Maui Resort Property Tax increase significantly?

[Fredm]

On a related note, I just recalled that Riverside County lowered assessment values on WMH in the last year. Quite a difference between their actions and those on Maui.

Right you are!

"Market Value" is not an abstract term. It has a precise meaning that can be quantified (within reasonable bounds).
The difference between Riverside and Maui Counties is that Riverside is in California, where a taxpayer revolt resulted in Proposition 13. That's why property taxes a billed separately in California. The assessed valuation is based on the amount paid at sale. In the interest of economy it is handled somewhat differently for timeshares, but nonetheless addressed.

Maui is exhibiting the very worst in taxing authority abuse.They want the money, and manufacture a rationale based on nothing honestly arguable to get it. All on the backs of those who do not vote in the jurisdiction. Although not as dramatic as taxing one out of their home, its the very same thing. There are those who cannot afford it simply because they are being taxed beyond their limit to pay an unjust tax. So, HOA fees become delinquent, and use is lost. Further, the delinquency is bad for every owner, compounding the matter.

Meanwhile, full time residents have their property tax heavily subsidized. Something is very twisted with approach to local governance.

Having traveled to Hawaii for the past 45 years I understand the issues of Polynesian cultural preservation, native economic sustainability, and grandfathered land rights. But this reaches far beyond what was originally intended. This is pure politics which is damaging the underpinning of the entire economy. Everyone loses in the long run.

Shame on them!

 

[Fredm]

...

Is there a way for Owners to challenge their appraised amount - and not base it on the 'paper' amount that WKORV claims which is much more than the actual value.

The premise of the tax can formally be appealed.
However, the only way for it to be effective is for all timeshare resorts to file a joint appeal. It effects all resorts.

What is troubling is that the KOR and KORN boards have allocated HOA funds to address the matter independently for the moment. That is a waste of time and money. Every resort must kick in and file an appeal that challenges the staff "findings" made to justify it.

 

[Icarus]

Mauians seem to loathe TS owners even as they enjoy the benefits of the tourism dollars we consistently bring to their area.

Nah .. it's just you and Denise. lol. I've seen the secret documents. You should not have taken that lava rock home with you.

ok, I'll go back to the lounge now.

-David

 

[DeniseM]

Nah .. it's just you and Denise. lol. I've seen the secret documents. You should not have taken that lava rock home with you.

ok, I'll go back to the lounge now.

-David

Icky - I'm crushed! But I do have that little tiny lava chip! :rofl:

Oh yeah, and then there's the beach glass, and the granite from the Hindu Temple, and the beach towel I took from the HHV in 1977...oh dear...

 

[LisaRex]

Nah .. it's just you and Denise. lol. I've seen the secret documents. You should not have taken that lava rock home with you.

That wasn't lava; it was charcoal. I swear!

 

[Troopers]

Update:

I was browsing through the Tax Board site and stumble on this. This is the most recent agenda archive...it appears Marriott is appealing their 2008 assessment. I was unable to find any appeals by Starwood.

 

[Fredm]

Update:

I was browsing through the Tax Board site and stumble on this. This is the most recent agenda archive...it appears Marriott is appealing their 2008 assessment. I was unable to find any appeals by Starwood.

I don't get it. Why are the Maui resorts not banding together on this? It affects all of them.

 

[LisaRex]

I don't get it. Why are the Maui resorts not banding together on this? It affects all of them.

All Maui TSs are affected by the 14% tax rate, but the "highest and best use" component only really affects the Marriott and Westin, because only they were selling tons of units at those crazy 2007 sales prices. It's hard for them to argue with a straight face that the units aren't REALLY worth $5m apiece when they were listing them, and presumably selling them, for $90m per week.

As time goes by and more units change hands at resale prices, an appeal SHOULD work. If Starwood would drop their purchase price, as Marriott has done, then it would certainly help our cause.

 

[Fredm]

All Maui TSs are affected by the 14% tax rate, but the "highest and best use" component only really affects the Marriott and Westin, because only they were selling tons of units at those crazy 2007 sales prices. It's hard for them to argue with a straight face that the units aren't REALLY worth $5m apiece when they were listing them, and presumably selling them, for $90m per week.

As time goes by and more units change hands at resale prices, an appeal SHOULD work. If Starwood would drop their purchase price, as Marriott has done, then it would certainly help our cause.

Lisa.

Its the entire tax calc formula. It's easy to get wrapped up in the details. But, no way, no how, should a 1400 sf condo carry a $25,000/yr. property tax, plus an additional 3-4k TOT.

The sale price only matters if it were a level playing field. Then, Maui would still be receiving a disproportionate tax over a residential payer.

