Schultz v. TM Florida-Ohio Realty Ltd. Partnership

• Decision Date: 28 March 1991
• Docket Number: No. 75322,FLORIDA-OHIO,75322
• Citation: 16 Fla. L. Weekly 225,577 So.2d 573
• Court: Florida Supreme Court
• Parties: 16 Fla. L. Weekly 225 Ronald J. SCHULTZ, etc., et al., Petitioners, v. TMREALTY LTD. PARTNERSHIP, Respondent.

Page 573

577 So.2d 573

16 Fla. L. Weekly 225

Ronald J. SCHULTZ, etc., et al., Petitioners, v. TM FLORIDA-OHIO REALTY LTD. PARTNERSHIP, Respondent.

No. 75322.

Supreme Court of Florida.

March 28, 1991.

Robert A. Butterworth, Atty. Gen. and Joseph C. Mellichamp, III, Senior Asst. Atty. Gen., Tallahassee, and Robert E.V. Kelley, Jr. of Rydberg, Goldstein & Bolves, P.A., Tampa, for petitioners.

Kent G. Whittemore of Whittemore & Ramsberger, P.A., St. Petersburg, for respondent.

John G. Fletcher, South Miami, for amicus curiae, Valencia Center, Inc.

Gaylord A. Wood, Jr. of Gaylord A. Wood, Jr., Fort Lauderdale, and Willa A. Fearrington of Fearrington & Hyman, West Palm Beach, for amicus curiae, Rebecca E. Walker as Palm Beach County Property Appraiser.

Larry E. Levy of Macfarlane, Ferguson, Allison & Kelly, Tallahassee, for amicus curiae, James Page, Nassau County Property Appraiser and as President of the Property Appraisers' Ass'n of Florida and Ron Alderman, Hillsborough County Property Appraiser.

Robert A. Ginsburg, Dade Co. Atty., and Craig H. Coller and Daniel A. Weiss, Asst. Co. Attys., Miami, for amicus curiae, Joel W. Robbins, as Property Appraiser of Dade County.

Arthur J. England, Jr. and Eileen Ball Mehta of Fine Jacobson Schwartz Nash Block & England, Miami, for amicus curiae, International Council of Shopping Centers.

PER CURIAM.

We have for review Schultz v. TM Florida-Ohio Realty Ltd. Partnership, 553 So.2d 1203 (Fla. 2d DCA 1989), in which the Second District Court of Appeal certified the following question as being of great public importance:

WHAT IS THE PROPER METHOD OF ASSESSING FOR AD VALOREM PURPOSES INCOME-PRODUCING PROPERTY WHICH IS ENCUMBERED BY A LONG-TERM LEASE WHICH DOES NOT RETURN TO THE OWNER RENT CONSISTENT WITH THE CURRENT RENTAL VALUE FOR SIMILAR PROPERTY? 553 So.2d at 1225. We have jurisdiction pursuant to article V, section 3(b)(4), Florida Constitution.

The property that is the subject of the assessment at issue is approximately an 11-acre tract of land improved with a large department store-type building occupied by two tenants, a K-Mart and a waterbed store. The property is owned by the respondent, TM Florida-Ohio Realty Ltd. Partnership (taxpayer), and is encumbered by a 22-year lease agreement with K-Mart Department Stores that commenced in 1970 and that contains four five-year options to renew.

The respondent filed an action in circuit court contesting the 1986 assessment of the property by the property appraiser of Pinellas County in the amount of $3,981,400. After a trial at which experts for both parties testified, the trial court entered a final judgment declaring null and void the portion of the assessment which exceeds $2,950,000, the amount found to be the fair market value of the property by the taxpayer's expert. Although the trial court found "no problem in the methodology by which [the taxing authority] appraised the property in 1986," the court could not "judicially countenance an 89.1 percent increase in the appraisal evaluation in the space of one year" because the taxpayer could not have anticipated such an increase.

The trial court's reduced assessment was affirmed on appeal. The district court rejected the property appraiser's contention that the assessment must be upheld because: 1) section 193.011, Florida Statutes (1985), ¹ merely requires a property appraiser to consider the various factors affecting the value of property; and 2) the evidence established that the appraiser considered each of those factors, including the "submarket" ² rental income under the long-term lease. In the district court's view "submarket rental income from a long-term lease on real property should be weighed in arriving at a proper valuation of the property for ad valorem tax purposes." 553 So.2d at 1208 (emphasis added). Reasoning that the property appraiser's failure to accord any weight to the actual submarket rental income from the property resulted in an assessment that exceeded the fair market value of the property, the district court concluded that the appraiser did not give "proper consideration to the income factor specified in section 193.011, as did in effect the trial court in arriving at its reduced assessment." 553 So.2d at 1205. Although the property appraiser's alternative motions for rehearing and rehearing en banc were denied by the district court, the question as set forth above was certified to this court as being of great public importance. Id. at 1225.

We find our decision in Valencia Center v. Bystrom, 543 So.2d 214 (Fla.1989), controlling and agree with the dissenting opinion below that the decision under review conflicts with Valencia Center and this Court's decision in Oyster Pointe Resort Condominium Association v. Nolte, 524 So.2d 415 (Fla.1988). See Schultz, 553 So.2d at 1225 (Parker, J., dissenting). As we noted in Valencia Center,

This Court has found that the just valuation at which property must be assessed under the constitution and section 193.011 is synonymous with fair market value.... In arriving at fair market value the assessor must consider, but not necessarily use, each of the factors set out in section 193.011. Oyster Pointe Resort Condominium Ass'n v. Nolte, 524 So.2d 415 (Fla.1988). The particular method of valuation, and the weight to be given each factor, is left to the discretion of the assessor, and his determination will not be disturbed on review as long as each factor has been lawfully considered and the assessed value is within the range of reasonable appraisals. Blake v. Xerox Corp., 447 So.2d 1348 (Fla.1984).

543 So.2d at 216-17 (emphasis added). In Valencia Center, we went on to specifically reject the taxpayer's argument that an assessment should be decreased where the property is encumbered by a long-term below-market lease. Id. at 217. In rejecting that argument we noted that

this issue too has already been addressed by this Court. In Department of Revenue v. Morganwoods Greentree, Inc., 341 So.2d 756, 758 (Fla.1977), we stated:

We reaffirm the general rule that in the levy of property tax the assessed value of the land must represent all the interests in the land. This means that despite the mortgage, lease, or sublease of the property, the landowner will still be taxed as though he possessed the property in fee simple. The general property tax ignores fragmenting of ownership and seeks payment from only one "owner."

(Citations omitted...