UPDATE ON PROPERTY TAX LITIGATION
Pensacola Beach Citizens Forum – May
12, 2008
Presented by John Pinzino, a Member of the
Residential Liaison Committee
Most everyone knows that development of Pensacola Beach
came about with a promise of no ad valorem taxes. Over time, laws were changed and leaseholds
were taxed even though Escambia
County owns the land as
well as the improvements. In 1979, the
Florida Legislature passed legislation that defined leasehold interest in government
owned property as intangible personal property.
This legislation changed the law to stipulate that a 100 year lease was the
same as ownership, but a 99 year lease was not.
Many people attribute this change in the law to the threat from Daytona
Speedway that it would leave Volusia
County if it had to pay
taxes on its 99 year lease.
In Escambia County, the former Property Appraiser and Tax
Collector disagreed with the language in this statute and continued to tax
improvements on Santa Rosa Island as real
property. In 1984, a group of
leaseholders filed suit. The case known
as Bell v. Bryan
effectively put an end to ad valorem taxes on Pensacola Beach
from 1987 through 2003.
All that changed in 2004, even though the legislature made
no change in the law. Property
Appraiser, Chris Jones decided Beach leaseholders were “equitable owners” based
on a Santa Rosa County Circuit Court decision involving Navarre Beach. In December of 2004, five law suits were
filed against Property Appraiser Jones and Janet Holley, the Tax Collector. A law firm from Tallahassee
represents Jones and Holley in all these Escambia
County cases, as well as the Santa Rosa
County cases.
I am going to update all these cases without going into great
detail. There are some references that
follow that will direct you to web sites where you can find additional information
and legal documents related to these cases.
In June of 2005, the 1st District Court of
Appeals upheld the ruling in the Navarre
Beach case known as Ward
v. Brown. Two members of the 3 judge
panel ruled that the automatic renewal clause Santa
Rosa County leases
made them “perpetual” leases and agreed that the Navarre Beach
leaseholders had sufficient rights and duties to make them equitable owners. This ruling does not help the Pensacola Beach cases. But, the dissenting opinion in Ward v. Brown
was very much in our favor. There is
hope that other judges will see it our way.
There are also differences in the leases for the 2 beaches that could
make a difference in the outcome. But, I
have to say that so far there hasn’t been any good news.
The case known as Alvin’s
Stores v. Jones involving 32 commercial leases was ruled on by Judge Nick
Geeker in November of 2006. Judge Geeker
ruled in favor of the County’s position, citing a number of findings of fact in
his order that the attorneys at Shell, Fleming, Davis & Menge felt provided
a strong basis for appeal. However, the appeal
was not successful. A three judge panel
filed an opinion of Per Curiam Affirmed (PCA) just 5 days after the oral
arguments were heard. A PCA means the 3
judges agree with the trial court’s decision and find no need to explain
further. This ended the commercial
case. There can be no appeal to the
Florida Supreme Court. The commercial
plaintiffs must pay ad valorem property taxes from 2004 forward on their improvements. They are also still obligated pay lease fees
to the SRIA.
Since the 1st DCA offered no explanation as to
why they affirmed the lower court decision by ruling per curiam affirmed, it
has no direct precedential impact on other cases. In other words, the appellate decision went
against the commercial leaseholders but it cannot be cited as authority that is
binding on another court or by a trial judge in a separate case.
Portofino is
represented in their court case by McDonald, Fleming and Moorhead.
This lawsuit challenges the property taxes and the amount of the tax
assessment. All the Portofino 99 year residential
leases are the same and do not have a guarantee for renewal. Judge Frank Bell likewise ruled in favor of
the Property Appraiser and Tax Collector.
Unlike Judge Geeker, Judge Bell provided no explanation for his
ruling. He also made this ruling prior
to the outcome of the appeal of the commercial case. Bell’s
decision has been appealed. Oral arguments
are scheduled for July 30th at the DCA in Tallahassee.
