitant salaries and usurious management agreements with the developer.

In the case of taxes, Starwood is trying to talk out of both sides of its mouth. It was asking $90k for OF 2 bdrms, but then is acting surprised when Maui county taxed them on 90k x 52.

Once again, the fact that the HOA is comprised of Starwood-selected individuals and not homeowners who are looking out for our interests, is the major problem. And once that is solved, the rest will follow.

 

[Troopers]

LisaRex,

A. Marriott's Maui MF are slightly less that Starwood's Maui MF (I expect this to be the case as I think Westin's are nicer than Marriott's)

B. Marriott's HOA BOD are not developer controlled (not sure about this but I believe this to be case based on the other resorts)

Since A & B are true, I don't think there's much to gain with respect to MF savings if our HOA was independently controlled.

 

[LisaRex]

LisaRex,

A. Marriott's Maui MF are slightly less that Starwood's Maui MF (I expect this to be the case as I think Westin's are nicer than Marriott's)

B. Marriott's HOA BOD are not developer controlled (not sure about this but I believe this to be case based on the other resorts)

Since A & B are true, I don't think there's much to gain with respect to MF savings if our HOA was independently controlled.

It remains to be seen whether Marriott Maui's MFs will increase based on the new property tax schedule. It they manage to absorb the increase within their MFs, then that does say something.

 

[Troopers]

It remains to be seen whether Marriott Maui's MFs will increase based on the new property tax schedule. It they manage to absorb the increase within their MFs, then that does say something.

Agreed.

Ignore the new tax increases and look at the 2009 MFs...Starwood MF are NOT out of line but I keep reading about it here starting from this thread. I believe the issue is overstated.

 

[LisaRex]

Ignore the new tax increases and look at the 2009 MFs...Starwood MF are NOT out of line but I keep reading about it here starting from this thread. I believe the issue is overstated.

It's hard to know when the only thing you're given is a topline summary. It's hard to know when you're not even given a name to contact. When you veil yourself in secrecy, it's hard for me to not believe that there's a reason for the secrecy.

Operate openly; communicate freely; manage honestly -- it's not that hard.

BTW, part of the reason I am so skeptical of the SVO representation on the boards is due to the sky high refurbishment cost that folks at Sheraton Vistana were asked to pay for. This is in addition to their usual MFs. See below for a breakdown on the costs to refurbish a 1200 square foot villa. That is 60 x 20 feet or about 1/2 the size of the first floor of my home:

What is the breakdown of the cost per villa?
The refurbishment cost for each villa will be approximately $67,170.

Kitchen $289*
Cabinets/countertops - $13,575
Master bedroom/bathroom* – $8,004
Guest bedroom/bathroom* – $4,155
Dining room – $4,134
Living room – $12,040
Patio/balcony – $784
Tile flooring – $5,245
Paint – $4,018
Demolition/renovation - $7,859
Stairwell improvements – $2,500
Other/contingency – $9,023

* This estimate is for furniture, fixtures and equipment only. Reserves will be used to offset the refurbishment cost by $4,456 per villa.

***

Now, I ask you, who pays $4,000 to paint a 60 x 20 room? Or $8,000 to demolish the same? And how can they get away with putting 1/7 of the budget in an "other" category? I ask this in total seriousness. What kind of furniture are they putting in the dining room that costs $4,000, or the living room for $12,000 (because, of course, the paint, flooring, and demo are itemized separately!) For $12k, I'd better see "Henredon" stamped on it! And, for the love of all that is holy, has ANYONE heard of getting a contractor's discount?

My point, Trooper, is that someone made a huge amount of money off the Courts remodel. The Starwood controlled HOA allowed it to happen, which makes me believe that there was some sort of kickback. Even if there wasn't they were clearly not acting as responsible financial stewards. And that is not how an HOA is supposed to act.

When you accept stewardship of someone's money, you should spend their money as if it were your own. My HOA should spend MY money as if it were theirs. I don't trust them, and frankly, I have good reason not to trust them.

 

[Troopers]

It's hard to know when the only thing you're given is a topline summary. It's hard to know when you're not even given a name to contact. When you veil yourself in secrecy, it's hard for me to not believe that there's a reason for the secrecy.

Operate openly; communicate freely; manage honestly -- it's not that hard

I completely agree.

BTW, part of the reason I am so skeptical of the SVO representation on the boards is due to the sky high refurbishment cost that folks at Sheraton Vistana were asked to pay for. This is in addition to their usual MFs. See below for a breakdown on the costs to refurbish a 1200 square foot villa. That is 60 x 20 feet or about 1/2 the size of the first floor of my home:

What is the breakdown of the cost per villa?
The refurbishment cost for each villa will be approximately $67,170.

Kitchen $289*
Cabinets/countertops - $13,575
Master bedroom/bathroom* – $8,004
Guest bedroom/bathroom* – $4,155
Dining room – $4,134
Living room – $12,040
Patio/balcony – $784
Tile flooring – $5,245
Paint – $4,018
Demolition/renovation - $7,859
Stairwell improvements – $2,500
Other/contingency – $9,023

* This estimate is for furniture, fixtures and equipment only. Reserves will be used to offset the refurbishment cost by $4,456 per villa.

