Sebring Airport Auth. v. McIntyre, No. SC94118

• Decision Date: 05 April 2001
• Docket Number: No. SC94105., No. SC94118
• Parties: The SEBRING AIRPORT AUTHORITY and Sebring International Raceway, Inc., Appellants, v. C. Raymond McINTYRE, Property Appraiser of Highlands County, Florida; and J.T. Landress, Tax Collector Of Highlands County, Florida, Appellees. The Department of Revenue, Appellant, v. C. Raymond McIntyre, Property Appraiser of Highlands County, Florida; and J.T. Landress, Tax Collector of Highlands County, Florida, Appellees.
• Court: Florida Supreme Court

783 So.2d 238

The SEBRING AIRPORT AUTHORITY and Sebring International Raceway, Inc., Appellants, v. C. Raymond McINTYRE, Property Appraiser of Highlands County, Florida; and J.T. Landress, Tax Collector Of Highlands County, Florida, Appellees.

The Department of Revenue, Appellant, v. C. Raymond McIntyre, Property Appraiser of Highlands County, Florida; and J.T. Landress, Tax Collector of Highlands County, Florida, Appellees.

Nos. SC94118, SC94105.

Supreme Court of Florida.

April 5, 2001.

Paul R. Pizzo, Hala A. Sandridge and Charles Tyler Cone of Fowler, White, Gillen, Boggs, Villareal and Banker, P.A., Tampa, FL; and Robert A. Butterworth, Attorney General, and Joseph C. Mellichamp, III, Senior Assistant Attorney General, Tallahassee, FL, for Appellants.

Larry E. Levy, Tallahassee, FL, for Appellees.

Mark C. Extein and John R. Hamilton of Foley & Lardner, Orlando, FL, for Greater Orlando Aviation Authority, Amicus Curiae.

Steven L. Brannock of Holland & Knight, Tampa, FL, for The Florida League of Cities, Inc., the Cities of Lakeland, Orlando, St. Petersburg, and the Tampa Sports Authority, Amici Curiae.

Loren E. Levy, Tallahassee, FL, for Property Appraisers' Association of Florida, Inc., Amicus Curiae.

Robert A. Ginsburg, Miami-Dade County Attorney, and Thomas W. Logue and James K. Kracht, Assistant County Attorneys, Miami, FL, for Joel W. Robbins, The Dade County Property Appraiser, Amicus Curiae.

William D. Shepherd, Tampa, FL, for Rob Turner, Hillsborough County Property Appraiser, Amicus Curiae.

LEWIS, J.

We have on appeal the decision of the Second District Court of Appeal in Sebring Airport Authority v. McIntyre, 718 So.2d 296, 297 (Fla. 2d DCA 1998) ("Sebring III"), which declared a portion of section 196.012(6), Florida Statutes (Supp.1994), to be unconstitutional. The invalidated provision would have created an ad valorem tax exemption for situations where private enterprise leases governmental property to be utilized for profit-making endeavors such as convention and visitor centers, sports facilities, concert halls, arenas and stadiums, parks or beaches. The exemption for these ventures was to be accomplished by statutorily defining these types of activities as serving "a governmental, municipal, or public purpose or function." We have jurisdiction. Art. V, § 3(b)(1), Fla. Const.

The primary premise advanced in support of the constitutional validity of this legislative scheme of exemptions is that these types of activities have traditionally been recognized to serve or be a "public purpose" in connection with bond validation proceedings, an approach which involves an analysis of the nexus between governmental financing and private profit making ventures pursuant to article VII, section 10 (pledging credit) of the Florida Constitution. A fundamental flaw in virtually all of the arguments submitted in support of the constitutionality of this legislation is that one cannot adopt and apply the phrase or concept of "public purpose" from decisions concerning issues other than ad valorem taxation exemptions in this ad valorem taxation context. The bond validation concept simply cannot be superimposed upon or commingled with the constitutional ad valorem taxation exemption analysis. For example, article VII, section 10, which is directly implicated in bond validation matters, itself undermines the theory advanced to support the validity of the exemption, in the provision related to the issuance and sale of certain revenue bonds which provides:

If any project so financed, or any part thereof, is occupied or operated by any private corporation, association, partnership or person pursuant to contract or lease with the issuing body, the property interest created by such contract or lease shall be subject to taxation to the same extent as other privately owned property.

Art. VII, § 10(c), Fla. Const.