The case involving the most plaintiffs and properties is
also being handled by Shell, Fleming, Davis &
Menge. There are over 2200 residential
properties, both single family residences and condominiums, and more than 3400
individually named plaintiffs involved in this case. All leases are for 99 years, but there are
variations on lease provisions that range from the very first leases on the
Beach to the most recent residences and condos.
A hearing was held on May 2, 2008 in front of Circuit Court
Judge Michael Jones. Both sides
presented there arguments for Summary Judgment and provided the court with
volumes of paperwork. Judge Jones seemed
very knowledgeable of the issues and law relevant to this case. He asked a lot of questions during the 3 hour
hearing. This was very different than
the manner in which the hearings in front of Judges Geeker and Bell were conducted. The attorneys were instructed to work out
which facts in the case both sides agree to and to submit their recommended
conclusions to Judge Jones by May 16th.. The judge indicated that he would review all
the materials submitted before making his ruling. His order is of course subject to appeal by
either side.
The remaining 2 lawsuits involve the residential and
commercial holdings of a family owned company that has leasehold interest in 25
residential condominium units and 2 commercial hotel properties on the Beach. In the case involving the condominiums, Judge
Jan Shackelford has ruled in favor of the Property Appraiser, agreeing with the
equitable ownership argument. Judge Shackelford
also wrote in her summary “The Florida Constitution requires that the
Plaintiffs pay ad valorem taxes at local government rates at parity with other
citizens of Escambia
County”. This decision has been appealed. The case involving the former Dunes and
Holiday Inn properties is still open in the Escambia County Circuit Court. No hearing has been scheduled.
Of the 5 Escambia
County cases, the commercial
case has concluded. Those commercial
leaseholders are subject to ad valorem taxes on their improvements and lease
fees. Two cases involving residential
property are on appeal. One case is
awaiting a ruling and another has yet to he heard in the Circuit Court.
I will end with a word about the situation in Navarre Beach.
Property taxes on improvements were upheld in the Ward v. Brown
case. In 2006, the Santa Rosa County
Property Appraiser also appraised the land as real property and tax bills included
tax on the land. A group of leaseholders
has filed suit. They are being
represented by Shell, Fleming, Davis & Menge. Obviously, the outcome of this case is of
great interest to leaseholders on Pensacola
Beach, as Property
Appraiser Jones will follow the lead of his counterpart.
I hope this has set the stage for the other presenters to
get you thinking about the issues stemming from the litigation. There are several other members of the
Residential Liaison Committee here tonight.
If you chose to ask questions during the speakers
forum, we will do our best to answer them.
TAX
LITIGATION REFERENCES
Escambia County Litigation
Alvin’s Stores v. Jones,
Escambia Co. Circuit Court Case No. 04-2281-CA-01(Nov. 17, 2006)
Alvin’s Stores v. Jones, 1st
District Court of Appeal Case No. 1D07-0149 (Oct. 22, 2007)
American
Fidelity v. Jones, Escambia Co. Circuit Court Case No. 04-CA-2292 (Dec. 13,
2007)
Portofino v. Jones, Escambia Co.
Circuit Court Case No. 04-CA-2288 (March 26, 2007)
Portofino v. Jones, 1st
District Court of Appeal Case No. 1D07-2292
Oral
Argument Scheduled for 9 am (EDT) July 30, 2008 in Tallahassee
Oral
Arguments can be viewed on line at www.1dca.org/video.html
Contact
person for Portofino Litigation is Richard Ball, Director of the HOA
1108
Ariola LLC v. Jones, Escambia Co. Circuit Court
Residential
Lawsuit brought by Shell, Fleming, Davis & Menge
Residential
Liaison Committee Web Site www.pbeachtaxsuit.com
Navarre Beach Litigation Web Site www.navarrebeachtaxsuit.com
Ward
v. Brown, Santa Rosa
Circuit Court Case
No. 01-892-CA01 (March 18, 2004)
Ward
v. Brown , 1st District Court of Appeal
Case No. 1D04-1629 (June 17, 2005)
Accardo
v. Brown, Santa Rosa
Circuit Court Case No. 06-001064-CA