The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Finance and Tax
BILL: SB 886
INTRODUCER: Senator Gruters
SUBJECT: Valuation of Timeshare Units
DATE: February 7, 2024
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Oxamendi Imhof RI Favorable
2. Shuler Khan FT Favorable
3. AP
I. Summary:
SB 886 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.
Current law requires a property appraiser to first look to the resale market to make a valuation of
timeshare units. If there is an inadequate number of unit resales for arriving at the valuation, the
property appraiser must use the original purchase price of the timeshare and deduct “usual and
reasonable fees and costs of the sale,” which is presumed to be 50 percent of the original
purchase price.
The bill provides that the proposed 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 at value conclusions.
The Revenue Estimating Conference (REC) determined that the bill will reduce local
government property tax revenue by at least $171.5 million beginning in Fiscal Year 2024-2025.
See Section V., Fiscal Impact Statement.
The bill takes effect July 1, 2024.
REVISED: BILL: SB 886 Page 2
II. Present Situation:
Timeshares
A timeshare interest is a form of ownership of real and personal property.
1
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.
2
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.
3
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.
4
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.
5
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.
6
The
term also includes an interest in a condominium unit, a cooperative unit, or a trust. The term
includes both direct and indirect interests in trusts. An example of an indirect interest in a trust is
the interest of a trust beneficiary’s spouse or other dependent.
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 requires that the managing entity be the
developer, a separate manager or management firm, or an owners' association.
7
Tax Assessments
Section 192.037, F.S., governs the ad valorem taxation of fee timeshare real property.
8
The
managing entity responsible for operating and maintaining fee timeshare real property is
considered the taxpayer as an agent of the timeshare period titleholder.
9
1
See s. 721.05(36), F.S.
2
See s. 721.05(39), F.S.
3
Section 721.02(2) and (3), F.S.
4
Section 721.03, F.S.
5
Sections 721.05(41) and 718.103(28), F.S.
6
Section 721.05(34), F.S.
7
See also s. 721.05(22), F.S., defining the term “managing entity.”
8
Section 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.”
9
Section 192.037(1), F.S. Section 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. BILL: SB 886 Page 3
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.
10
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.
11
To determine the value of timeshare property, a property appraiser must first look to the resale
market.
12
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.
13
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.
14
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.
15
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 specified in that section,
including providing that no assessment may exceed just value.
III. 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. The taxpayer must provide a reasonable number of resales as would be supported by the
Uniform Standards of Professional Appraisal Practice
16
at such time the assertion is made.
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,
10
Section 192.037(4), F.S.
11
Section 192.037(5), F.S.
12
Section 192.037(10), F.S.
13
Section 192.037(11), F.S.
14
Id.
15
Id.
16
The Uniform Standards of Professional Appraisal Practice provides ethical and performance standards for the appraisal
profession in the United States. See The Appraisal Foundation, What is UPAP?,
https://www.appraisalfoundation.org/imis/TAF/Standards/Appraisal_Standards/Uniform_Standards_of_Professional_Apprais
al_Practice/TAF/USPAP.aspx (last visited Feb. 3, 2024). BILL: SB 886 Page 4
under the bill, the taxpayer may submit the known and controlling resales of the properties sold
to assist in arriving at value conclusions.
The bill is effective July 1, 2024.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Section 18(b), Article VII, of the State Constitution provides that except upon the
approval of each house of the Legislature by a two-thirds vote of the membership, the
Legislature may not enact, amend, or repeal any general law if the anticipated effect of
doing so would be to reduce the authority that cities or counties have to raise revenue in
the aggregate, as such authority existed on February 1, 1989. However, the mandate
requirement does not apply to laws having an insignificant impact.
17
The Revenue Estimating Conference (REC) determined that the bill will reduce the
authority local governments have to raise revenue through local property tax by $171.5
million beginning in Fiscal Year 2024-2025.
18
Therefore, this bill may be a mandate
subject to the requirements of s. 18(b), Art. VII, of the State Constitution.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
This bill does not create or raise state taxes or fees. Therefore, the requirements of Art.
