Fuchs v. Robbins, No. 98-275

• Decision Date: 18 November 1998
• Docket Number: No. 98-275, No. 98-274.
• Parties: Lawrence FUCHS, etc., et al., Appellants, v. Joel W. ROBBINS, etc., Appellee.
• Court: Florida District Court of Appeals

738 So.2d 338

Lawrence FUCHS, etc., et al., Appellants, v. Joel W. ROBBINS, etc., Appellee.

Nos. 98-275, 98-274.

District Court of Appeal of Florida, Third District.

November 18, 1998.

Opinion Granting Rehearing July 16, 1999.

Robert A. Butterworth, Attorney General, and Joseph C. Mellichamp, III, Assistant Attorney General; Bloom & Minsker, Miami; Arnaldo Velez, Miami, for appellants.

Robert A. Ginsburg, Dade County Attorney, and Jay W. Williams, Assistant County Attorney, for appellee.

Before JORGENSON, LEVY and GODERICH, JJ.

Opinion Granting Rehearing En Banc July 16, 1999.

LEVY, Judge.

This appeal arises from a lower court Order upholding the Property Appraiser's original assessment of the Miami Beach Ocean Resort and declaring section 192.042, Florida Statutes unconstitutional. For the reasons that follow, we reverse.

In 1992, Joel W. Robbins, a Dade County property appraiser ("the Appraiser"), assessed property, now The Miami Beach Ocean Resort ("the Taxpayer"), at $6,067,227.00. Specifically, he assessed the land at a value of $2,277,000.00 and the building at $3,790,227.00. The Taxpayer appealed the assessment to the Dade County Value Adjustment Board ("the Board"). The Board reduced the value of the building to $50,000. In response, the Appraiser brought an action in the circuit court to defend his original tax assessment of the building ("subject property").¹ A general master was appointed to hear the matter pursuant to Florida Rule of Civil Procedure 1.490.

At trial, the Appraiser established that he conformed to the eight factors enumerated in section 193.011, Florida Statutes (1991). In response, the Taxpayer argued that pursuant to section 192.042 the subject property was not substantially completed as of January 1, 1992, and as a result thereof should have no value placed upon it for the 1992 tax year.² The Appraiser responded that section 192. 942 was unconstitutional and therefore his original assessment should stand.

The General Master found that the Taxpayer established the subject property was not substantially completed as of January 1, 1992, as defined in section 192.042, but found that section 192.042 was unconstitutional. This finding was based upon the General Master's determination that the provision improperly creates a class of property not enumerated in Article VII, Section 4 of the Florida Constitution, and further recommended that the Appraiser's original assessment be upheld. The trial court adopted the recommendation and incorporated by reference the General Master's Report in its Order.

The Taxpayer challenges the Order and argues that the Property Appraiser, as a constitutional officer, does not have standing to challenge the validity of section 192.042. The general rule, as the Taxpayer asserts, is that government officials and constitutional officers do not have standing to challenge the constitutionality of a statute. Department of Educ. v. Lewis, 416 So.2d 455, 458 (Fla.1982). However, where operation of a statute is brought into issue by another party in the litigation, the officer may, in defense, question the validity of the statute. Id.

Here, it was the Taxpayer who raised the issue of whether the property was substantially completed pursuant to section 192.042. The Property Appraiser challenged the validity of section 192.042 after the taxpayer put forth evidence showing that the property was not "substantially complete" on January 1, 1992. Accordingly, we find that the Property Appraiser had standing to challenge the validity of section 192.042, Florida Statutes pursuant to Department of Educ. v. Lewis, 416 So.2d 455 (Fla.1982). We further find that this holding is consistent with section 194.036, Florida Statutes.

We disagree with the lower court and expressly hold that section 192.042, Florida Statutes, is constitutional. At the outset, we note that the Supreme Court of Florida upheld the constitutionality of a similar statute in Culbertson v. Seacoast Towers East, Inc., 212 So.2d 646 (Fla. 1968); see also Hausman v. Bayrock Investment Co., 530 So.2d 938 (Fla. 5th DCA 1988)

(finding that the validity of section 192.042(1) is settled by Culbertson v. Seacoast Towers East, Inc., 212 So.2d 646 (Fla.1968) and Markham v. Yankee Clipper Hotel, Inc., 427 So.2d 383 (Fla. 4th DCA 1983)); Markham v. Yankee Clipper Hotel, Inc., 427 So.2d 383 (Fla. 4th DCA 1983),

rev. denied 434 So.2d 888 (Fla.1983)(holding that section 192.042(1) does not violate the "just valuation" clause of Article VII, section 4).

