Over the past summer, a new tax was levied on Article 81 entities. As a result, Sun City Summerlin was hit with an unexpected tax bill of nearly $15,000.
“We’d never paid taxes before and we went, ‘Why are we paying taxes?’ …” said Ken Caroccia, vice president of Sun City’s board of directors.
He said he expected those taxes will continue to increase.
Caroccia said the tax was imposed on entities incorporated under Article 81. Now, the board is looking to re-organize the community under Article 82. The board voted unanimously for the change. Now, it goes to residents.
“Article 81 was a catch-all that goes back 30, 40 years,” Caroccia said. “It was for all sorts of different corporations. Then they invented a new one, Article 82, which is really designed for a nonprofit corporation; that’s us.”
Under Article 81, Sun City’s community operations — the golf courses, the theater and restaurants — were taxed on the gross amount of business they do. If left in place, that tax would get passed on to the consumer.
“Every time we have a show at the Starbright or a club puts on a performance, we have to pay an entertainment tax. Under 82, we don’t. So, it saves money for us all,” said Steve Brenner, a resident and former litigation attorney.
But there’s another issue. Under Article 81, the community, which consists of 7,781 homes, was incorporated as a “fixed life” one. At the end of 50 years, the corporation must be dissolved.
“In 22 years, most of us won’t be around but our kids and grandkids will, and our properties will be worth half of what they are now if (the common) property goes to someone else,” Brenner said.
That means the recreational buildings, the pools and golf courses have it be sold or given to another not-for-profit organization.
“I am not going to speculate what that does to the values of our real properties other than to tell you without any doubt, it will drive them down, down, down,” said Ken Resnick, assistant treasurer of Sun City.
Why would home values drop so dramatically? Because of the unknown, Caroccia said.
“Do you want somebody to own it who you know nothing about and don’t know what kind of landlord they’re going to be? When you have a good landlord and they don’t raise the rent, I mean, I don’t know what company would want to buy it and if they did, they might have a whole different idea (for operating it). They might want to charge more in dues,” he said.
Board members are going to club meetings to urge residents to vote.
The April issue of The Link, a magazine sent to every Sun City household, contained a ballot. Every home gets to vote: one ballot, one house. The community needs 50 percent of Sun City homes plus one to vote in favor of the change — or at least 3,891 “approve” votes — for the switch to be enacted.
Joyce Best, a homeowner in Sun City, said she’s “going to vote for it, for the future and the younger people who will move in here … so there isn’t any doubt what’s going to happen.”
The board hopes to get responses by the end of April but said it will extend the ballot receivership time if it doesn’t get enough of a response. That sometimes happens in a community with a high number of snowbirds. The community extended the time to vote by a few months when it came to getting a firehouse. As with that issue, the board will begin a knock-on-doors campaign if people aren’t mailing in their Article 82 postcards.
Resident Connie High said the money saved in taxes could be used to maintain the community’s common areas, such as the tennis courts and recreation centers.
“The fact that there’s hard dollars that come out of their pockets is something people understand very well. When you’re retired, nobody likes to spend,” Resnik said.
Contact Jan Hogan at firstname.lastname@example.org or 702-387-2949.
Mailing it in
Postcards can be mailed back to the Association or dropped into the ballot box at Mountain Shadows Administration office. For more information, call 702-966-1401, 702-966-1432 or 702-966-1439.