For example, California is ecstatic because timeshare property tax is calculated on the interval sale price x 52 weeks. It results in a far higher valuation than the same condo that is single owner based. But, all are computed from the same tax rate. 1%, plus a few special districts that add up to another 0.25%.

Maui has chosen to apply a tax rate at 700% above a residential unit, THEN compute it at a property valuation that has no rational relationship to its unit value.
Your view of it is how it was. This change doubled an already outrageous tax.

This is not a Starwood manufactured problem. It is a mistake to frame it as such, IMO. Marriott is discounting prices to move inventory. Not to mitigate taxes. Starwood has no inventory to move. Marriott has lots of it, worldwide.

This tax is not simply unjust, its criminal. The only way to reverse it is to challenge it. First, by appeal, which probably won't work. Then in the courts, which might.
This is why all Maui resorts have to challenge it together. It affects all of them on the same basis.

 

[LisaRex]

This is not a Starwood manufactured problem. It is a mistake to frame it as such, IMO. Marriott is discounting prices to move inventory. Not to mitigate taxes. Starwood has no inventory to move. Marriott has lots of it, worldwide.

I've never believed, or said, that the high property taxes were a Starwood manufactured problem. In this instance, Starwood is blameless.

If the "highest and best" use isn't based on the "highest and best" sales price of the units, then what is it based on? Because if it is somehow based on actual sales price, then discounting the price (as Marriott has done) would ultimately lead to lower property taxes.

And, no, I don't believe Marriott discounted the prices in order to mitigate taxes. They discounted the price in order to move more product. But by lowering the prices, it will mitigate taxes, unless I don't understand what "highest and best" means.

 

[Fredm]

I've never believed, or said, that the high property taxes were a Starwood manufactured problem. In this instance, Starwood is blameless.

If the "highest and best" use isn't based on the "highest and best" sales price of the units, then what is it based on? Because if it is somehow based on actual sales price, then discounting the price (as Marriott has done) would ultimately lead to lower property taxes.

And, no, I don't believe Marriott discounted the prices in order to mitigate taxes. They discounted the price in order to move more product. But by lowering the prices, it will mitigate taxes, unless I don't understand what "highest and best" means.

Lisa:

From the Maui tax assessor:

"Timeshare properties are assessed using the same methodology
as the hotel properties (cost of replacement less depreciation).
Interval sales are not considered in determining the market value
for the timeshare properties."


The tax assessor goes on to say (although it makes no sense whatsoever)

"resort condominiums are assessed based on its per unit market
value. Resort condominiums tend to have more current sales
activities, therefore, it is easier to assess the market value of
resort condominium properties.

Hotel properties do not have as frequent of sales activities as
individual condominium units, therefore the cost of replacement
less depreciation for the hotel properties are taken into
consideration when assessing hotel properties for tax purposes."

So, they are using current developer sale prices, to establish replacement cost. But, hotel replacement costs only include land acquisition and construction. If that was the basis for real replacement costs applied to timeshares, the real number would be about 1/3 of the basis being used.

So, a real contradiction. Replacement cost is inflated by ~200%.
Then, the $14 per 1k is the multiplier. Which is nothing less than what is needed for the tax coffers.

They must either use real market price to determine "fair market value", or, real replacement cost. Not the contrived application of 1 from column A and 1 from column B, and a multiplier that relates to neither.

Bottom line is that the tax method is bogus. I am not a property tax attorney, but I do not believe it could be defended it in a court of law. There is no legitimate basis for it that is consistent with other property valuation or tax rate methodology.

This is one of those situations where the elected officials need to find money, and give marching orders to staff to develop a "finding" that supports a defined end result. So the salaried staff pastes a rationale together to give credence to the action.
Unfortunately, it happens way too often.

Of course, it is very convenient that they apply the tax to those who do not vote in the jurisdiction.

 

[thinze3]

Look WHO is most delinquent on their taxes (by dollar amount). It's not Starwood.

 

[Troopers]

Look WHO is most delinquent on their taxes (by dollar amount). It's not Starwood.

I saw that too when I was looking around. Of course, one has to google them to find out which property it is.

 

[taffy19]

I didn't see Marriott either but Diamond Resorts has the highest delinquency but is this all by one owner? Our other resort went through this process some time ago but I wonder how much our taxes will go up at the Marriott?

If the Marriott owners, at the two new towers, have to pay the suggested percentage, we will be hit very hard. Unbelievable.

Marriott needs to fight this hard but they cannot do it alone. Some of these developers will have to ban together or they can kiss their development goodbye for additional sales. ARDA should help them too because they are more for the developers' benefit than ours. They should have some cloud. JMHO.

