Court: District Court of Appeal of Florida; April 20, 2005; Florida; State Appellate Court
The case involves Lori Parrish, Broward County Property Appraiser, appealing a decision regarding Pier Club Apartments, LLC's claim for an affordable housing tax exemption under Florida law. The central issue is whether vacant apartment units, previously occupied by low or very low income tenants, qualify for the exemption as of January 1st. Pier Club purchased a 480-unit complex in 1999 and was required to adhere to a Land Use Restriction Agreement mandating a specific percentage of units be occupied by low-income tenants. In February 2000, Pier Club applied for a tax exemption under section 196.1978, which stipulates that qualifying property owned by certain non-profit entities providing affordable housing is exempt from ad valorem taxation.
When the property appraiser did not respond by the statutory deadline, Pier Club filed a writ of mandamus and received a denial shortly thereafter, leading to an amended petition challenging the denial and claiming entitlement to the exemption. The property appraiser argued that recent amendments to the statute were unconstitutional and that Pier Club did not meet the exemption criteria. A settlement was reached in February 2002, granting Pier Club a tax exemption for units occupied by eligible tenants on January 1, 2000, but leaving unresolved the status of vacant units. Pier Club contended that units previously occupied by low-income tenants but vacant on January 1 should still qualify for the exemption, while the property appraiser maintained that only units occupied on that date could be considered as providing affordable housing, leading to this appeal. The court ultimately ruled against Pier Club, stating they were not entitled to the exemption for the vacant units.
The trial court ruled in favor of Pier Club, asserting that apartments occupied by low or very low-income tenants before January 1, 2000, but vacant on that date, still qualify for an ad valorem tax exemption. This ruling is contested. Key principles of ad valorem taxation in Florida state that all real property is taxable unless expressly exempted, assessed at just value on January 1, and that property owners must apply for exemptions by March 1; failure to do so waives the exemption for that year. Exemptions must be strictly construed against the taxpayer, and the burden of proof lies with the claimant.
Section 196.1978 specifies that property used for affordable housing for eligible persons is exempt from ad valorem taxation if it serves low and very low-income individuals. Although it is agreed that 57% of Pier Club's tenants fall within this income category, the exemption applies only to units actually occupied by such tenants on January 1. The term "provide" is central to this determination. Pier Club argues that "provide" means to "make available," suggesting that units leased to qualified tenants, even if vacant on January 1, should qualify for the exemption. However, the counterargument posits that actual occupancy is necessary for a unit to be considered as providing housing, as a vacant unit cannot fulfill this definition. The legislative intent appears to require actual occupancy for the exemption to apply.
Evidence does not support Pier Club's claim that vacant units previously occupied by low or very low income tenants will be made available to such tenants. The Land Use Restriction Agreement (LURA) required Pier Club to lease 75% (360 of 480) of its units to low and very low income tenants by June 1, 2000. As of January 1, 2000, only 272 units were occupied by these tenants, necessitating the leasing of an additional 88 units. The remaining 208 units' occupancy status was unclear. If 120 were leased to higher income tenants, all vacant units would need to be leased to low income tenants to meet the LURA requirement. In contrast, if only 100 were leased to higher income tenants, Pier Club would have 108 available units, with only 88 needing to be for low income tenants.
Pier Club argued that ambiguities regarding occupancy requirements for exemptions under section 196.1978 were clarified by references to several other statutory sections and a revenue procedure. However, these references did not clarify whether actual occupancy on January 1 was necessary. Legislative history affirmed the intent for affordable housing exemptions to apply broadly, not limited to federal programs.
Furthermore, Pier Club cited the LURA and Florida Administrative Code Rule 67-36.006 to argue that actual occupancy on January 1 is not mandated. These regulations require properties financed through public housing revenue bonds to reserve units for low income tenants and certify compliance. Specifically, rule 67-36.006 states that a unit vacated by a low-income tenant is considered occupied until reoccupied. The LURA similarly mandates that 75% of units be "continuously occupied or held open for occupancy" by low income tenants, counting previously occupied units as occupied until they are reoccupied, barring temporary vacancies.
Pier Club argues that under the LURA and rule 67-36.006, units previously occupied by low or very low-income tenants but vacant on January 1st should be exempt from ad valorem taxation. The legal precedent indicates that interpretations by the enforcing agency are entitled to deference unless clearly erroneous; however, the Department of Revenue—not the Housing Finance Authority of Broward County—oversees tax assessments. Evidence from a Department of Revenue employee states that tax status is determined on January 1st based on actual use, with no known exceptions for low-income housing.
Florida law establishes that January 1st is critical for determining ad valorem taxation, with the property's actual use on that date being decisive. Pier Club posits that past use of units for low-income housing should determine their tax-exempt status on January 1st. However, case law, including Trinity Episcopal School, Inc. v. Robbins and Grady v. Hausman, does not support this argument. In Trinity Episcopal, the court affirmed an exemption based on educational use prior to January 1st, but this case involved consistent use, not differing uses before and after that date. The court finds no justification for applying past use to determine tax status for vacant units on January 1st.
Grady's case parallels Trinity Episcopal, where a church sought an exemption for a 17-acre undeveloped parcel used partially for recreation and overflow parking. The property appraiser denied the exemption due to a lack of physical improvements. However, the trial court determined that only the section used as a meditation buffer for the rectory qualified for exemption, regarding the rest as incidental recreational use. The Fifth District Court reversed this decision, asserting that the absence of physical improvements was not decisive and that the entire property had been consistently used for parish-related activities since before January 1, 1985. The court clarified that it was not considering cases where land use varied before and after January 1.
The conclusion emphasizes the interpretation of section 196.1978 regarding tax exemptions, stating that all real property is subject to taxation unless expressly exempted. Exemptions must be strictly construed, with ambiguities resolved against the taxpayer. Therefore, actual occupancy by low or very low-income tenants on January 1 is necessary to activate the affordable housing exemption in section 196.1978. Consequently, the previous order was reversed and remanded. Judges Gunther and Taylor concurred. Notes included indicate that the relevant statutes' language has remained unchanged since 2000 and that a specific rule was repealed in 2004.
