This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0471a.WMC
DATE: 1/31/2024
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 471 Valuation of Timeshare Units
SPONSOR(S): Fine
TIED BILLS: IDEN./SIM. BILLS: SB 886
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Ways & Means Committee 18 Y, 4 N Berg Aldridge
2) Commerce Committee
SUMMARY ANALYSIS
Under Florida law, a property appraiser must first look to the resale market to value timeshare property. If the
property appraiser determines that there is an inadequate number of resales to provide a basis for determining
value, the property appraiser must use the original purchase price of the timeshare and then deduct “usual and
reasonable fees and costs of the sale” to determine value.
The bill provides that, upon an appeal of a property appraiser’s valuation of timeshare units that are part of a
timeshare development with more than 300 timeshare units, the number of resales is deemed to be adequate if
the taxpayer provides a reasonable number of resales as supported by the most recent standards adopted by
the Uniform Standards of Professional Appraisal Practice.
The bill provides that this method meets the requirement of just valuation of all property, including timeshare
units, as required under s. 4, Art. VII of the State Constitution. Additionally, under the bill, the taxpayer may
submit the known and controlling resales of the properties sold to assist in arriving as value conclusions.
The bill does not have an effect on state government revenues or expenditures. However, the Revenue
Estimating Conference estimates that the bill would have a recurring negative impact on local government
property tax revenues of $171.5 million ($65.6 million school taxes; $105.9 million non-school taxes), beginning
in FY 2024-25.
The bill is effective July 1, 2024.
This bill may be a county or municipality mandate requiring a two-thirds vote of the membership of the
House. See Section III.A.1 of the analysis.
STORAGE NAME: h0471a.WMC PAGE: 2
DATE: 1/31/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Property Taxes in Florida
The Florida Constitution reserves ad valorem taxation to local governments and prohibits the state from
levying ad valorem taxes on real and tangible personal property.
1
The ad valorem tax is an annual tax
levied by counties, municipalities, school districts, and some special districts based on the value of real
and tangible personal property as of January 1 of each year.
2
The Florida Constitution requires that all
property be assessed at just value for ad valorem tax purposes,
3
and it provides for specified
assessment limitations, property classifications, and exemptions.
4
After the property appraiser
considers any assessment limitation or use classification affecting the just value of a property, an
assessed value is produced. The assessed value is then reduced by any exemptions to produce the
taxable value.
5
Timeshares
A timeshare interest is a form of ownership of real and personal property.
6
In a timeshare, multiple
parties hold the right to use a condominium unit or a cooperative unit. Each owner of a timeshare
interest is allotted a period of time during which the owner has the exclusive right to use the property.
The Florida Vacation Plan and Timesharing Act, ch. 721, F.S., establishes requirements for the
creation, sale, exchange, promotion, and operation of timeshare plans, including requirements for full
and fair disclosure to purchasers and prospective purchasers.
7
Chapter 721, F.S., applies to all
timeshare plans consisting of more than seven timeshare periods over a period of at least three years
in which the accommodations and facilities are located within this state or offered within this state.
8
Part
I of ch. 721, F.S., relates to vacation plans and timesharing, and Part II of chapter 721, F.S., relates to
multisite vacation and timeshare plans that are also known as vacation clubs.
A timeshare unit is an accommodation of a timeshare plan which is divided into timeshare periods or a
condominium unit in which timeshare estates have been created.
9
A “timeshare estate” is a right to occupy a timeshare unit, coupled with a freehold estate or an estate
for years with a future interest in a timeshare property or a specified portion thereof.
10
The term also
includes an interest in a condominium unit, a cooperative unit, or a trust. Whether the term includes
both direct and indirect interests in trusts is not specified. An example of an indirect interest in a trust is
the interest of a trust beneficiary’s spouse or other dependent.
1
Art. VII, s. 1(a), Fla. Const.
2
S. 192.001(12), F.S., defines “real property” as land, buildings, fixtures, and all other improvements to land. The terms “land,” “real
estate,” “realty,” and “real property” may be used interchangeably. S. 192.001(11)(d), F.S., defines “tangible personal property” as all
goods, chattels, and other articles of value (but does not include the vehicular items enumerated in Art. VII, s. 1(b), Fla. Const., and
elsewhere defined) capable of manual possession and whose chief value is intrinsic to the article itself.