***

Now, I ask you, who pays $4,000 to paint a 60 x 20 room? Or $8,000 to demolish the same? And how can they get away with putting 1/7 of the budget in an "other" category? I ask this in total seriousness. What kind of furniture are they putting in the dining room that costs $4,000, or the living room for $12,000 (because, of course, the paint, flooring, and demo are itemized separately!) For $12k, I'd better see "Henredon" stamped on it! And, for the love of all that is holy, has ANYONE heard of getting a contractor's discount?

I can understand your skepticism. But, $56 per square feet ($67k for 1200 sf) doesn’t seem high at all. I’m never stayed there nor do I know Orlando costs so maybe $56 per foot is high…I’m not sure. Maybe the refurb cost per villa is higher than you might expect due to construction constraints, such as hours of work, or insurance requirements. As for the specific line items, perhaps SVO awarded the entire refurb job to the single low contractor where the overall costs were the lowest, rather than award multiple contracts to not have to manage the job. Btw and not that it matters, is the flooring in the dining room and living room included under Tile Flooring?

My point, Trooper, is that someone made a huge amount of money off the Courts remodel. The Starwood controlled HOA allowed it to happen, which makes me believe that there was some sort of kickback. Even if there wasn't they were clearly not acting as responsible financial stewards. And that is not how an HOA is supposed to act.

I’m suspicious that someone made a boatload of money, but I’m not certain. The SVV refurb seems reasonable but I’ll have to think about it more.

 

[gregb]

I believe the property tax is on tangible property. But isn't part of the purchase price for the services *wood provides when we stay there? If that is the case, than that part of the sales price should not be subject to property tax. Maybe *wood could approach the problem from that perspective?

 

[clsmit]

WKORV HOA is Has More Owners that SVO Employees

When I was at WKORV this June I went to a Board meeting. (go to note #8)http://www.tugbbs.com/forums/showthread.php?t=99809 . The board members at WKORV are owners who seem to have a clue and ask good questions (I think Starwood has 1 board member out of I think 5). But since, like all Boards, they have to go by what the management says, I don't know how much profit the companies who bid for the refurbishments made, but the bids were not all for the same amounts. The bid companies had to bid to certain specs for the furniture, drapes, etc., though.

They talked briefly about the status of the tax issue at this meeting even though it wasn't the primary topic. My take on it is that the timeshare lobbyists were doing what they could with the Maui government. Given the sometimes acrimonius relationship between the mainlanders and the longtimers/natives (and I don't know the makeup of the Maui government on this issue), however, it could be a lost cause. I don't recall if going to court over the issue was discussed, but it could potentially be an option. Or the timeshare owners could just be stuck with this tax if it looks like the litigation won't be worth it.

It would be nice if the HOA members were on this forum, even if the SVO people weren't. Something to think about if you happen to run into one at your local Starwood property or golf outing.

 

[Lawlar]

Salt

I hate to pour salt on your wounds, but I suspect Starwood will also add to your MF its costs for attorneys, accountants and lobbyists to fight the tax increase. Will your HOA require Starwood to pay those fees? I doubt it.

I take no pleasure in reading this thread. I'm sure Marriott will be passing on this same tax and related fees to those of us who bought at MOC.

I wonder if Marriott would give me a discount on the MF if I painted my unit the next time I stay there. I love to paint and it wouldn't take me long to paint the unit. I'll even buy the paint.

 

[Fredm]

I believe the property tax is on tangible property. But isn't part of the purchase price for the services *wood provides when we stay there? If that is the case, than that part of the sales price should not be subject to property tax. Maybe *wood could approach the problem from that perspective?

This is true in California. Assessed value is computed at 65% of the price. The other 35% is a standard for furnishings and services which are non-taxable.

 

[gregb]

I wonder how Maui County justifies the difference of $8.50 per $1000 for hotels, and $14 per $1000 for Time Shares, but only $4.55 per $1000 for apartments and $2.00 per $1000 for homeowners. I have heard justifications that transient visitors use more services than locals and so should pay more. But thinking about it, I cannot identify any county services that a TS visitor would use more than an apartment dweller. In fact, TS users don't use some services that apartment dwellers do, such as schools and social services. So how does the county justify the more than three times higher rate for TS over apartments?

And compare TS to hotel rates. Both service transient visitors. If one could find a justification that transient visitors cost the county more than locals residents, I would expect Hotels to have a higher tax rate than TS. I expect that hotels have a shorter average length of stay than a TS, so a hotel room would contribute more cost to the county than a TS unit. Does any of this make sense??

Greg

 

[LisaRex]

Here's what I've gathered as to why TSs have a bad reputation. They believe that the presence of TSs escalate the prices of local housing because of the inflated developer prices. They believe that because we have a fully equipped house (including kitchen & laundry) that we won't contribute to the local economy in the same way that hotel tourists do. And, of course, the relationship with tourism is always a love/hate relationship, in large part because developers don't know when to stop.