Rick Singh appeals Disney resort market value decision

Orange County Property Appraiser Rick Singh on Sept. 13 appealed a judge’s decision to reduce the appraised value of the Disney-owned Yacht and Beach Club Resort by nearly 40%.

In 2015, The Yacht and Beach Club Resort, located on a 65-acre property at 1700 Epcot Resorts Blvd., was appraised by the OCPA at a value of $336.9 million, but Walt Disney Parks and Resorts, U.S. Inc., challenged that valuation with a lawsuit. 

The property appraiser currently has 33 open cases filed against him by Disney, said Beth Watson, who works as a communications and external affairs manager for Singh. But this latest suit, which disputes the market value of the hotel for the 2015 tax year, claimed the methodology used to assess the resort’s value at $336.9 million was flawed. Instead, Disney believes the value should have been $188,673,081, according to court documents.

In the 2014 tax year, the resort was valued at $154.2 million, meaning its appraised value increased 118% in 2015. According to court documents, the increase was partially because the OCPA office included the revenue generated from retail shops and restaurants located on the property to assess the resort’s value — an income of $73.7 million.

“The property appraiser … included approximately $74 million of ancillary income from Disney’s sale of food, beverages, merchandise and other goods and services attributed to retail and restaurant shops operating on the premises of the Yacht and Beach Club,” court documents state. “The main issue, in this case, is whether it was legally proper to include this ancillary income in determining the just value of said property.”

According to court documents, Disney had never had to provide income or expense information to the OCPA’s office for the preceding 28 years, but for the 2015 tax year, the OCPA requested such information to complete its appraisal. However, Disney declined to provide it, which was its right, courts documents state.

“(Because) Disney did not provide the specific income and expense figures requested, the property appraiser had to use its best efforts to determine said income and expense figures using other methods,” court documents state.

Disney later submitted the requested income and expense information and hired experts to counter OCPA’s calculation, but the court determined it was too late. However, it did allow Disney to challenge OCPA’s use of ancillary income in its assessment.

Ultimately, the court determined the income approach was the most appropriate method of appraisal for the resort. So it used figures and expenses as calculated by Disney’s own experts, but excluded the ancillary income of $73.7 million used by the OCPA and replaced it with the projected rental income from the resort’s restaurant and retail operations, which amounted to $1.74 million.

In the end, the court’s revised calculations for the 1,197-room hotel totaled $209 million.

But Singh challenges the hybrid methodology the judge used to come up with the revised value in the July 2018 ruling. Singh said standard appraisal methodologies for hotels include all sources of additional income — not just the rooms. 

Singh expects a revision of Judge Thomas Turner’s ruling will reveal the court made an error in its calculation. To support his point, Singh emphasized the Dr. Phillips Center for the Performing Arts, located on a site about one-tenth of the size of the resort (6.6-acres) in downtown Orlando, has a market value of $254 million.

“We are confident that a closer review of the calculations used to determine value will result in the ruling being overturned,” Singh said. “It is simply illogical that The Yacht and Beach Club — with nearly 1,200 guest rooms and (more than) 100,000 square feet of meeting space — has a market value of $209 million.”