Gulf Coast Solar Ctr. I, LLC v. Busbee

• Decision Date: 19 July 2021
• Docket Number: No. 1D20-1439,1D20-1439
• Citation: 326 So.3d 120
• Parties: GULF COAST SOLAR CENTER I, LLC, Appellant, v. Mack BUSBEE CFA, as the Okaloosa County Property Appraiser, State of Florida, Ben Anderson, as the Okaloosa County Tax Collector, and Jim Zingale, as the Executive Director of the Florida Department of Revenue, Appellees.
• Court: Florida District Court of Appeals

326 So.3d 120

GULF COAST SOLAR CENTER I, LLC, Appellant,

v.Mack BUSBEE CFA, as the Okaloosa County Property Appraiser, State of Florida, Ben Anderson, as the Okaloosa County Tax Collector, and Jim Zingale, as the Executive Director of the Florida Department of Revenue, Appellees.

No. 1D20-1439

District Court of Appeal of Florida, First District.

July 19, 2021

Rehearing Denied August 30, 2021

J. Riley Davis of Akerman, LLP, Tallahassee and George W. Powell, Jr. of Akerman, LLP, Naples, for Appellant.

Loren E. Levy of the Levy Law Firm, Tallahassee, for Appellee Mack Busbee CFA, Okaloosa County Property Appraiser.

Winokur, J.

Gulf Coast Solar Center I, LLC, ("Gulf Coast") appeals an order granting final summary judgment in this case concerning ad valorem taxes in a federal enclave. The trial court ruled Gulf Coast's tangible personal property used in connection with a solar energy generating facility located on a ground lease within the territorial confines of the Eglin Air Force Base was taxable. We agree and affirm.

In 1951, Florida ceded to the federal government exclusive jurisdiction over an area of land, which became Eglin Air Force Base. According to the Deed of Cession, the land was provided "for the purpose of erecting and maintaining thereon forts, magazines, arsenals, dockyards and other needful buildings or any of them as contemplated and provided in the Constitution of the United States." The Deed specifically addressed taxation and provided that the property was exempt from taxation under the laws of Florida while it continued to be "owned and occupied by the United States" for the purposes set forth in the Deed of Cession and "not otherwise." The Deed also provided cession was subject to the terms and effect of Florida Statutes.

In 2016, Gulf Coast subleased 240 acres of land on Eglin Air Force Base from Gulf Power Company, which had previously leased the land from the U.S. through the Secretary of the Air Force. After Gulf Coast's solar panels were constructed and operational, the Okaloosa County Property Appraiser ("Property Appraiser") issued a notice in 2018 assessing a tangible personal property tax (ad valorem tax) on the solar panel array. Gulf Coast then filed a complaint against the Property Appraiser, asserting that the solar energy generating facility was immune from ad valorem taxation because it was located within a federal enclave. After considering cross motions for summary judgment, the trial court ruled in the Property Appraiser's favor.

Gulf Coast argues simply that because the property is located on a federal enclave under the exclusive jurisdiction of the federal government the U.S. and Florida supreme courts have definitely held the property is exempt from taxation. See Humble Pipe Line Co. v. Waggonner , 376 U.S. 369, 84 S.Ct. 857, 11 L.Ed.2d 782 (1964) ; Int'l Bus. Machs. Corp. v. Vaughn , 98 So. 2d 747 (Fla. 1957). However, as the Property Appraiser correctly argues, the federal enclave doctrine is much more nuanced than Gulf Coast asserts.

First, because the property is on land leased pursuant to the Military Leasing Act, Congress consented to taxation. Under the Military Leasing Act, the "interest of a lessee of property leased under this section may be taxed by state or local governments." 10 U.S.C. § 2667(f). Neither Humble Pipe Line nor International Business Machines, which Gulf Coast asserts definitely control the issue before this Court, involve the Military Leasing Act.

The Supreme Court in Offutt Housing Co. v. Sarpy County, Neb., 351 U.S. 253, 259, 76 S.Ct. 814, 100 L.Ed. 1151 (1956), held that the buildings, improvements, and appliances owned by the private lessees of property located within a federal enclave were subject to state taxation because Congress had indicated its consent for taxation of "the lessee's interest" under the Wherry Act and Military Leasing Act. 351 U.S. at 260, 76 S.Ct. 814. Although the federal government held paper title to the improvements under the lease, the full value of the building and improvements constituted the lessee's interest in the property subject to state taxation. Id. at 261–62, 76 S.Ct. 814. The state "may tax when the United States divests itself of proprietary interest over the area on which the tax is sought to be levied." Id. at 256, 76 S.Ct. 814 (citing S. R. A., Inc. v. Minnesota , 327 U.S. 558, 66 S.Ct. 749, 90 L.Ed. 851 (1946) ).

The holding in Offutt Housing has been specifically applied to tangible personal property located on leased premises under the Military Leasing Act. See Sec'y of Treasury of Puerto Rico v. Esso Standard Oil Co., (P. R.) , 332 F.2d 624 (1st Cir. 1964). There, the property was owned exclusively by oil companies and used by them on the leased premises in their business of storing,...