VII, s. 19 of the State Constitution do not apply.
E. Other Constitutional Issues:
None identified.
17
FLA. CONST. art. VII, s. 18(d). An insignificant fiscal impact is the amount not greater than the average statewide
population for the applicable fiscal year multiplied by $0.10. See Florida Senate Committee on Community Affairs, Interim
Report 2012-115: Insignificant Impact, (September 2011), available at
http://www.flsenate.gov/PublishedContent/Session/2012/InterimReports/2012-115ca.pdf (last visited Feb. 3, 2024).
18
Based on the Demographic Estimating Conference’s revenue estimating conference for HB 471 and SB 886 adopted on
Dec. 1, 2023. The conference packet is available at
http://edr.state.fl.us/Content/conferences/revenueimpact/archives/2024/_pdf/impact1201.pdf (last visited Feb. 3, 2024). BILL: SB 886 Page 5
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
The Revenue Estimating Conference determined that the bill will reduce local
government revenue by $171.5 million beginning in Fiscal Year 2024-2025.
The REC noted that the Uniform Standards of Professional Appraisal Practice provides
minimal guidance regarding the adequate number of timeshare property resales.
19
B. Private Sector Impact:
Persons having an interest in a timeshare unit or timeshare period may benefit from a
reduction in assessed ad valorem taxes.
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
None.
VII. Related Issues:
Appeals of property appraisers’ valuation of timeshare properties highlight that the timeshare
resale market may not be sufficiently robust to use as the basis of an appraisal for ad valorem
valuation.
20
The properties in Grande Vista, Cypress Palms, and Star Island, were all found by the property
appraiser to have a resale market that was insufficient to produce an adequate number of resales
for valuation purposes. For example, in Grande Vista, the property appraiser’s representative
testified on a retrospective analysis performed of the property that, “66.7 percent of the 2017
owner-to-owner resales of unit weeks … transacted for documentary stamps of $100, which
reflect a transfer of ownership for no consideration.”
21
In addition, the volume of developer
sales, in terms of dollars transacted, made up 91.4 percent of the market.
22
Consequently, the property appraisers deducted from the original purchase price the usual and
reasonable fees and costs of the sale. The property appraisers prevailed in all three appeals.
19
Id at 32.
20
See Grande Vista of Orlando Condo. Ass’n, Inc., v. Singh, No. 2018-CA-013570-O (Fla. 9th Cir. 2023) (on file with the
Senate Committee on Finance and Tax); Cypress Palms Condo. Ass’n, Inc. v. Scarborough, No. 2012-CA-1293-OC (Fla. 9th
Cir. 2016) (on file with the Senate Committee on Finance and Tax); and Star Island Vacation Ownership Ass’n, Inc. v.
Scarborough, No. 2016-CA-1006-OC (Fla. 9th Cir. 2019), aff’d per curiam 2021 WL 646806 (Fla. 5th DCA) (on file with
the Senate Committee on Finance and Tax).
21
See Grande Vista (Fla. 9th Cir. 2023), at 17.
22
Id. at 18. BILL: SB 886 Page 6
The resale valuation and the original purchase price valuation may produce significantly
different results. In these court cases, the resale price valuation method resulted in values that
were between 75 percent and 40 percent lower than the purchase price method.
23
The Department of Revenue’s bill analysis indicates that the statement, “[t]his methodology
meets the requirement of just valuation of all real estate located in this state, including timeshare
units, as recognized by and provided in s. 4, Art. VII of the State Constitution,” could create
“very significant difficulties in [tax] administration because it appears to reverse and/or
potentially contradict the just value requirements outlined in s. 194.301 F.S.”
24
VIII. Statutes Affected:
This bill substantially amends section 192.037 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.
23
See Grande Vista, (Fla. 9th Cir. 2023), Cypress Palms, (Fla. 9th Cir. 2016), and Star Island, (Fla. 9th Cir. 2019).
24
Department of Revenue, 2024 Agency Legislative Bill Analysis of SB 886, Feb. 23, 2024 (on file with the Senate
Committee on Finance and Tax).