Jackson-Shaw Co. v. Aviation Authority

Decision Date18 December 2008
Docket NumberNo. SC07-2235.,SC07-2235.
Citation8 So.3d 1076
PartiesJACKSON-SHAW COMPANY, etc., Appellant, v. JACKSONVILLE AVIATION AUTHORITY, etc., Appellee.
CourtFlorida Supreme Court

John S. Mills and Bryan S. Gowdy of Mills, Creed and Gowdy, P.A., Jacksonville, FL, Michael G. Tanner and Stuart F. Williams of Tanner Bishop, Jacksonville, FL, for Appellant.

Cindy A. Laquidara, Chief Deputy General Counsel, City of Jacksonville, Jacksonville, FL, for Appellee.

PER CURIAM.

This case is before the Court for review of two questions of Florida law certified by the United States Court of Appeals for the Eleventh Circuit that are determinative of a cause pending in that court and for which there appears to be no controlling precedent. We have jurisdiction. See art. V, § 3(b)(6), Fla. Const. In this case, the two certified questions ask us to decide whether, under the undisputed facts of the case, the Jacksonville Aviation Authority ("JAA") has become a joint owner with a private entity in violation of article VII, section 10 of the Florida Constitution and whether it has given, lent, or used its credit to aid a private entity in violation of article VII, section 10 of the Florida Constitution. For the reasons that follow, we hold that the JAA has neither become a joint owner with a private entity by virtue of its obligations under the challenged agreement nor has it given, lent, or used its credit to aid a private entity by virtue of its obligations under the challenged agreement.1

FACTS AND PROCEDURAL HISTORY

Through a suit in federal district court, Jackson-Shaw Company ("Jackson-Shaw") challenged an agreement between the JAA and Majestic Realty Company ("Majestic") for Majestic's long-term use of 328 acres of vacant land owned by the JAA near the Jacksonville International Airport. Jackson-Shaw Co. v. Jacksonville Aviation Auth. (Jackson-Shaw I), 510 F.Supp.2d 691, 695 (M.D.Fla.2007).2 Jackson-Shaw is a private commercial development company that owns a parcel of land known as the Jacksonville International Tradeport near the Jacksonville International Airport. Id. at 696. Majestic is also a private commercial development company. Id. at 698. As explained in the district court's opinion, the JAA is a public entity:

The JAA is [a] public body, established by Florida law to develop and administer public airports in Jacksonville, Florida. It is a political subdivision of the state of Florida and it has responsibility for the planning, management and oversite of four airports located in Duval County, including the Jacksonville International Airport ("JIA") and three smaller air fields, as well as management of a considerable portfolio of undeveloped land. The JAA derives its power and authority from its Charter, which is a special act of the Legislature. The JAA was created to "operate, manage, and control all publically owned airports and ancillary facilities located within Duval County" as provided by statute. The JAA is governed by a seven-member board of directors, four appointed by the governor of Florida, and three appointed by the mayor of Jacksonville. The JAA possesses no independent taxing authority, and receives its revenues from state and federal grants, landing fees, rentals, concession fees and facility lease fees.

The JAA has approximately 4,000 to 6,000 acres of land in its portfolio available for development, depending upon possible future runway configurations. Much of the land available is located in the vicinity of JIA including 328-acre Woodwings East, and its sister parcel of vacant land, 890-acre Woodwings West across International Airport Boulevard, though some is predominantly wetlands. In 2004, the JAA created the Enterprise Division to focus on maximizing the value of the Authority's undeveloped property, and to diversify the JAA's revenue sources.... The Enterprise Division is comprised of the real estate division and the consultative services division. The real estate division is responsible for leasing non-aeronautical land at JAA's four airports to enable non-aeronautical development and generate revenue to the Authority.

Id. at 697 (citations and footnotes omitted) (quoting ch. 2004-464, § 1, Laws of Fla.).

The challenged agreement between the JAA and Majestic concerns the property known as Woodwings East, which is owned by the JAA and consists of approximately 328 unimproved acres of land lying southeast of Jacksonville International Airport. Id. at 698. A portion of Woodwings East was acquired by eminent domain. Id. It is part of the Jacksonville International Airport Development of Regional Impact and was tax-exempt at the time of trial. Id. The JAA attempted in the past to develop this land into an industrial and office park, but negotiations with another large-scale developer broke down in the late 1990s. Id. Thereafter, the JAA retained a consulting firm to determine the highest and best use of the property, and the firm concluded that it should be developed for light industrial and commercial use. Id. at 698-99. The JAA never had the property's value appraised, but it estimated the value based on the price of a nearby parcel of undeveloped property for which it had negotiated to purchase. Id. at 699. Based on this transaction, the JAA estimated in 2005 that Woodwings East was worth between $35,000 and $50,000 an acre, or approximately $10 million. Id.

In 2003, the JAA "conducted a Non-Aviation Real Estate Development Board Workshop to discuss strategies for putting some of the [JAA's] real estate assets into production, including whether JAA should get directly involved in the development business, constructing infrastructure, and actually constructing buildings for lease." Id. The JAA's intent was to derive revenue for the airport. Id. at 700. Based on this workshop, the JAA determined that it would ground lease the property, rather than use the JAA's capital dollars to develop it. Id. The JAA placed "For Lease" signs on the property and issued a brochure advertising that it was looking for commercial and industrial development for Woodwings. Id. In looking for someone for the property, the JAA wanted to make sure that it did not have to put out any more funds than the $750,000 that it had previously committed in its 2005 capital budget to construct a road extension. Id. The JAA did not want to be responsible for providing other infrastructure for the property, which would necessitate the JAA borrowing money impacting its debt ratios. Id. at 701. Furthermore, the JAA was seeking a long-term revenue stream. Id.