3
Art. VII, s. 4, Fla. Const.
4
Art. VII, ss. 3, 4, and 6, Fla. Const.
5
S. 196.031, F.S.
6
See s. 721.05(36), F.S.
7
S. 721.02(2) and (3), F.S.
8
S. 721.03, F.S.
9
See ss. 721.05(41) and 718.103(26), F.S.
10
S. 721.05(34), F.S. STORAGE NAME: h0471a.WMC PAGE: 3
DATE: 1/31/2024
The “managing entity” for a timeshare property is the person who operates or maintains the timeshare
plan pursuant to s. 721.13(1), F.S., which defines the managing entity as either the developer, a
separate manager or management firm, or an owners' association.
11
Tax Assessments
Section 192.037, F.S., governs the ad valorem taxation of fee timeshare real property.
12
The managing
entity responsible for operating and maintaining fee timeshare real property is considered the taxpayer
as an agent of the timeshare period titleholder.
13
The managing entity responsible for operating and maintaining the timesharing plan and each person
having a fee interest in a timeshare unit or timeshare period may contest or appeal an ad valorem tax
assessment in the same manner as other property owners under ch. 194, F.S., which relates to the
administrative and judicial review of property taxes assessed by the property appraiser.
14
The managing entity is required to collect and remit the taxes and special assessments due on fee
timeshare real property. In allocating taxes, special assessments, and common expenses to individual
timeshare period titleholders, the managing entity must clearly label the portion of any amounts due
which are attributable to ad valorem taxes and special assessments.
15
A property appraiser must first look to the resale market for determining the value of timeshare
property.
16
In order for resales to meet the definition of “fair market” value, those resales must
constitute arms-length transactions.
17
If the property appraiser finds an inadequate number of resales
exists for such a determination, the property appraiser must determine the value by deducting the
“usual and reasonable fees and costs of the sale” from the original purchase price.
18
The term “usual and reasonable fees and costs of the sale” for timeshare real property includes all
marketing costs, atypical financing costs, and those costs attributable to the right of a timeshare unit
owner or user to participate in an exchange network of resorts.
19
For timeshare real property, the “usual
and reasonable fees and costs of the sale” is presumed to be 50 percent of the original purchase price,
but that presumption is rebuttable.
20
Section 4, Art. VII of the State Constitution requires regulations for securing a just valuation of all
property to be prescribed by general law subject to the conditions in this section, including providing
that no assessment may exceed just value.
Litigation
The valuation of timeshare properties has been the subject of recent litigation and is the subject of
ongoing litigation.
21
In Star Island Vacation Ownership Ass'n v. Scarborough, 313 So. 3d 1168 (Fla.
Dist. Ct. App. 2021), the Fifth District Court of Appeals per curium affirmed the ruling of the circuit court
11
See s. 721.02(22), F.S., defining the term “managing entity.”
12
S. 192.001(14), F.S., defines the term “fee timeshare real property” to mean “the land and buildings and other improvements to land
that are subject to timeshare interests which are sold as a fee interest in real property.”
13
S. 192.001(15), F.S., defines the term “timeshare period titleholder” to mean “the purchaser of a timeshare period sold as a fee
interest in real property, whether organized under ch. 718, F.S., relating to condominium associations, or ch. 721, F.S, relating to
timeshares and vacation plans.
14
S. 192.037(4), F.S.
15
S. 192.037(5), F.S.
16
S. 192.037(10), F.S.
17
Star Island v. Scarborough, case no. 2016-CA-1006-OC, 9th Cir. Ct. Fla. 2019.
18
S. 192.037(11), F.S.
19
S. 192.037(11), F.S.
20
S. 192.037(11), F.S.
21
See, e.g., the following pending cases from 9
th
Cir. Ct. Fla.: Grande Vista vs. Rick Singh, case no. 2018-CA-013570-O, Isle of Bali II
Condominium Association vs. Amy Mercado, case no. 2021-CA-006130-O, Sabal Palms Condominium Association vs. Rick Singh,
case no. 2019-CA-015110-O, and Cypress Pointe Resort vs. Amy Mercado, case no. 2021-CA-006108-O. STORAGE NAME: h0471a.WMC PAGE: 4
DATE: 1/31/2024
that the resale market of timeshares does not provide a sufficient basis for obtaining reliable resale
data.