 

[Troopers]

Update:

No Starwood (or Marriott) appeals heard in yesterday's hearing, Oct 21, 2009. Hearing agenda is here. All appeals are FY 2008, not FY 2009 appeals.

Next hearing is Nov 4, 2009. I'll keep everyone posted.

 

[LisaRex]

http://www.tugbbs.com/forums/showthread.php?t=108943

Kauai Kid reports that there are no increases in maintenance fees for 2010 at the Maui Schooner. And they're offering a 3% cash discount if paid by Jan 1.

2 BR every year AOAO 544.77 or 528.43 with disc
2 br every year ROA 504.54 or 489.40 with disc
Total AOAO+ROA=1049.31 OR 1017.83

If energy costs are up so much, how can other properties on Maui manage to stabilize their MFs?

 

[Fredm]

http://www.tugbbs.com/forums/showthread.php?t=108943

Kauai Kid reports that there are no increases in maintenance fees for 2010 at the Maui Schooner. And they're offering a 3% cash discount if paid by Jan 1.

2 BR every year AOAO 544.77 or 528.43 with disc
2 br every year ROA 504.54 or 489.40 with disc
Total AOAO+ROA=1049.31 OR 1017.83

If energy costs are up so much, how can other properties on Maui manage to stabilize their MFs?

Owners control the resort.
Trading Places (TPI) is the OM.

Owner newsletters are very revealing.

Money is treated as it should. It belongs to the owners.
Examples:

- Balances are swept daily into an interest bearing money market account.

- Occasional foreclosures are offered to owners at deep discount.
The discounted sale proceeds are then deposited into the HOA general funds account. So despite non-performing shares, the HOA fund actually realizes a net benefit from foreclosures.

- Rentals of vacant inventory is managed by the OM for a commission. The balance belongs to to the HOA.

- A concerted effort is made to operate within budget. So, to offset what they say have been 20-40% annual electric rate increases, services and in-room amenities are cut in a timely way. So, occupants pay for them. Kind of a small use tax, which makes sense to me when navigating tight budgets.

Maui Schooner owners just want affordable value. They get it by having complete control.

The price of branding is lack of control. I suspect that most Starwood owners would find the trade off unappealing. Unfortunately, it is not possible to have the best of both.

 

[DanCali]

http://www.tugbbs.com/forums/showthread.php?t=108943

Kauai Kid reports that there are no increases in maintenance fees for 2010 at the Maui Schooner. And they're offering a 3% cash discount if paid by Jan 1.

2 BR every year AOAO 544.77 or 528.43 with disc
2 br every year ROA 504.54 or 489.40 with disc
Total AOAO+ROA=1049.31 OR 1017.83

If energy costs are up so much, how can other properties on Maui manage to stabilize their MFs?

So even with the tax increase they were able to holds MFs constant? That's what I call looking after the owners!

 

[Fredm]

So even with the tax increase they were able to holds MFs constant? That's what I call looking after the owners!

One of the owner newsletters mentions that they were successful in having 2008 taxes reduced via lower assessed valuation.

 

[LisaRex]

Acc to the Hawaii boards, the Kaanapali Beach Club MFs increased $100 this year.

Waiting to see what Marriott does. I'm sure Starwood is waiting, too.

 

[LisaRex]

Marriott has come out with their Maui MFs. Even the new towers are roughly what Starwood charged in 2009. Starwood, are you watching?

Molokai, Lanai & Maui Towers
1Bdrm $1538.81
2Bdrm $1692.70

Lahaina & Napili Towers
2Bdrm $1896.49
3Bdrm $2275.79

 

[Fredm]

Marriott has come out with their Maui MFs. Even the new towers are roughly what Starwood charged in 2009. Starwood, are you watching?

Molokai, Lanai & Maui Towers
1Bdrm $1538.81
2Bdrm $1692.70

Lahaina & Napili Towers
2Bdrm $1896.49
3Bdrm $2275.79

That's about a $78 increase over 2009.
Considering the tax bite is over $200, looks like a reduction in base fees.

 

[gregb]

At MSC my WKORVN currently shows an estimated MF of slightly less than the 2009 MF. (Don't have the exact figure here right now, but checked yesterday.) But that is estimated. Not sure how often they come in at the estimate.

 

[DeniseM]

At MSC my WKORVN currently shows an estimated MF of slightly less than the 2009 MF. (Don't have the exact figure here right now, but checked yesterday.) But that is estimated. Not sure how often they come in at the estimate.

Greg - In the past, the estimate has been completely different than the actual MF - I wouldn't put any faith in it at all.

 

[YYJMSP]

WKORV MF online at MSC

Our account on MSC is showing 2010 MF for WKORV now -- a 25% increase from last year.

Our entry for WKORVN is still showing a projected MF (i.e. the same as last year)