Daniel v. Canterbury Towers, Inc.
| Decision Date | 28 December 1984 |
| Docket Number | No. 83-1864,83-1864 |
| Citation | 10 Fla. L. Weekly 305,462 So.2d 497 |
| Parties | 10 Fla. L. Weekly 305, 10 Fla. L. Weekly 82 W.R. (Ray) DANIEL, Jr., Property Appraiser of Hillsborough County, Appellant, v. CANTERBURY TOWERS, INC., Appellee/Cross-appellant. |
| Court | Florida District Court of Appeals |
John A. Curtiss, David C.G. Kerr and Ted R. Manry, III, of MacFarlane, Ferguson, Allison & Kelly, Tampa, for appellant.
Edward M. Waller and Thomas P. Scarritt, Jr., of Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, for appellee/cross-appellant.
Appellant, W.R. (Ray) Daniel, Jr., as Property Appraiser of Hillsborough County, appeals an amended final judgment which invalidated his property assessments for ad valorem taxes assessed against appellee, Canterbury Towers, Inc., for the 1979, 1980 and 1981 tax years. Appellee cross-appeals that portion of the amended final judgment which affirmed appellant's denial of appellee's claim for charitable exemptions for 1979, 1980 and 1981. The trial court, in its amended final judgment after invalidating appellant's assessments of appellee's property for the three tax years in question, made its own determination of the assessed value of appellee's property.
On appellant's appeal, we reverse the invalidation of appellant's assessments and the trial court's reassessments of appellee's property for the tax years 1979, 1980 and 1981.
On appellee's cross-appeal, we affirm the trial court's approval of the denial by appellant of appellee's claim for charitable exemption for the tax years 1979, 1980 and 1981.
We dispose of the cross-appeal first. Appellee/cross-appellant attacked the denial of its claimed charitable exemptions on the basis of a constitutional challenge to section 196.012(6) and section 196.1975, Florida Statutes (1979). The essential basis of appellee/cross-appellant's challenge to those statutes was that they were unconstitutionally vague in supplying inadequate guidelines for determination of the charitable exemptions provided therein. That attempt to support a claimed charitable exemption from taxes by a constitutional attack on the validity of the very statutes providing for such an exemption must obviously fail. Section 3(a), Article VII, Constitution of the State of Florida, provides only for a charitable exemption when provided by general law. Thus, if the law which grants the exemption is declared invalid, there is no exemption. To his credit, counsel for appellee/cross-appellant acknowledged at oral argument the fatal flaw in their "Catch 22" argument against the constitutional validity of the exemptory statutes.
In reversing the trial court's amended final judgment on appellant's appeal therefrom, we are required to construe section 193.011, Florida Statutes (1979), to determine whether appellant acted in compliance with the statute in assessing appellee's property. The trial court concluded he did not, however, we respectfully find otherwise. Our examination of section 193.011, and our determination of appellant's compliance is controlled by the holding in Blake v. Xerox Corp., 447 So.2d 1348 (Fla.1984), as later enunciated herein. A look at some of the essential facts of this case is necessary.
Appellee was incorporated in 1976, as a Florida nonprofit organization. It owns two contiguous parcels of Hillsborough County real property which are improved with a fifteen-story condominium-type building known as "The Canterbury Tower." This structure contains 125 residential apartment-type living units, as well as kitchen, dining and nursing facilities.
The real property is utilized by appellee as a life care facility which has been licensed under chapter 400, Florida Statutes (Nursing Facilities) and chapter 651, Florida Statutes (Life Care Facilities).
The property was purchased by appellee for $4,500,000 in 1976. The valuation assessment by the property appraiser and the assessments as judicially determined by the trial court are as follows:
Appellee offers its residents the benefit of a health care facility immediately adjacent to the living units and it contracts with them to care for them for the rest of their lives on the basis of the nonrefundable entrance fee paid upon admission. These entrance fees (sometimes referred to as "Entrance Endowments") have varied depending upon the size of the particular living unit.
