Page v. City of Fernandina Beach
| Decision Date | 15 June 1998 |
| Docket Number | No. 96-3645,96-3645 |
| Citation | 714 So.2d 1070 |
| Parties | 23 Fla. L. Weekly D1477 James PAGE, in his capacity as Property Appraiser for Nassau County, Florida; Gwendolyn M. Miller, in her for Nassau County, Florida; and L.H. Fuchs, in his capacity as Executive Director of the Florida Department of Revenue, Appellants, v. CITY OF FERNANDINA BEACH, a municipal corporation, Appellee. |
| Court | Florida District Court of Appeals |
Larry E. Levy of The Levy Law Firm, Tallahassee; Granville C. Burgess, Fernandina Beach; and Robert A. Butterworth, Attorney General, and Joseph C. Mellichamp, III, Senior Assistant Attorney General, Department of Legal Affairs, Tallahassee, for Appellants.
Benjamin K. Phipps and George C. Hamm of The Phipps Firm, Tallahassee; and Anthony J. Leggio, Fernandina Beach, for Appellee.
This case raises questions about the amenability to ad valorem taxation of certain municipally owned real property. We affirm the final judgment insofar as it adjudicated property at a public beach and vacant lots held by the City of Fernandina Beach (City) exempt from ad valorem taxation, but we reverse the final judgment insofar as it held that city property leased to private parties who used it for proprietary purposes was nevertheless exempt.
As Nassau County Property Appraiser, James Page (the property appraiser) assessed the property in question for the years 1990, 1992, and 1993. Its claims for exemptions having been denied, the City filed three separate complaints against appellants in circuit court. Eventually, the cases were consolidated, final judgment was entered, and the property appraiser instituted this appeal, along with Gwendolyn M. Miller, Nassau County Tax Collector, and the Florida Department of Revenue, through its executive director, L.H. Fuchs.
The final judgment concluded that the "City is exempt from ad valorem taxation on the Marina property," 1 "the airport hang[a]rs," "the vacant lots," "the beach, public restroom and concession stand; ... [but that t]he miniature golf course is subject to ad valorem taxation." Since the City has not taken a cross appeal, the ruling as to the Putt-Putt golf course is not before us. We affirm as to the vacant lots and--because it, too, was not leased on tax assessment day--as to the beach property, but reverse as to the airport and the marina.
Insofar as pertinent, the same constitutional and statutory provisions govern in all three tax years in question. The rule has long been:
The taxable status of property is determined on January 1 of each year. See Section 192.042, Florida Statutes (1973). This is the date on which the tax assessor determines whether a particular parcel of property is entitled to exemption from taxation for the tax year. See Overstreet v. Ty-Tan, Inc., 48 So.2d 158 (Fla.1950).
Dade County Taxing Auths. v. Cedars of Lebanon Hosp. Corp., 355 So.2d 1202, 1204 (Fla.1978). See Lake Worth Towers, Inc. v. Gerstung, 262 So.2d 1 (Fla.1972).
Generally, our supreme court has said "all property is subject to taxation unless expressly exempt and such exemptions are strictly construed against the party claiming them." Sebring Airport Auth. v. McIntyre, 642 So.2d 1072, 1073 (Fla.1994) (citing Volusia County v. Daytona Beach Racing and Recreational Facilities District, 341 So.2d 498, 502 (Fla.1976); Williams v. Jones, 326 So.2d 425, 435 (Fla.1975)).
Where municipal property is used by the municipality that owns it, however, the constitution has established a broad exemption, which the Legislature has implemented by providing that "[a]ll property of the several ... municipalities of this state ... used [by them] for governmental, municipal, or public purposes shall be exempt from ad valorem taxation, except as otherwise provided by law." § 196.199(1)(c), Fla. Stat. (1995). Still on the books, this statutory provision antedates the tax years in question.
With regard to City property leased to nongovernmental lessees, section 196.199(2)(a), Florida Statutes (1995), provided at all pertinent times:
Leasehold interests in property of ... municipalities, ... shall be exempt from ad valorem taxation only when the lessee serves or performs a governmental, municipal, or public purpose or function, as defined in s. 196.012(6). In all such cases, all other interests in the leased property shall also be exempt from ad valorem taxation.
