Homer v. Dadeland Shopping Center, Inc., 68-75

• Decision Date: 14 January 1969
• Docket Number: No. 68-75,68-75
• Parties: Porter W. HOMER, as Acting County Manager of Dade County, Florida, etc., et al., Appellants, v. DADELAND SHOPPING CENTER, INC., a Maryland corporation authorized to do business in the State of Florida, Appellee.
• Court: Florida District Court of Appeals

Page 844

217 So.2d 844

Porter W. HOMER, as Acting County Manager of Dade County, Florida, etc., et al., Appellants, v. DADELAND SHOPPING CENTER, INC., a Maryland corporation authorized to do business in the State of Florida, Appellee.

No. 68-75.

District Court of Appeal of Florida, Third District.

Jan. 14, 1969.

Rehearing Denied Feb. 11, 1969. Opinion Vacated 231 So.2d 870.

Thomas C. Britton, County Atty., and Gerald T. Wetherington, Asst. County Atty., for appellants.

Sibley, Giblin, Levenson & Ward, Miami Beach, for appellee.

Before PEARSON and HENDRY, JJ., and PIERCE, WILLIAM C., Associate Judge.

HENDRY, Judge.

This appeal was taken by the defendant below, the Dade County Taxing Authorities, from a final judgment and decree of the Circuit Court of Dade County. The plaintiff in this action is a corporation whose principal asset is the property on which a thriving shopping center now exists. At issue is the proper ad valorem tax assessment of three particular portions of the total property.

In 1965, the taxing authorities assessed the three parcels of land at a total value of $889,520.00. In 1966, the same three parcels were assessed at $3,360,210.00. This action was originally brought to test the correctness of the method or methods used by the taxing authorities in arriving at their 1966 assessment for the property.

Before we set forth the trial court's finding regarding the value of each particular folio, some factual detail is essential. Prior to 1961, almost all ¹ of two major tracts of land were owned in fee simple by Arvida, Inc., a real estate corporation. In 1961, Arvida entered into a leasing agreement with Federated Stores, Inc., wherein Arvida's entire interest was leased for a period of 99 years. Thereafter, Federated sub-leased all the Arvida property to Dadeland, Inc., the appellee here, retaining for itself only the 2.29 acres which it owned in fee simple before the first lease with Arvida. Dadeland, Inc., was a subsidiary of its parent, the Joseph Myerhof Corporation, and had been created for the purpose of developing and operating the shopping center venture.

In 1962, Dadeland and Federated entered into an operating agreement, which set forth the expectations of the parties with regard to Dadeland's forthcoming efforts in developing the property into a successful venture. Among its lengthy provisions, the operating agreement set forth certain restrictive covenants to run with the land, which in effect bound Dadeland to develop only up to a certain amount of the property. The balance of the land remaining was divided into separate categories with regard to the applicable restrictions.

The first category of the remaining undeveloped land was dedicated solely to future expansion, requiring first, however approval from Federated and conformity with technical specifications which governed the ratio of parking space to floor space in the buildings to be constructed. The other category was required by restrictive covenants to be utilized solely for access roads and paved parking areas for free public parking. All of these restrictive covenants bound the shopping center property for a period of 20 years, or so long as one of the retail stores, Burdine's, ² or its successors operate a retail store, whichever is longer. The business justification underlying the restrictive covenants was to insure that the shopping center's physical growth would be in proportion to the area's economic growth. Therefore, the restrictions would prevent a situation wherein too many tenants of the center were competing for a limited market in the neighborhood.

In 1965, Dadeland entered a series of transactions designed to secure for itself fee simple ownership of the entire shopping center property, with some minor exceptions. To achieve this, Dadeland made an outright cash purchase from Arvida, Inc., of all Arvida's interest in the two main tracts. Then, Dadeland negotiated to acquire the outstanding leasehold interest held by Federated. In the latter transaction, Federated conveyed all its leasehold interest in the Arvida property for a cash amount, plus receipt of an encumbered interest in 5.71 acres of land adjacent to the Burdine's store. ³ The encumbrances on this 5.71 acres of property include, among other outstanding liens, the identical restrictive covenants that apply to much of the property at issue here. The tax stamps affixed to the deed for the 5.71 acres indicated a consideration of $84,000.00.