Entrance Endowment Entrance Endowment
Fees for Least Fees for Most
Year Expensive Unit Expensive Unit
---- ------------------ ------------------
1978 $22,450 $50,950
1979 $23,450 $50,950
1980 $24,950 $54,950
1981 $28,950 $64,500
Monthly service fees charged at "The Canterbury Tower" vary depending upon the size of the unit as follows:
Monthly Service Fee Monthly Service Fee
for Least for Most
Year Expensive Unit Expensive Unit
---- ------------------- -------------------
1978 $295 $495
1979 $340 $570
1980 $396 $664
1981 $455 $764
Only "financially responsible" applicants are accepted for residency. All are subjected to a financial screening process. "Entrance Endowments" paid by residents to gain admission to "The Canterbury Tower" are deposited in an escrow fund utilized for servicing the mortgage on the premises. At the end of 1981, this fund amounted to approximately $1,000,000.
Appellee provides the following services to its residents: one meal per day, special diet entries, air conditioning, heating, electricity, water and telephone service, building janitor and maintenance, weekly housekeeping services, weekly laundry service, planned social and cultural recreational activities, emergency nursing service, as well as private health care service, all of which significantly increase appellee's operating expenses.
"The Canterbury Tower" is operated by a professional management company which, in 1981, charged $6,250 per month, and an apparent consulting fee of $260,000.
Although the usual or normal operating ratio of expense to gross income for commercial apartment houses in Hillsborough County has been determined to be in the range of forty to forty-five percent, the actual operating ratio for appellee is seventy-two percent.
The premises owned by appellee was, at the times in question, encumbered by a purchase money mortgage in the amount of $4,500,000.
In the event that a resident, due to illness, must be transferred into the medical facility, then the management may, upon deciding that the individual can no longer function on their own, re-sell the residential living unit. There are, in actuality, no sales of interest in real property to the residents of "The Canterbury Tower." What occurs is that the resident receives a "license" to occupy a residential unit during the remainder of his life.
The medical/nursing facility of appellee has been granted a charitable exemption from taxes pursuant to sections 196.012 and 196.1975. Appellee's financial data co-mingles income and expense figures applicable to the individual residential units on one hand, and the tax exempt medical/nursing facility on the other.
At its inception in 1977, appellee enjoyed substantial proceeds from the sale of its housing units. As units were sold to permanent residents, however, appellee experienced a significant drop in sales proceeds. Specifically, the amount decreased from approximately $4,500,000 for the first three years, to between $300,000 to $400,000 for the years 1980 and 1981.
When the appellant valued appellee's property in 1979 through 1981, he used the cost approach to make the valuation. The building was treated as a "special purpose" property, and the entire parcel appraised solely by use of the cost approach. A "special purpose" property is one that cannot easily be converted to another use and that has no ready market value, rental value or income stream.
While appellee experiences somewhat of an income stream, the appellant in this case felt the income approach was too complicated to apply because of the complications and imbalance caused by the entrance and monthly fee charges. While appellant never had actual expense or income figures in connection with the property, he did have available the general scheme of monthly charges, entrance fees and overall expense figures which were not broken down between those attributable to the residential units and those attributable to the medical/nursing facility. Because of the dual nature of the facility and the complications caused by attempting to accurately predict any stability in the income approach over the years, appellant concluded that appellee's property was "special purpose" type property for which a cost approach for assessment purposes would be more realistic and accurate than an income approach. The trial court concluded that appellant's assessments were invalid for...
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...See Schultz v. Lurie, 512 So.2d 1003 (Fla. 2d DCA 1987), rev. denied, 520 So.2d 586 (1988). Compare Daniel v. Canterbury Towers, Inc., 462 So.2d 497, 500 (Fla. 2d DCA 1984) (trial court not justified in overturning property appraiser's assessment on basis of appraiser's failure to take inco......
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