In February 2005, Majestic first contacted the JAA after seeing one of the "For Lease" signs. Id. In March 2005, Majestic sent the JAA "`a preliminary overview of the real estate and partnership structure'" it would propose creating. Id. In the ensuing months, the parties negotiated the terms of a two-part transaction: an Option to Ground Lease ("Option") between the JAA and Majestic, and an incorporated Participating Ground Lease Agreement ("PGL"). Id. at 701-02.

"On December 19, 2005, the Option and incorporated PGL were presented to the JAA board of directors for the first time in a public meeting." Id. at 704. The Submission for Board Approval provided in pertinent part:

Pursuant to its charge of diversifying the Jacksonville Aviation Authority's ("JAA") non-aviation revenue stream through the development of non-aeronautical real estate at JAA airports, the Enterprise Division identified and concentrated its efforts on the unimproved JAA real estate known as Woodwings East.

. . . .

The proposed arrangement provides JAA with a vehicle to generate significant cash flow for vacant non-producing land with a large industry leader with a successful track record of performing as promised and generating significant cash flow for landowners.

Id. The JAA board unanimously approved the Option and PGL and authorized its executive director, John Clark, to enter into and execute all necessary agreements. Id. at 705. The board chairman, Mary Burnett, testified that she voted for the project because "`I thought in the best interest of the Jacksonville International Airport this was the right thing to do.... This was a good use for the property ... [I]t's been vacant for many years. It was going to generate revenue. It was going to give people jobs. It was a good thing for the community.'" Id.

After the board's approval in December 2005, negotiations between the JAA and Majestic continued, and among other terms, a fixed rent was added on the advice of the JAA's counsel. Id. at 706. On September 18, 2006, the JAA board of directors, in a public board meeting, approved the revised Option and PGL. Id. The 2006 board submission mirrored that provided to the board in 2005 with several amendments. Id. The Option was signed by Majestic, and Clark signed the Option the day before trial commenced in this case. Id. at 707.

The district court's opinion summarized the pertinent aspects of the Option and PGL as follows:

1. Summary

The JAA approved a two-part agreement with Majestic, granting Majestic an option to designate and lease sub-parcels for commercial development from the 328-acre Woodwings East parcel for a period of five years, with the right to extend the Option up to 15 years. The Option encumbers the entire 328 acre tract, and is at no cost to Majestic. After exercising the Option on a sub-parcel by the end of the 5-year Option period, Majestic has up to four more years to prepare to lease it, all without a return to the JAA. The 65-year ground lease (PGL) which is incorporated into the Option, to be executed by the JAA and Majestic for each sub-parcel, provides Majestic an additional four years to "substantially complete" commercial development on the property. After a one-year grace period from the closing on each PGL, Majestic would pay JAA either a "fixed rent" of $1,380 per acre per year on the leased sub-parcel, or 50 percent of the "net revenue" generated by Majestic's...

To continue reading

Request your trial
31 cases
  • State v. Markus
    • United States
    • Florida Supreme Court
    • January 31, 2017
    ...This question presents a pure question of law and is, therefore, subject to de novo review. SeeJackson–Shaw Co. v. Jacksonville Aviation Auth. , 8 So.3d 1076, 1084–85 (Fla. 2008). The conflict we must now resolve between the decision below and Ulysse is the result of a misunderstanding of U......
  • Special v. W. Boca Med. Ctr.
    • United States
    • Florida Supreme Court
    • November 13, 2014
    ...Because the certified question presents a pure question of law, our standard of review is de novo. See Jackson–Shaw Co. v. Jacksonville Aviation Auth., 8 So.3d 1076, 1085 (Fla.2008) (citing Macola v. Gov't Emp. Ins. Co., 953 So.2d 451, 454 (Fla.2006) ).As we consider the proper test for det......
  • Tarasewicz v. Royal Caribbean Cruises Ltd.
    • United States
    • U.S. District Court — Southern District of Florida
    • June 30, 2015
    ...(4) a right to share in the profits and (5) a duty to share in any losses which may be sustained." Jackson-Shaw Co. v. Jacksonville Aviation Auth., 8 So. 3d 1076, 1089 (Fla. 2008) (quoting Kislak v. Kreedian, 95 So. 2d 510, 515 (Fla. 1957)). "The absence of one of the elements precludes a f......
  • Kirsch v. Brightstar Corp., 12 C 6966
    • United States
    • U.S. District Court — Northern District of Illinois
    • January 13, 2015
    ...a combination thereof in conducting some particular line of trade or for some particular business deal.” Jackson–Shaw Co. v. Jacksonville Aviation Auth., 8 So.3d 1076, 1089 (Fla.2008) (quoting Kislak v. Kreedian, 95 So.2d 510, 515 (Fla.1957) ). The relationship must arise out of a contract,......
  • Request a trial to view additional results
1 books & journal articles
  • Business & commercial cases
    • United States
    • James Publishing Practical Law Books Florida Causes of Action
    • April 1, 2022
    ...thereof, in conducting a particular line of trade or for some particular business deal. Jackson-Shaw Co. v. Jacksonville Aviation Auth. , 8 So.3d 1076, 1089 (Fla. 2008). The fiduciary relationship between parties arises by virtue of the existence of the joint venture agreement, requiring th......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT