In something of a rarity, an appellate court has written an opinion in favor of a property owner bringing a claim under The Bert J. Harris, Jr., Private Property Rights Protection Act.

In Ocean Concrete, Inc. v. Indian River County, Board of County Commissioners, the Fourth District Court of Appeal reversed a trial court order denying relief to a property owner under the Bert Harris Act. As the Fourth District explained, in order to obtain relief under the Bert Harris Act, a plaintiff has to show

a specific action of a governmental entity has inordinately burdened an existing use of real property or a vested right to a specific use of real property.”

Bert Harris Act in a Nutshell

Continue Reading Appellate Court Rules in Favor of Florida Property Owner Under Bert Harris Act

In most cases, agreements between landlord and tenant are memorialized in writing that provides a specific procedure for both landlord and tenant default. However, not everyone hires an attorney to draft a lease. So what happens when the tenant stops paying the landlord and there is no written lease? The following is a summary of the process for evicting a commercial tenant and recovering money damages for past due rent.

No Written Lease = Tenancy at Will

In Florida, an unwritten lease is considered a tenancy at will. If rent is paid monthly, then the tenancy at will is regarded as a monthly lease. Either party can terminate a monthly tenancy at will by giving 15 days’ notice before the end of any monthly period.

Continue Reading My Commercial Tenant Quit Paying Rent, Now What?

Last year, the Florida Supreme Court issued an important opinion on property rights that you need to know about if you own real estate in Florida. I had written a blog post right after the decision, but a case I was handling at the time involved some issues related to the post, so I delayed the post until after my case resolved. In any event, the Florida Supreme Court opinion updates my blog posts of July 8, 2015 and August 20, 2015 about the Bert J. Harris, Jr., Private Property Rights Protection Act topic.

Land Use Designations in Hardee County

As mentioned in my earlier post, this case originates from a land purchase in Hardee County in 1996. The purchaser, FINR, bought land that held an “agriculture and public institutional purpose” future land use designation. In 2007, FINR successfully applied to amend the Hardee County Comprehensive Plan and change FINR’s future land use designation to rural center. The “rural center” designation provided FINR with a quarter-mile setback that applied to the adjacent properties and prohibited phosphate mining activities in the setback.

Continue Reading Not Your Property? Then You’ve Got No Claim Under the Bert Harris Act

Due to the growing use by local governments of certain quasi-judicial code enforcement proceedings to obtain compliance with their local land use and zoning regulations, it is important for Florida property owners and business operators to have a thorough understanding of administrative enforcement proceedings.

Local Government Enforcement Authority

Florida’s statutory scheme governing local code enforcement procedures is divided into two separate parts under Chapter 162 of Florida Statutes. There is no statutory provision prohibiting local governments from enforcing their land use development and zoning regulations by other means. Section 162.13 provides that the provisions of Chapter 162 are supplemental procedures for local governments to achieve code compliance and are therefore intended “to provide an additional or supplemental means of obtaining compliance with local [government] codes.”

Penalties and Fines

Continue Reading How Can Local Governments in Florida Enforce Compliance With Their Land Use & Zoning Regulations?

Florida’s State Constitution & Amendments Proposed by the Constitutional Revision Commission (“CRC”)

Once every twenty years the Florida Constitution provides for the creation of a thirty-seven member revision commission (hereinafter referred to as the “CRC”) which is appointed for the specific purpose of reviewing the Florida Constitution and proposing changes to be considered for voter consideration.

As such, the CRC has been uniquely vested with the duty to examine the Constitution of the State of Florida, as revised in 1968 and subsequently amended, hold public hearings, and file with the Secretary of State its proposed changes, if any.

Florida Constitution Article XI, Section 2

Continue Reading What All Florida Voters Need to Know About the 2017-2018 Constitutional Revision Commission

Victorville West Limited Partnership (“Victorville”) purchased the Inverrary Golf Course and Clubhouse within the Inverrary community in Lauderhill, Florida, in 2006. Victorville acquired the property subject to a restrictive covenant that became the subject of a lawsuit that the Fourth DCA recently ruled could not be canceled because it remained a substantial benefit to the surrounding homeowners.

Restrictive Covenants

When a person or entity purchases property, the property may be subject to a restrictive covenant that limits the purchaser’s use. The most common example is the restrictions provided by the declaration of covenants, restrictions, and easements that a homeowner’s association enforces within a residential neighborhood.

Continue Reading Appeals Court Hands Down a Win for Florida HOA

On December 20th, 2017, President Trump stood outside the White House and announced that Congress had passed the Tax Cuts and Jobs Act (“Tax Act”), the most thorough overhaul of the federal tax code since the Reagan administration. Like American taxpayers everywhere, most Floridians are wondering:

How will this tax legislation affect me?”

Because the most significant investment for most Americans is their home, this blog post explores how the legislation will affect home-owning taxpayers.

Capital Gains Tax on Primary Residences

One of the main concerns of home-owning taxpayers regarding the tax overhaul was whether Congress would alter the current tax treatment of capital gains taxes on the sale of primary residences. In many instances, the IRS treats the gain from real estate transactions, such as the sale of a vacation home, as taxable capital gains income. However, § 121 of the Internal Revenue Code provides an exception that exempts from taxable income up to $250,000 in capital gains for homeowners selling their primary residence. Much to the relief of homeowners and the homebuilders’ lobby, Congress did not change this provision.

Mortgage Interest and Property Tax Deduction

While Congress did not change the capital gains treatment of the sale of primary residences, Congress did make two notable changes affecting popular deductions for property taxes and mortgage interest. First, with respect to the mortgage interest deduction, Congress amended § 163(h)(3) of the Internal Revenue Code to reduce the amount of borrowed money used to purchase a home (mortgage debt or “acquisition indebtedness”) on which homeowners can deduct the interest from income.

Under the previous tax rules, homeowners could deduct from income the interest paid on the first $1,000,000 in acquisition indebtedness ($500,000 if married filing separately). The Tax Act lowered to $750,000 the amount of acquisition indebtedness on which interest deductions are allowed ($375,000 if married filing separately). It is important to note that mortgage debt incurred before December 15, 2017, is grandfathered in under the older $1,000,000 limitation. Also grandfathered in under the $1,000,000 limitation are taxpayers who had signed contracts on or before December 15, 2017, to close on the purchase of a primary residence before January 1, 2018, so long as the purchase is actually closed before April 1, 2018.

Second, Congress placed a cap on the amount of state and local income taxes and property taxes that taxpayers can deduct on their federal tax returns. Under the previous tax rules, taxpayers could deduct from their income unlimited amounts of state and local income taxes, state and local real property taxes, and state and local personal property taxes paid in the taxable year. The Tax Act amends § 164 of the Internal Revenue Code by reducing the amount of state and local taxes taxpayers can deduct from income to the first $10,000 in state and local income and property taxes ($5,000 if married filing separately). This change represents a significant adjustment and most significantly affects taxpayers in high income-tax states. Fortunately, we have no state income taxes in Florida. However, the $10,000 limitation on deduction of property taxes will still affect Florida homeowners paying property taxes above that amount.

Takeaway

Beginning in 2018, many taxpayers, but not all, will start to see federal income tax relief and lower federal income tax bills. However, while the Tax Act changes provisions that benefit some taxpayers, some changes in the Tax Act will be detrimental to other taxpayers. To know more about how the Tax Act will affect you, you should consult with a tax professional. If you have any questions regarding the Tax Cuts and Jobs Act and its effects, please contact Caleb Hinton at caleb.hinton@henlaw.com or Paul Shuman at paul.shuman@henlaw.com.

In staunchly conservative Collier County, Florida, tax increases are rarely popular. But when the increases are to the bed tax (a.k.a. tourist development tax) and the sales tax, the impact is a little easier to digest. This is mainly because, as compared to tax increases on real property, the bed tax and sales tax do not have uniform impact on owners of real property.

The Board of County Commissioners, in its present form since Commissioners McDaniel and Solis were seated in late 2016, took bold steps in 2017:

  • to diversify the county’s economy through adoption of a bed tax increase;
  • to address overdue improvements to infrastructure via a 2018 voter referendum that would increase the County’s sales tax by 1%; and,
  • to solicit input on potential creation of a stormwater utility.

Bed Tax Increase

Continue Reading Tax Increases: Collier County Takes Bold Steps for 2018

The Florida Legislature recently delivered a small win for the business community with Florida House Bill 7109. Effective January 1, 2018, Florida Statute 212.031(1)(c) is amended by lowering the sales tax levied against commercial tenants from 6% to 5.8%. A more significant decrease would have been better, but commercial tenants will take what they can get, we suspect. The tax – known as the Business Rent Tax or “the BRT” – affects commercial tenants including retail, office space, and industrial tenants.

What is the BRT?

The Florida Legislature enacted the BRT in 1969, declaring that the business of renting, leasing, letting or granting a license for the use of commercial real property is a “taxable privilege.” In part because Florida has no personal income tax, the state government relies on sales taxes, including the BRT, as a significant source of revenue. Many local governments also impose a local option sales tax on top of the state BRT.

Florida is the only state to levy a statewide tax against commercial tenants, and thereby creates a competitive disadvantage for Florida businesses that lease rather than own their commercial space.

House Bill 7109

Florida’s BRT is unique from a national perspective in two respects: not only is it the only standard, statewide sales tax on commercial real estate rents, but unlike other corporate taxes, it is not pegged to profitability. As a result, the BRT significantly raises occupancy costs on all commercial tenants, regardless of their financial condition. New and/or struggling businesses in Florida may have the greatest difficulty with the burden this tax creates, and these businesses are likely to benefit the most from the tax relief in House Bill 7109.

Takeaway

Many voices within Florida’s business community have pushed for years for steep cuts to the BRT and, beginning in 2018, start to see their lobbying efforts bear fruit. Considering the significant impact the tax has on occupancy costs, the BRT should continue to be the subject of considerable debate in Tallahassee. As with all tax matters, please consult with your tax professional. If you have answer questions regarding the Business Rent Tax reduction and its effects, please contact Caleb Hinton at caleb.hinton@henlaw.com or Paul Shuman at paul.shuman@henlaw.com.

Last week on Wednesday, November 15th, the Greater Naples Chamber of Commerce hosted a panel of local business and government leaders, to discuss “After Irma: The Outlook for Small Business in Collier County.” Panelists included Michael Wynn, President of Sunshine ACE Hardware; Blake Gable, CEO of Barron Collier Companies; Jody Hudgins, Senior Vice President at First Florida Integrity Bank; Leo Ochs, Collier County Manager; and Marshall Goodman, President and CEO of Naples Accelerator.

Themes

After an introduction by Bill Barker, President of the Naples Daily News, the panelists discussed the status of business in Collier County following Hurricane Irma which focused on three themes:

  • County’s storm response: All panelists expressed gratitude to Mr. Ochs for the great work of the County staff and the County’ exemplary storm preparation and response.
  • Environment for small business: Both before and after the storm, Collier County has been investing in citizen-accessible “economic incubators” and other methods to accelerate the success of small business.
  • Optimistic outlook: After the biggest storm to hit the Naples area in over 50 years, the small business community is poised to continue the pre-storm momentum and economic recovery.

Lessons from the Panelists

Michael Wynn. Odds are stacked against small businesses and challenges are constantly evolving. Despite the hurricane and despite the “Amazon effect” and trend toward consolidation, Mr. Wynn made it clear that retail is not dead. He stressed the importance of social media during a major storm and for general knowledge of a customer base. Small businesses may not be able to compete with Amazon’s product selection, but they can deliver products and use data to hone in on their customer base and product preferences.

Blake Gable. Mr. Gable explained that Hurricane Irma hit small retail businesses particularly hard and recovery will be an ongoing challenge. One month of lost business can devastate a “Mom and Pop” business. Both commercial and residential real estate markets are making a steady comeback. While Irma hit all sectors in September, signs point to a recovery to healthy pre-storm levels for both commercial and residential real estate.

Jody Hudgins. Mr. Hudgins stressed the importance of having a good relationship with your banker. He also urged that, in times of trouble, standby letters of credit are very important to have (particularly for unexpected surges in overtime expenses and supplies). Mr. Hudgins also indicated that disaster recovery loans have been an important part of the post-storm lending environment.

Leo Ochs. Mr. Ochs received accolades from fellow panelists on the County’s storm preparation and response. He indicated that the County is undergoing an “after action review” of the storm. Mr. Ochs also mentioned that the Board of County Commissioners may be considering policies such as a requirement for actual generators at gas stations and the need for backup generators at County utility stations.

Marshall Goodman. Mr. Goodman has a background in Silicon Valley and uses his background to help small businesses get up and running. He shared stories about the unique businesses that have come through his accelator program and the combination of retirees and opportunities that make Collier County unique.

The Future Looks Bright

Many small businesses are still reeling from the unexpected costs and lost revenue associated with the storm. Despite being directly hit by the most powerful hurricane to hit the area in over fifty years, Collier County is quickly recovering from the storm. The general mood among the panel was optimistic. Lessons learned from Irma will hopefully make the small business community even stronger than before the storm.

 

Photo Courtesy of Gail Lamarche