22
In Star Island, the Property Appraiser presented evidence that during the year at issue (2014), out of
approximately 25,000 total sales of timeshares, only 3,790 were classified as resales.
23
Of those
resales, approximately 90% were transacted for nominal amounts which removed them from
consideration for valuation purposes.
24
The Property Appraiser also presented evidence that the
exceedingly large number of resales at nominal amounts reflected significant financial distress in the
overall market.
25
The remaining number of resales constituted less than 1.7% of the total timeshare
sales market each year.
26
When evaluating the sales from the viewpoint of total sales consideration, the
resale market constituted less than 1% of the total sales of timeshares.
27
While there were hundreds of developer sales each year that clearly qualified as arms-length
transactions reflective of just value, the resales showed no consistent trend in pricing, and, accordingly,
the court agreed with the Property Appraiser that there were not a sufficient number (only 4 resales
potentially qualified as arms-length transactions) to support an accurate, credible, and reliable value
conclusion.
28
In sum, the court concluded that the resale market does not provide a sufficient basis for
obtaining reliable sales data.
29
Effect of Proposed Changes
The bill amends s. 192.037, F.S., to require the property appraiser to defer to the taxpayer for the
determination of whether the number of resales is adequate if, on appeal of the tax assessment for a
timeshare unit that is part of a timeshare development with more than 300 timeshare units, the taxpayer
asserts that there is an adequate number of resales to provide a basis for arriving at a value and
provides a reasonable number of resales as would be supported by the Uniform Standards of
Professional Appraisal Practice.
30
The bill further provides that this method meets the requirement of just valuation of all property, as
provided in s. 4, Art. VII of the State Constitution. Additionally, under the bill, the taxpayer may submit
known and controlling resales of the properties sold to assist in arriving at value conclusions.
The bill is effective July 1, 2024.
B. SECTION DIRECTORY:
Section 1: Amends s. 192.037, F.S., relating to fee timeshare real property; taxes and
assessments; escrow.
Section 2: Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
22
Star Island v. Scarborough, case no. 2016-CA-1006-OC, 9th Cir. Ct. Fla. 2019.
23
Id.
24
Id.
25
Id.
26
Id.
27
Id.
28
Id.
29
Id.
30
Adopted by Congress in 1989, the Uniform Standards of Professional Appraisal Practice are the generally recognized ethical and
performance standards for the appraisal profession in the United States. See The Appraisal Foundation, What is UPAP?, available at:
https://www.appraisalfoundation.org/imis/TAF/Standards/Appraisal_Standards/Uniform_Standards_of_Professional_Appraisal%20Pract
ice/TAF/USPAP.aspx (last visited January 24, 2024). STORAGE NAME: h0471a.WMC PAGE: 5
DATE: 1/31/2024
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
The Revenue Estimating Conference estimates that the bill would have a recurring negative impact
on local government property tax revenues of $171.5 million ($65.6 million school taxes; $105.9
million non-school taxes), beginning in FY 2024-25.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Individuals and businesses having an interest in a timeshare unit or timeshare period may benefit from
a reduction in assessed ad valorem taxes.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
The county/municipality mandates provision of Art. VII, section 18, of the Florida Constitution may
apply because this bill may reduce the authority of cities and counties to raise total aggregate
revenues. This bill does not appear to qualify under any exemption or exception. If the bill does
qualify as a mandate, final passage must be approved by two-thirds of the membership of each
house of the Legislature.
2. Other:
The bill provides that the valuation methodology provided for in the bill meets the requirement of
just valuation of all property, as provided in s. 4, Art. VII of the State Constitution. The authority to
make this determination vests with the judicial branch of state government.
31
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
The Department of Revenue noted in its agency analysis that the “statutory amendment [providing for
assessment at less that just value] could create very significant difficulties in administration because it
appears to reverse and/or potentially contradict the just value requirements outlined in s. 194.301,
F.S.”
32
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
31
See Art. V, s. 1., and Art. III, s. 3., Fla. Const.
32
Department of Revenue, 2024 Agency Legislative Bill Analysis of HB 471 (on file with the Ways & Means Committee).