WDW wins real estate tax law suite

[MR.Dis]

After years of Disney's on going law suites that the real estate taxes on there resorts were illegally inflated, a judge has confirmed that Disney is entitled to refund for 2015 and 2016 real estate taxes on the Yacht and Beach clubs. The amount has not yet been announced on the rebate, but a school board rep estimates that if all the properties are to likely be found over taxed the total owed Disney could be as much as 80 million. This goes back to an over zealous tax assessor named Singh who used a formula that is not common to Florida, but used in other states. He was repeatedly warned that his taxes would not hold up in Florida courts, but ignored the warnings. Now the School districts will be in a real bind trying to find a way to pay back Disney.

 

[nickys]

What do school districts have to do with this and why do they owe Disney money? I can understand that Disney were over-taxed, but wouldn’t it be the county that would owe the money to Disney?

Do you have a source for this? I think some key bits of information are missing.

 

[Figgy1]

What do school districts have to do with this and why do they owe Disney money? I can understand that Disney were over-taxed, but wouldn’t it be the county that would owe the money to Disney?

Do you have a source for this? I think some key bits of information are missing.

The tax bills in the states are broken down into city or in Florida's case county and school taxes. Generally a check goes to each. A large majority goes to school taxes. Hope that makes sense

 

[DCBaker]

What do school districts have to do with this and why do they owe Disney money? I can understand that Disney were over-taxed, but wouldn’t it be the county that would owe the money to Disney?

Do you have a source for this? I think some key bits of information are missing.

Here is the story from the Orlando Sentinel via Yahoo News:

A court ruling in Disney’s favor could force Orange County Public Schools to refund millions — and potentially tens of millions — in property taxes to the entertainment giant.

The decision, handed down Monday by Judge Thomas W. Turner, followed an eight-year legal battle over claims the Orange County Property Appraiser’s Office improperly calculated the taxable value of the Yacht & Beach Club, a 1,200-room Disney-owned resort and convention hotel near the Epcot theme park. But it could have implications far beyond the taxes paid on that single hotel.

The property appraiser’s assessment of the Yacht and Beach Club Resort for tax years 2015 and 2016 was “unconstitutional and invalid,” the judge said in a 43-page decision. “The appraiser substantially increased the amount of Disney’s tax bill by unlawfully including value attributable to Disney’s intangible property” — namely the value of the Disney brand, its managerial skiIIs and workforce.

The total refund has not yet been calculated but Orange County Tax Collector Scott Randolph said Walt Disney Parks and Resorts could be due $2 million for property taxes it paid on the hotel in 2015 and 2016, the years that were the basis for the lawsuit.

But Disney could get a whole lot more — as much as $80 million, if the ruling is applied to all its resorts, Randolph said.

“Technically the ruling only applies to the Yacht and Beach Club Hotel and only for those two years, but the disagreement on which it’s based upon, the valuation determination, is the basis for all their litigation on all the hotels of Disney since 2015,” he said.

Randolph, a party to the case in his role as the elected tax collector, said he alerted school officials a year ago that the litigation wasn’t going well and encouraged them to set aside money in case the ultimate decision favored Disney. “Luckily they did,” he said.

They put away about $80 million, an amount Randolph said was the equivalent of paying a $6,000 retention bonus to every teacher in the district or building about three new elementary schools.

School officials did not respond to a request for comment Tuesday.

Neither did Disney or its lead counsel, Robert E. V. Kelley, Jr., of Tampa.

An appeal is under consideration, said Ana C. Torres, general counsel for Orange County Property Appraiser Amy Mercado.

Randolph said he worries other hotel owners might try a similar strategy to cut their tax bill.

“Potentially other hotels are going to start calling, too,” Randolph said.

It is common for businesses to challenge their tax amounts, and Disney has squared off with the Orange County Property Appraiser in the past.

Disney lawyers filed this particular challenge in 2016 after the assessed value of the resort property jumped 118% from $154 million as of Jan. 1, 2014, to $336 million as of Jan. 1, 2015, “although there was no material renovation or expansion,” the judge noted in his ruling.

Disney sued then-Property Appraiser Rick Singh, who had lumped Disney among the “fat cats” he was fighting to force them to pay their fair share. Singh then lost in 2020 to Amy Mercado, who won a second term in August when the candidate challenging her re-election withdrew.

Mercado’s lawyers submitted a brief last month arguing that Disney had “enjoyed many years of artificially low assessments” and insisting that the increase in 2015 corrected that error going forward.

While other taxing authorities also might owe Disney a small tax refund, none would be as impacted as the school district.

Randolph said state law prevents taxes on a commercial property from increasing more than 10% a year unless the assessing authority is a school district. As a result, only Orange County schools enjoyed the full amount of the tax increase associated with the 2015 bump in the valuation of the Yacht and Beach Club Hotel.

Disney court win could cost Orange County schools millions

A court ruling in Disney’s favor could force Orange County Public Schools to refund millions — and potentially tens of millions — in property taxes to the entertainment giant. The decision, handed down Monday by Judge Thomas W. Turner, followed an eight-year legal battle over claims the Orange...

www.yahoo.com

 

[Club Cooloholic]

In-law suite?
Sorry it was too good to pass up, I am a king of misspelled words and incorrect grammar myself.

 

[MichWolv]

What do school districts have to do with this and why do they owe Disney money? I can understand that Disney were over-taxed, but wouldn’t it be the county that would owe the money to Disney?

Do you have a source for this? I think some key bits of information are missing.

