In City of Fort Pierce v. Treasure Coast Marina, LC, No. 4D14-3064, 2016 WL 3087680 (Fla. 4th DCA May 31, 2016), the Fourth District Court of Appeal addressed whether a marina that was owned and operated by a municipality should qualify as a traditionally exempt “municipal or public purpose” for ad valorem tax exemption purposes under Article VII, Section 3(a) of the Florida Constitution.
A Brief Look at Florida’s Constitutional Ad Valorem Tax Exemption for “Municipal or Public Purposes”
According to Article VII, Section 3(a) of Florida’s Constitution, “[a]ll property owned by a municipality and used exclusively by it for municipal or public purposes shall be exempt from taxation.”
Florida case law has interpreted this provision to mean that the “municipal or public purposes” for which municipality owned property must be exclusively used to qualify for an ad valorem tax exemption encompasses activities which are essential to the health, morals, safety, and general welfare of the people within the municipality.
City of Ft. Pierce Court Finds that City’s Marinas Were Not Used for a “Municipal or Public Purpose” under the Constitutional Ad Valorem Tax Exemption
The genesis of the controversy in the City of Ft. Pierce case started when the St. Lucie County Property Appraiser granted ad valorem tax exemptions in tax years 2011-13 for two City owned and operated marinas, but denied the exemption for another local privately owned marina known as Harbortown Marina.
Obviously displeased with their result, the private marina’s owners challenged the Property Appraiser’s treatment of the City marinas seeking a declaratory judgment and injunctive relief in trial court. The private marina owners argued that it was unconstitutional to exempt the City’s marinas because they were commercial enterprises, indistinguishable from a privately-owned enterprise, not exclusively used for a municipal purpose, and not essential to the health, morals, safety, and general welfare of the City’s people. It was also argued that the Florida Supreme Court’s decision in Florida Department of Revenue v. City of Gainesville, 918 So. 2d 250 (Fla. 2005), narrowed the definition of “municipal or public purpose” under the constitutional exemption and that the City’s marinas could not qualify under that definition because they were previously operated as private marinas and still competed with other privately owned marinas like Harbortown. Following a summary judgment hearing, the trial court agreed with the private marina owners and concluded that the Gainesville case replaced a number of earlier Florida cases which would have supported exempting the City’s marinas.
On appeal, the Fourth District Court of Appeal reversed the trial court’s decision and rejected the notion that Gainesville changed the legal standard for municipal purpose under Article VII, Section 3(a) of the Florida Constitution. The court explained that, while there is no statutory definition for “municipal or public purpose” applicable under the exemption, Florida courts have long recognized marinas serve a traditional municipal function. Also, after the appellate court analyzed the City’s marinas “in harmony” with Florida cases that preceded Gainesville, it concluded that the marinas served a “municipal or public purpose” because they “are open to public use, are exclusively owned and operated by the City, and provide recreation for local residents and support the local economy by attracting non-local residents.”
So What’s the Legal Scoop
It is important to highlight that the Fourth District Court of Appeal’s opinion did not stop at simply disagreeing with the trial court’s treatment of the two City marinas. Along with reversing and remanding the trial court’s decision, the court expressly acknowledged that “[t]here is a large boating community in Florida, supported by a large number of public, as well as private, marinas.” Accordingly, the following question was certified to the Florida Supreme Court:
IN LIGHT OF FLORIDA DEPARTMENT OF REVENUE V. CITY OF GAINESVILLE, 918 So.2d 250 (Fla.2005), DOES A MUNICIPALLY OWNED AND OPERATED MARINA STILL QUALIFY AS A TRADITIONALLY EXEMPT “MUNICIPAL OR PUBLIC PURPOSE” UNDER ARTICLE VII, SECTION 3(a) OF THE FLORIDA CONSTITUTION?”
Since the City of Ft. Pierce opinion has not yet been selected for publication and the Florida Supreme Court has not weighed in on the certified question described above, for now the municipal marinas will be treated as exempt for purposes of ad valorem taxation as serving a “municipal or public” purpose under Article VII, Section 3(a) of the Florida Constitution.
For any questions regarding this recent Florida case or general assistance in understanding your rights before opening your 2016 TRIM Notice, please contact me either by email at email@example.com or by telephone at (239) 344-1178.
Photo Courtesy of Gail Lamarche