One law 2 subsequently amending section 196.012(6), Florida Statutes, specifically made the amendment "appl[icable] to the 1994 and subsequent tax rolls." Ch. 94-353, § 59, at 2566, Laws of Fla. Since the present dispute has to do with tax rolls prepared before 1994, this amendment to section 196.012(6), Florida Statutes, does not purport to control. Indeed, no amendment that took effect after January 1, 1993, applies in the present case. 3 See State, Dep't of Revenue v. Zuckerman-Vernon Corp., 354 So.2d 353 (Fla.1977); State ex rel. Riverside Bank v. Green, 101 So.2d 805 (Fla.1958).
Property a city has leased to a private entity is exempt from ad valorem taxation only if it is used for what has been called a "governmental-governmental" purpose. See Canaveral Port Auth. v. Department of Revenue, 690 So.2d 1226, 1229-30 (Fla.1996) (); Capital City Country Club, Inc. v. Tucker, 613 So.2d 448, 452 (Fla.1993). Section 196.012(6), Florida Statutes (1991), provided:
Governmental, municipal, or public purpose or function shall be deemed to be served or performed when the lessee under any leasehold interest created in property of the United States, the state or any of its political subdivisions, or any municipality, agency, authority, or other public body corporate of the state is demonstrated to perform a function or serve a governmental purpose which could properly be performed or served by an appropriate governmental unit or which is demonstrated to perform a function or serve a purpose which would otherwise be a valid subject for the allocation of public funds. 4] The term "governmental purpose" includes a direct use of property on federal lands in connection with the Federal Government's Space Exploration Program. Real property and tangible personal property owned by the Federal Government and used for defense and space exploration purposes or which is put to a use in support thereof shall be deemed to perform an essential national governmental purpose and shall be exempt.
"The exemptions contemplated under ... [this provision for property leased to private, profit making lessees] relate to 'governmental-governmental' functions as opposed to 'governmental-proprietary' functions." McIntyre, 642 So.2d at 1073 (quoting Williams, 326 So.2d at 433).
Our supreme court has rejected the proposition that "a governmental lease to a [for profit] nongovernmental lessee [and so the underlying realty] is exempt from ad valorem taxation if the lessee [merely] serves a public purpose." McIntyre, 642 So.2d at 1073. To avoid giving one private enterprise an advantage over another by virtue of its landlord's identity, the constitution strictly limits exemption from ad valorem taxation. Property leased to profit-making nongovernmental entities is exempt only when such entities use the property to carry out some sovereign function on the municipality's behalf (thereby presumably reducing the municipality's cost of providing governmental-governmental services). "It is the utilization of leased property from a governmental source that determines whether it is taxable under the Constitution." Straughn v. Camp, 293 So.2d 689, 695 (Fla.1974).
"Proprietary functions promote the comfort, convenience, safety and happiness of citizens, whereas government functions concern the administration of some phase of government." McIntyre, 642 So.2d at 1074 n. 1. See generally Chardkoff Junk Co. v. City of Tampa, 102 Fla. 501, 135 So. 457 (1931) ().
The law grants no "ad valorem tax exemption to a nongovernmental lessee of governmental property that uses such property for [profit-making] governmental-proprietary purposes," McIntyre, 642 So.2d at 1074, such as operating a hospital, hauling garbage, or operating an incinerator. Because all the lessees in the present case were private entities seeking to make a profit, at issue is whether the leased properties served a "governmental-governmental" purpose or whether they were put to uses that are "purely proprietary and for profit," Williams, 326 So.2d at 433, even if of benefit to the public.
The final judgment declared exempt certain property the City owns at the Fernandina Beach Municipal Airport, "officially an uncontrolled airport." Although owned by the City, the property at issue was not "used exclusively by [the City] for municipal or public purposes." Because the City leased the property and did not use it itself, the property did not qualify for the exemption set out in article VII, section 3, of the Florida Constitution of 1968 and section 196.199(1)(c), Florida Statutes, the legislation implementing the constitutional exemption for municipal property unencumbered by lease.
Rawls Aviation and its successor, Island Aviation Services, (Rawls) are or were nongovernmental lessees of part of this property. Rawls was authorized to use the leased premises to conduct a fixed-base operation, offering aviation services to the general public, including chartering aircraft, servicing aircraft, and selling aircraft parts, accessories, fuel, and lubricants, as well as providing catering services and renting cars, all for profit. Additionally, the lease authorized Rawls...
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