The final transaction involving these parties that is part of the record on appeal is an 'Operating Agreement', made January 11, 1966, between Federated Department Stores, Inc., and Dadeland Shopping Center, Inc. We shall return to the effect of this agreement later in this opinion; however, suffice it to say at this point that this 'Operating Agreement' has raised several questions of fact which we will remand for resolution, but which do not in any way affect the issues of law which we are about to resolve.

At the heart of this appeal is the simple question: Did the chancellor act contrary to law or abuse his discretion in his final decree?

Our first source of guidance here is Fla.Stat., § 193.021, F.S.A. Before this statute was enacted in 1963 the tax assessor's wide discretion in computing 'just valuation' had caused numerous difficulties. E.g., State ex rel. Glynn v. McNayr, Fla.1961, 133 So.2d 312; Schleman v. Conn. Gen. Life Ins. Co., 151 Fla. 96, 9 So.2d 197. The Legislature enacted section 193.021 in an effort to give the county tax assessors a yardstick with which to evaluate 'just valuation' in accordance with Art. IX, Section 1, of the Florida Constitution, F.S.A. The statute now sets forth eight specific factors to be considered by the county assessor:

'(1) The present cash value of the property;

'(2) The highest and best use to which the property can be expected to be put in the immediate future; and the present use of the property;

'(3) The location of said property;

'(4) The quantity or size of said property;

'(5) The cost of said property and the present replacement value of any improvements thereon;

'(6) The condition of said property;

'(7) The income from said property; and

'(8) The net proceeds of the sale of the property, as received by the seller, after deduction of all of the usual and reasonable fees and costs of the sale, including the costs and expenses of financing.'

In Walter v. Schuler, Fla.1965, 176 So.2d 81, the Supreme Court's consideration of section 193.021 resulted in blending the 'just valuation' concept with the specific factors enumerated in the statute. The first premise set forth by the court stated:

'We agree with the chancellor's view that Sec. 193.021 was not intended to give assessors an almost unbridled discretion in the performance of their duty to establish just valuation. Rather, we regard the Act as an attempt by the Legislature to pin the assessors more firmly to the Constitutional mandate.' Id. at 85.

The Supreme Court then reaffirmed the classic formula for determination of 'just valuation' as '* * * the amount a 'purchaser willing but not obligated to buy, would pay to one willing but not obligated to sell.' Root v. Wood, 155 Fla. 613, 21 So.2d 133.' Id. at 86.

Finally, the court combined the two positions just given by stating:

'If the assessors will apply (the 'willing buyer' test) and in doing so observe the seven ⁴ guideposts in Sec. 193.021, justness should be secured to the taxpayer and the tangle that has developed should be unraveled.' Id. at 86.

Lanier v. Overstreet, Fla.1965, 175 So.2d 521, was a case dealing with the correctness of the tax assessor's valuation of agricultural property. At issue was whether the tax assessor could properly consider the potential use to which the land could be put. The Supreme Court answered that the taxing authorities could not consider potential use, and in so answering, directed attention to Fla.Stat. 193.021, F.S.A.:

'The latest legislative directive of this subject, Ch. 63--250, Acts of 1963, appearing as Section 193.021, Fla.Stat., 1963, F.S.A., is in accord with its previous pronouncements in this field. By authorizing tax assessors to consider, as one of the factors '(i)n arriving at a just valuation' of property, the use to which the property 'can be Expected to be put in the Immediate future', the legislature has, under the familiar rule of Expressio unius est exclusio alterius, prohibited tax assessors from considering potential uses to which property is reasonably susceptible and to which it might possibly be put in some future tax year, or, even, during the current tax year. To be considered, the use must be Expected, not merely potential or a 'reasonably susceptible type of use'; it must be expected Immediately, not at some vague uncertain time in the future.' (Emphasis by the court.) Id. at 524.

In Staninger v. Jacksonville Expressway Authority, Fla.App.1966, 182 So.2d 483, the question was whether or not the restrictive covenants on the property at issue should have properly been considered in reaching a just valuation in a condemnation action. The court felt that it was a proper element, and this position is taken by the great weight of authority in the U.S. See Annot., 55 A.L.R.2d 773 (1957).

Stainger's main holding discussed the evidentiary weight to be afforded restrictive covenants on property when such property was being valuated. However, a second problem is raised by the opinion, and that problem is this: What consideration may a court give to the...