Disney Victorious in Property Tax Debate


Property taxes represent one of the biggest areas of exposure for commercial property owners. Changing laws, competing valuation methods, and a multitude of jurisdictions can be a compliance headache and a serious hit to a company’s bottom line.

The annual Notice of Proposed Property Tax (TRIM Notice) is sent at end of summer to notify property owners of their proposed taxes for the year. The tax on the TRIM is a gross number composed of multiple lines assessing different values at different millage rates. The different values that appear on a TRIM notice are the just value of the property, which is fair market value, and assessed value. These numbers are different for a few reasons. For simplification purposes, different jurisdictions can tax at different rates. These jurisdictions are usually 1) a county or municipality, which taxes at assessed value and 2) the school districts, which tax at just value. The discrepancy between rates stems from Art. VII Section 4 of the Florida Constitution, which caps increases on the assessed value of real property. This provision caps increases on the assessed value at 10% per year, but does not apply to the value for school districts.[1] The value for school districts has no such cap in the context of commercial property.[2]

In order to determine the value of a property, Section 193.011 Fla. Stat. identifies 8 factors. While all these factors can be taken into account, different factors are more relevant for different scenarios. For purposes of today’s article, we will focus on 193.011(7), Fla. Stat., which derives value based on the income from the property. This method is often used by property appraisers for valuation of commercial rental property, such as office buildings, hotels, or retail space. This is the method used by Rick Singh, the Orange County Property Appraiser, in valuation of a hotel property located outside of Epcot.

Article VII Section 1 Fla. Const. prohibits the State of Florida from levying a tax on real estate. This assessment is left to local governments. Real estate, or real property, is defined to include land, fixtures, buildings and improvements to land. For businesses such as hotels, commercial office buildings, or retail space, the value of the property is generally based on the income derived from the rental of the real property. IRV is the formula on which buyers and sellers value these properties. That is, net operating income (I) divided by the cap rate (C) equals value (V). For purposes of taxable value, the net operating income should exclude any income not derived from real property and reduce this income by intangibles.[3]

In a recent ruling out of Orange County, Walt Disney Parks and Resorts prevailed over Orange County Property Appraiser Rick Singh in a litigation over the valuation of a hotel connected to the Epcot property. The just value of the property had gone from $154 million in 2014 to $336 million in 2015. The value for purposes of most county taxes is assessed value, which can only increase at the 10% statutory cap discussed previously. However, the just value of the property is the basis for tax by the school district. The taxes associated with the school board here represented about half the tax bill, approximately $1.7 million.

The hotel had rental income, as one would expect, but it also had income attributable to sales of beverages, merchandise, goods and services, as well as intangibles including the value of skilled management, workforce, goodwill, transport to the parks and “Magic Bands”, which are wrist bands given to guests that act as room keys and allow guests to charge items to their room. Disney took the position that these ancillary items account for $74 million, on which tax was not due.

As discussed, there is a long history of litigation surrounding this issue. Specifically, in Scripps Howard, 742 So. 2nd, 213-14, the Florida Supreme Court addressed intangibles, and identified that the value of tangible personal property of a business cannot include intangible assets of a business. The Court stated the appraiser must deduct “the values of real property, intangible assets, and other nontaxable items, to ensure that the income is solely attributable to the tangible personal property of the business enterprise,” and not to the business’s other income.

A similar issue also arose in Metro. Dade Cty. v. Tropical Park, where the Third District Court of Appeals affirmed that gambling income at a race track could not be factored into income for the income approach. This income was not “derived from the use of the land” but instead came from “the business operated on it.” Metro. Dade Cty. v.Tropical Park, 231 So. 2n, 243, 246 (Fla. 3d DCA 1970).

The court in the Disney case applied that same reasoning from the previous cases and very clearly laid out a guideline for income-based assessments by county appraisers. In citing to Scripps Howard, the court stated, “the Property Appraiser here … had a duty to deduct the value of nontaxable items, specifically tangible and intangible assets, “to ensure” that the income used is “solely attributable to” Disney’s real property.” In citing to Tropical Park, the court furthered the analysis by identifying that income from restaurants and stores is not assignable to real estate, but rather, an intangible right of another business.

This case has not changed that the assessment of real property under this income method should be an assessment of income from the land, buildings, fixtures, and other improvements, net of tangibles and intangibles. This has, however, reaffirmed that many property appraisers are overstepping in their calculation under the income method of valuation.

undefinedAbout the Author: Amanda Levine is an associate attorney at The Law Offices of Moffa, Sutton, & Donnini, P.A. Ms. Levine joined the firm as a clerk in 2013, and focuses her practice on state and local taxation issues including property taxation, and criminal proceedings.

Ms. Levine received a bachelor's degree in Accounting from University of Central Florida. She spent several years working in public accounting before attending Nova Southeastern University Law School. She received her J.D. in 2014. During her time at Nova Law, Ms. Levine was the Executive Justice of Academics for the Moot Court Honor Society, as well as the Finance Chair. She was awarded by the National Order of the Barrister, a national honor society which acknowledges excellence in oral advocacy and brief writing skills.


193.011 Florida Statutes – Factors to consider in deriving just valuation

Disney Yacht and Beach Club Hotel 2015 Assessment

Disney v. Rick Singh – Final Judgment


FLORIDA HOMESTEAD EXEMPTION: A FAMILY (UNIT) AFFAIR, published August 27, 2017, by James McAuley, Esq.

FL HOMESTEAD EXEMPTION RISKED RENTING ON AIRBNB, published March 31, 2017, by Amanda Levine, Esq.

EVEN WALT DISNEY WANTS TO PAY LESS PROPERTY TAX, published October 31, 2016, by Amanda Levine, Esq.

TOURISTS & TAXES: THE EFFECTS OF RENTAL ON HOMESTEAD PROPERTY, published September 29, 2016, by Amanda Levine, Esq.

[1] Read more about the commercial property tax cap here.

[2] Save Our Homes provision of Florida Constitution caps increases at 3% for value of homesteaded property. However, the $50,000 homestead is applied to assessed value for county or municipal tax, but the homestead applied to county rates is only $25,000.

[3] Art. VII S. 9(a) Fla. Const. prohibits local government from levying ad valorem tax on intangible personal property.