The Property Appraiser relies on Interlachen Lakes Estates, Inc. v. Snyder, 304 So.2d 433 (Fla.1973) to support his argument that the 1968 Amendment to our State Constitution, enumerating specific instances where property may be valued according to different valuation standards, affects the holding in Culbertson. This argument has no merit. Contrary to the Property Appraiser's argument, neither the 1968 amendment nor Interlachen alter the Culbertson holding. Compare Fla. Const. art. IX, § 1 (1885) with Fla. Const. art. VII, § 4 (1968); see also Yankee Clipper, 427 So.2d at 384 n. 3

(finding that "[t]he constitutional change in 1968 is insignificant.").

The 1968 Amendment, like the 1885 constitution, requires that regulations secure a "just valuation" of all property. Unlike section 192.042(1), the statute at issue in Interlachen did not permit a "just valuation" of all property. In Interlachen, the Supreme Court of Florida found that section 195.062(1),³ Florida Statutes, violated Article VII, section 4 of the 1968 Florida Constitution. The Court found that this section created a classification based on ownership effectively giving a subdivision developer a "tax break by treating his unsold lots as unplatted for tax valuation purposes." The Court recognized that the statute discriminated between the subdivider and purchasers of the lots because unlike the subdivider, the purchasers of the lots would be paying taxes on similar lots. The Court also noted its concern that assessment standards and criteria might be manipulated to favor certain taxpayers over others.

As the Court pointed out in Interlachen, section 195.062(1) taxed similar property differently, depending on who owned it; to-wit, if the lot had been sold the land was taxed, if it had not been sold the land was not taxed. Here, all property not substantially complete by January 1st is not taxed for that particular year. Accordingly, we find that section 192.042 does not create an additional exemption in violation of Article VII, section 4. Rather, it merely relates to the timing of the valuation and assessment of incomplete improvements to real property. Culbertson, 212 So.2d at 647. We note that it is the Legislature, acting through statutes that it passes, that has the recognized authority to determine the date upon which valuation and assessment of property shall take place, to-wit: January 1st of each calendar year. See Fla. Stat. § 192.042 (1997).

The Order appealed from is reversed. Since the general master found that the building was not "substantially completed" on January 1, 1992, the building should not have been assessed for the 1992 year.

Reversed.

Before SCHWARTZ, C.J., and NESBITT, JORGENSON, COPE, LEVY, GERSTEN,⁴ GODERICH, GREEN, FLETCHER, SHEVIN, and SORONDO, JJ.

ON REHEARING EN BANC

FLETCHER, Judge.

We grant rehearing en banc and affirm the decision of the trial court which held section 192.042(1), Florida Statutes (1991) to be unconstitutional.⁵ The statute requires that a zero valuation, for ad valorem property tax purposes, be placed on buildings under construction and not substantially completed on the taxing date (January first of each year). We conclude that the statute is unconstitutional because it violates the mandate of the Florida Constitution that all real property⁶ (with certain inapplicable exceptions) be assessed and taxed at just valuation⁷ (fair market value). Here, the real property improvement (an incomplete hotel) on the owner's land had an uncontested fair market value of $3,790,227, on January 1, 1992 (the tax year in question), but the subject statute requires this incomplete improvement to be assessed and taxed at a zero value. As this result is in direct conflict with the constitution's mandate to assess all real property at just valuation, it follows that the statute contravenes the constitution; which, of course, means that the legislature was not, and is not, empowered to enact the statute. If we were to conclude otherwise, the owners would not be required to pay their fair share of the 1992 cost of local governmental services, such as police and fire protection, planning, building, zoning, public works, and others funded by ad valorem taxes.⁸,⁹

We start our analysis with article VII, section 4, Florida Constitution (1968), which reads in pertinent part:

"By general law regulations shall be prescribed which shall secure a just valuation of all property for ad valorem taxation...."¹⁰

The "just valuation" of article VII, section 4, which the legislature is mandated to guarantee,¹¹ is synonymous with "fair market value," Valencia Center, Inc. v. Bystrom, 543 So.2d 214 (Fla.1989); Walter v. Schuler, 176 So.2d 81 (Fla.1965). The supreme court has defined fair market value as:

"The amount a purchaser willing but not obliged to buy, would pay to one willing but not obliged to sell."

Id.; see also Valencia Center; ITT Community Dev.

This court in McNayr v. Claughton, 198 So.2d 366 (Fla. 3d DCA 1967) added that, in arriving at the willing buyer/willing seller amount (fair market value):

"[T]here are three well recognized guides to appraisal: (1) the cost approach; (2) the comparable sales and (3) the income or economic approach."

Id. at 368. The constitutional mandate of just valuation thus comes down to the classic, well-understood appraisal practice which is to be utilized in arriving at fair market value.

The trial court referred the case to...