The American Resort Development Association’s Resort Owners’ Coalition, a non-profit lobbying organization for the timeshare industry and 1.6 million timeshare owners, has filed suit in federal court against a new $25 per occupancy day fee on timeshare units in the territory.
In a statement on the suit, the plaintiffs argue the fees violate the U.S. Constitution’s Commerce Clause and Equal Protection Clause by “discriminating against interstate commerce and intentionally targeting non-resident timeshare owners.”
In the complaint, the plaintiffs argue it is “targeted, discriminatory, revenue legislation that has the purposeful intent to impose fees almost exclusively on interstate commerce violates the Commerce Clause,” citing various times Gov. Kenneth Mapp has said the legislation aims to seek funding from visitors to the territory. Timeshare Lawsuit
The complaint does not say how this fee is distinct from the many other taxes and fees in many U.S. jurisdictions that have been aimed primarily at out of state travelers for many decades. For example, a great many jurisdictions, including the USVI, charge hotel occupancy fees, which are, by the nature of hotels, aimed at getting revenue from visitors instead of residents. Williamsburg, Va., a town with a large tourist industry, charges a restaurant meals tax specifically aimed at deriving revenue from out of town and out of state visitors.
The USVI is also not the only jurisdiction to charge extra fees specifically on timeshares. Virginia Beach, Va. charges additional fees of $2 per night plus 8 percent occupancy tax. Hawaii charges a transient occupancy tax on timeshares of 9.25 percent per night.
“The comments by Governor Mapp and others make it clear that the intention in enacting the Timeshare Impact Fee is to make non-resident timeshare owners exclusively bear the costs of funding the U.S. Virgin Islands revenue needs,” the plaintiffs say elsewhere in the complaint.
Individual income taxes, gross receipts taxes and real property taxes each separately contribute vastly more than the projected revenues from the timeshare fee.
Finance Commissioner Valdamier Collens testified to the Senate in February that his department projected the fee would generate around $19 million per year. The V.I. budget is nearly a billion dollars per year. Its structural deficit is around $170 million per year. The government also increased tobacco, alcohol and soda taxes, which are projected to generate similar amounts of revenue. It also increased hotel occupancy taxes and gross receipts taxes in recent years, to try to staunch the territory’s deficits.
The timeshare group also argues the fee will hurt business.
“This fee is discriminatory and will drastically impact the future growth and health of the timeshare industry in the U.S. Virgin Islands,” Ken McKelvey, ARDA-ROC Chair said in their statement.
“Timeshare owners in the USVI already pay the highest real estate property tax rate in the territory making this particular fee an exorbitant burden on the ability of the territory to compete with similar markets,” McKelvey continued.
While the V.I. rate for timeshares is higher than other V.I. property tax rates, V.I. property tax rates are actually lower than most states. According to the Tax Foundation, 49 of the 50 states have higher homeowner property tax rates than the USVI, with only Hawaii, at 0.28 percent, coming in lower. The V.I. rate for timeshare units is 1.407 percent, a bit lower than Hawaii, which charges 1.43 percent for timeshares.
The lobbying group also says the fees will be bad for the territory’s economy, saying that timeshares have seen sustained growth for the past quarter century and that current 70 percent average occupancy rates may fall.
“This fee will hurt the local economy, discourage tourism to the USVI and negatively impact the continued growth of timeshares in the USVI. Fighting this fee will benefit the local economy, and those USVI residents whose incomes and livelihood depend on the local tourism industry, specifically timeshares,” McKelvey said.
The organization made similar arguments when it vigorously opposed the fees when the governor proposed it and during legislative hearings. (See related links below)
As a timeshare owner, this additional fee is pushing me to walk away from the ‘property’ I own.. and in the end, the unit will foreclose and the USVI gov’t will be out my portion of the new $25/day fee as well as the real estate tax I pay. Not to mention that a re-sale of the unit/share is a real hard sell with already high maintenance fees (thanks wapa!), high real estate taxes and now an additional $25/day tax. Do these folks know they just made it impossible to sell more timeshare weeks and that owners will walk away? And seriously – charging us an additional $25 per day to use our deeded property on which we already pay real estate taxes?? Does the USVI charge other non-resident homeowners a fee to use their properties when down for a few months in the winter?
This is yet another example of how short sighted the decision makers are here…. great in the short term – but you’re killing your future revenue potential. BRAVO USVI gov’t….. another really bad decision!
We have owned a deeded timeshare on St Thomas for about 20 years and we, too, are finally thinking of donating it back to the association (good luck to them in selling it now, with all of the fees and taxes). There are many other places that would be glad of our business and we should go to them, rather than rewarding the USVI for this kind of aggressive anti-tourism campaign. Our deeded property is taxed at four times the rate of other deeded residential property already, so adding $175/week to that, plus the association fees, plus the energy fees, etc, is just driving us out of St Thomas. Next island, here we come. With the whole thing unusable this year due to Irma and Maria, we won’t have to think about this very hard; we’ve been unable to use the timeshare for three of the years we’ve owned (including this year) due to hurricane impacts, and adding this tax burden is adding insult to injury. We were OK with waiting out hurricane repairs but now, not so much.