Schools in the US are generally funded in large part by property taxes. In many jurisdictions, the school district is a separate taxing authority that receives property tax money and does not share it with other governmental entities. This allows the school districts to be somewhat independent of local and state governments (although not completely, as there is often other local and state funding as well). Generally, property taxes are stated as a percentage of the assessed value of the property, so if the assessed value is reduced, as is happening here, the amount of property taxes owed is reduced as well.

The downside, of course, is that this does not mean the school district's expenditures go down, and it puts the district in a difficult position. Although here, it appears that the school may have been aware of this possibility and prepared for it.

 

[monothingie]

I’ll shill for Disney on this. They deserve every cent back that they overpaid property wide based on this wildly capricious method of determining property value.

The real villains here are the public officials who got caught by the courts. Thanks to these public officials, now the entirety of OC taxpayers and schools will need to bear the burden of remediating this.

 

[Doberge]

Disney collects and writes a donation check back for (1) goodwill and (2) maybe tax benefits? (I don't know much about corporate tax benefits of donations). Maybe Disney even gets a little controlling donates specifically for bonuses. Schools then budget for future at lower anticipated tax receipts but, hey, if they actually saved the money and get Disney donations they should be okay. Disney will be happy to see future appraisals changed.

 

[monothingie]

The downside, of course, is that this does not mean the school district's expenditures go down, and it puts the district in a difficult position. Although here, it appears that the school may have been aware of this possibility and prepared for it.

They’ll bond the refunds out over the course of several years. The schools aren’t going to be affected, But there certainly will be an impact for taxpayers.

 

[MR.Dis]

They’ll bond the refunds out over the course of several years. The schools aren’t going to be affected, But there certainly will be an impact for taxpayers.

There will be some belt tightening. From Disney's viewpoint, they have to make sure they are paid back every cent to send a clear message to future assessors not to make same mistakes. I have followed this story since it first came to light in 2017. The part that still bothers me is how the Assessor kept saying Disney was under paying real estate taxes, when in fact they were the HIGHEST tax payer in Orange County. The story is only going to get worse as Universal was also over taxed and has similar cases pending. So the 80 million is just for Disney, and not for all the other Corporations that also felt the sting of an out of control Assessor.

 

[Horizons '83]

Hope the school board built a contingency fund for what they had to know was going to happen at some point.

 

[Smiley/OCD]

Hope the school board built a contingency fund for what they had to know was going to happen at some point.

They NEVER do…they adhere to the “it can’t happen to us” gamble…and then they get caught with their proverbial pants down…

 

[Skibum1970]

In-law suite?
Sorry it was too good to pass up, I am a king of misspelled words and incorrect grammar myself.

That's the first joke that came to my mind as well.

 

[ohioguy]

The county could sue Mr. Singh, the tax assessor, for knowingly using a formula that was not standard in the state of Florida, a breach of fiduciary duty.

 

[MR.Dis]

The county could sue Mr. Singh, the tax assessor, for knowingly using a formula that was not standard in the state of Florida, a breach of fiduciary duty.

Not likely, would send a bad message for all future employees. I want to make clear the method used is a standard method used in Other states. Very Basically there are 2 methods: Replacement and Income. Replacement is the method Florida has always used, you determine the value of a property by looking at what other properties have sold for that have similar Sq Ft, rooms, amenities. The problem is of course that Disney has never sold a resort, so comparables are all off site. From The assessor point of view, this does not take into the calculation how valuable a property is being in Disneys footprint. So the Assessor used the second method, which to state simply, you determine value by how much income the property generates (again this method has NOT been used in Florida). He argued that just because it had not been used does not mean it is an unacceptable method to determine value -- in the end his argument did not convince Florida's judges. What got him in hot water was he was warned that this was a losing argument by many, but refused to listen (I.e. he was totally arrogant to all those trying to advise him).

 

[jennab55]

Not likely, would send a bad message for all future employees. I want to make clear the method used is a standard method used in Other states. Very Basically there are 2 methods: Replacement and Income. Replacement is the method Florida has always used, you determine the value of a property by looking at what other properties have sold for that have similar Sq Ft, rooms, amenities. The problem is of course that Disney has never sold a resort, so comparables are all off site. From The assessor point of view, this does not take into the calculation how valuable a property is being in Disneys footprint. So the Assessor used the second method, which to state simply, you determine value by how much income the property generates (again this method has NOT been used in Florida). He argued that just because it had not been used does not mean it is an unacceptable method to determine value -- in the end his argument did not convince Florida's judges. What got him in hot water was he was warned that this was a losing argument by many, but refused to listen (I.e. he was totally arrogant to all those trying to advise him).

This is interesting. Did this assessor only use that other method to assess Disney resorts, or other resorts like Universal’s as well?

 

[MR.Dis]

This is interesting. Did this assessor only use that other method to assess Disney resorts, or other resorts like Universal’s as well?

The Assessor went all in with Universal and others - Marriot, Wyndam, and others. These Corps have pending litigation to reduce their property taxes and based on the Disney precedent should win. That is why the county has a big big problem on future property tax revenue in upcoming years.

 

[jennab55]

The Assessor went all in with Universal and others - Marriot, Wyndam, and others. These Corps have pending litigation to reduce their property taxes and based on the Disney precedent should win. That is why the county has a big big problem on future property tax revenue in upcoming years.

I mean at least he wasn’t singling out Disney, but that’s going to be a lot of money the school district will have to return. Yikes.

 

[HakunaMatata89]

That man clearly did not like the people he was working for

$80 million over is no small whoopsies. It will be interesting to see the total amount for all of them that gets refunded

 

[Vacationeer]

Will DVC get a credit toward future dues, and would that end up closer to a nickel per point or $/pt?