The 1994 amendment under consideration here attempts to create an ad valorem tax exemption for private, profit-making ventures conducted upon property leased from a governmental entity—a result which the Florida Constitution does not allow. Therefore, we agree with the Second District to the extent that it held the 1994 amendment to be unconstitutional, and affirm the result below.

The broad question posed here is not new: we must address the source and the constitutionally derived limitations upon provisions establishing and creating exemptions from ad valorem taxation. The issue is not the popularity of such activities, nor the pleasure derived from such operations. We certainly understand, acknowledge and respect the legislative direction involved here, but we are compelled to review and address the issue from a specific constitutional perspective.

The activities of the appellants—the Sebring Airport Authority and Sebring International Raceway (collectively, "Raceway")¹ —have received prior scrutiny by this Court, and are conceded to be unchanged since our last review. As observed by the trial court, "[t]he factual uses of the subject property include the operation of a racetrack by the lessee for profit and attendant functions, such as food stands, drink stands, souvenirs, all of which are, per se, proprietary activities."

We first addressed Raceway's activities, as measured against the "public purpose" requirement for mandatory tax exemptions, in Sebring Airport Authority v. McIntyre, 642 So.2d 1072 (Fla.1994) ("Sebring II"). In that case, Raceway asserted that the subject property was being used to further a public purpose, and it was therefore entitled to an exemption from ad valorem taxation under section 196.199(2)(a), Florida Statutes (1991). That section provided, in pertinent part, that "[p]roperty owned by the following governmental units but used by nongovernmental lessees shall only be exempt from taxation ... when the lessee serves or performs a governmental, municipal, or public purpose or function, as defined in s. 196.012(6)." Section 196.012(6), in turn, provided:

(6) 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.

The trial court denied the exemption, and entered summary judgment for the county. The district court affirmed. Sebring Airport Authority v. McIntyre, 623 So.2d 541 (Fla. 2d DCA 1993) ("Sebring I"). Asserting conflict with Page v. Fernandina Harbor Joint Venture, 608 So.2d 520 (Fla. 1st DCA 1992), Raceway then sought to have this Court review the denial of the exemption.

In asserting entitlement to an exemption, Raceway did not dispute its status as a for-profit corporation. Rather, Raceway argued that "a governmental lease to a nongovernmental lessee is exempt from ad valorem taxation if the lessee serves a public purpose, regardless of the for-profit motive." Sebring II, 642 So.2d at 1073. This Court disagreed:

A governmental-proprietary function occurs when a nongovernmental lessee utilizes governmental property for-proprietary and for-profit aims.² We have no doubt that Raceway's operation of the racetrack serves the public, but such service does not fit within the definition of a public purpose as defined by section 196.012(6). Raceway's operating of the race for profit is a governmental-proprietary function; therefore, a tax exemption is not allowed under section 196.199(2)(a).

Id. at 1074. In approving the Second District's decision denying Raceway an exemption, the Court "disapprove[d] Page v. Fernandina Harbor Joint Venture, 608 So.2d 520 (Fla. 1st DCA 1992), to the extent that it may be read to grant ad valorem tax exemption to a nongovernmental lessee of governmental property that uses such property for governmental-proprietary purposes." Id. at 1074.

Following the outcome in Sebring II, the Legislature amended section 196.012(6)("the 1994 amendment"). See ch. 94-353, § 59, at 2566, Laws of Fla. That amendment—which is the subject of this appeal—provides, in pertinent part:

The use by a lessee, licensee, or management company of real property or a portion thereof as a convention center, visitor center, sports facility with permanent seating, concert hall, arena, stadium, park, or beach is deemed a use that serves a governmental, municipal, or public purpose or function when access to the property is open to the general public with or without a charge for admission.

Once again, appellants sought a tax exemption for the subject property. This time, appellants cited the 1994 amendment to support their argument that they qualified for an exemption.

Based upon Raceway's "proprietary-governmental" activities, the trial court again determined that appellants were not entitled to a tax exemption. Relying on the "guiding principles" set forth in Williams v. Jones, 326 So.2d 425 (Fla.1975), and Volusia County v. Daytona Beach Racing & Recreational Facilities Dist., 341 So.2d 498 (Fla.1976), the court rejected Raceway's argument that the definition of "public purpose," as contained in the statutory amendment, was determinative.

Rather, the court observed that the principles established in Williams and Volusia County were "premised on a constitutional foundation that all privately used property must bear the proper tax burden." Applying what it thus perceived to be a constitutional limitation on the Legislature's ability to define "public purpose," the trial court declared the 1994 amendment to be "unconstitutional as an attempt to create an exemption not permitted in the Florida Constitution."

On...