Disney Wins Property Tax Victory Against Orange County

In recent years, Walt Disney World has filed a number of lawsuits challenging the agressive tax valuation methods employed by Orange County, seeking to reduce its property tax burden.  One suit was resolved earlier this month with a ruling in favor of Disney. 

Disney's Beach Club Porte Cochere

Disney's Beach Club Resort

Florida's Ninth Circuit Court, serving the Orange County area, has ruled in favor of Disney's challenge to the 2015 property tax assessment for Disney's Yacht and Beach Club Hotel.  

Dating back to 2014, the property had an assessed value of approximately $154 million. However, the 2015 assessment reflected a value of nearly $337 million as county appraiser Rick Singh sought to use new valuation methods to extract additional dollars from central Florida's amusement venues.  

Chief among Disney's disputes was the county's inclusion of ancillary income in calculating the value of the property.  Disney argued that dollars generated by food & beverage sales, merchandise and other goods and services should not be tied to the property itself.  Disney also questioned the method in which certain intangible assets are factored into the fair market value calculation. 

In a 21-page ruling filed on July 3, 2018 the court ruled in favor of Disney's challenge, stating:

"The Property Appraiser's Assessment of Disney's Yacht and Beach Club Resort is unconstitutional and invalid. The Property Appraiser has substantially increased the amount of Disney's tax bill by unlawfiully including value attributable to Disney's intangible property, specifically the valuation established by the Property Appraiser of the ancillary income figures."

The county was ordered to adjust the 2015 value to a figure of $188 million, recalculate taxes and issue a refund on the overpayment.  

Florida statute limits year-to-year tax increases to no more than 10% for all items other than schools. With a 2014 valuation of $154 million, the payment for 2015 had already been capped at $169 million.  This is less than the $188 million figure cited by the courts, so no refunds are due on non-school related taxes.  

However, the school tax bill was charged based upon the original figure of $337 million.  The county must revise this figure down to the new $188 million valuation and refund accordingly. 

This is just one of a series of cases pending which involve Walt Disney World property valuations.  Additional details on those suits has been previously posted at DVCNews and the website FloridaSalesTax.com

It is important to note that Disney Vacation Club Condominium Assocaitions are separate legal entities from their sister hotels.  Although Disney won an important victory in this case related to the Yacht and Beach Club, it is not known if owners at Disney's Beach Club Villas will realize any benefit. 

Disney Vacation Club Resort Appraisals

Most of the adjustments to valuation are due to the removal of ancillary revenue from the sales of food, drink and souvenirs.  Disney Vacation Club legal entities typically do not include for-profit operations of this nature. DVC Condominium Associations are structure to include only the guest rooms and resort amenities which are freely available to owners.

Still, in light of the sharp increases in DVC resort valuation detailed in the chart above, there is some hope that a revised calculation will benefit owners to some degree.  Disney Vacation Development is the named plaintiff in at least 3 pending tax cases, all of which relate to "The BoardWalk Resort."

Thanks to Wil Lovato for information used in this story!