County commissioners deny valuation reductions for luxury condos
February 10, 2010
Steamboat Springs —Editor’s note: This story has been updated from its original version to clarify that the Sheraton’s commercial property tax bill does include restaurant and convention space. Also, Nancy Stahoviak is the Routt County Board of Commissioners chairwoman.
The Routt County Board of Commissioners voted unanimously Tuesday against reducing the valuation for property tax purposes of 21 luxury condominiums at Steamboat Villas in the east wing of the Sheraton Steamboat Resort. The vote denied an appeal that would have resulted in relief for Starwood Vacation Ownership from a portion of 2009 taxes already billed by the county.
The project is held by Points of Colorado, a division of Starwood, which owns the Sheraton Steamboat Resort.
The county had valued the 21 condos at a combined $28.56 million, and the owners were seeking a reduction in valuation on a per-square-foot basis that would have cut that amount to $19.9 million. Had the commissioners agreed with the petitioners, Starwood's tax bill on the Steamboat Villas would have been reduced retroactively by $22,531, from $71,941 to $49,410.
The time-share condos in Steamboat Villas are valued as residential property and thus assessed at a lower rate than commercial property. In contrast, the traditional hotel rooms in the attached Sheraton Steamboat are taxed at the commercial rate — the tax bill for those hotel rooms and the hotels public spaces, including restaurants and convention space, etc., was $332,000 last year, according to county assessor's personnel.
Starwood did not protest its original valuation notice during the summer but exercised its right to appeal for a tax abatement.
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Commissioner Diane Mitsch Bush emphasized that the commissioners do not take property tax revenues into account when making decisions about property valuation.
"We look only at values, not taxes," Mitsch Bush said.
Commissioner Doug Monger agreed.
"Our job is to make certain that valuations across the county are fair," he said.
Sheraton and Villas General Manager John Curnow said by e-mail Tuesday afternoon that although his company did not agree with Tuesday's decision, it would continue to fully support county government.
"We filed a real estate tax appeal to Routt County to express our dissatisfaction on how our timeshare units were appraised," Curnow wrote. "While we were not fully satisfied at the denial of our appeal, we fully understand the financial situation in our county. … County officials have always been fair to the businesses in our community, but it so happens that this is one of the rare occasions where we disagreed."
Curnow went on to acknowledge the accomplishments of county government while working through the recession.
Starwood actively was closing sales of time-share periods here in August and September. Sale amounts varied from about $20,000 to $99,000. However, the pace of sales slowed, and the sales team was relocated to another city.
"Sales continue on the time-share product offered in our Morningside Tower," Curnow wrote. "The SVO sales office did relocate, last fall, from our hotel to the Westin Riverfront Resort in Avon. We refer all interested parties to the sales team in Avon."
Time-share statistics compiled from county records by Bruce Carta, of Land Title Guarantee Co., show that the Villas closed 128 transactions amounting to $4.92 million in January 2009 alone and finished the year with 211 transactions valued at $8.36 million.
Technically, Tuesday's vote came at the conclusion of an abatement hearing during which the commissioners weighed the merits of Points of Colorado's appeal of its property valuation.
County Appraiser Caitlyn McKenzie valued the condominiums June 30, 2008, at either $800 per square foot or $700 per square foot depending upon whether they overlook the ski slopes or look west over the hotel arrival drive. Under state law, she looked at comparable sales during a 24-month period from July 1, 2006, through June 30, 2008, to reach her value determination.
That period also coincides with the peak of the local real estate market before the country fell into recession and resort housing prices began to decline. McKenzie told the commissioners that her valuation process took into account the rapid rise of prices here and the modest decline during the last six months of the sales gathering period.
Starwood officials appealed, citing condominium sales during the same period that led them to seek values per square foot of $488, $516 and $588 for the three floor plans or locations in the building.
They cited sales at The Steamboat Grand, Torian Plum, Bear Claw II, Phoenix, Emerald Lodge and Christie Club.
However, McKenzie told the commissioners that those projects either didn't enjoy the slopeside location or the high level of interior finishes of the newly remodeled Steamboat Villas units. The Sheraton and Starwood brands add to the value of the condominiums, McKenzie said, and in particular, the amenities in the Sheraton hotel, which are available to villa owners, set them apart from other base area condos.
"It's really one of the best locations in Steamboat," she said.
McKenzie said the best comparable sales she could find for the Steamboat Villas were sales of condos on the upper two floors of the traditional hotel portion of the Sheraton. Only those units share the same hotel amenities — spas and in-house restaurants, among others — in a slope-side location, she said.
McKenzie, who specializes in valuing condominium projects, told the commissioners that in 2008, Points of Colorado undertook an extensive remodel of the existing Morningstar condominium tower, which was built in 1998. The remodel created three luxury units on each floor. It was part of a larger $20 million remodeling project that included refurbishing traditional hotel rooms and public areas in another portion of the Sheraton building.