City of Fort Pierce v. Treasure Coast Marina, LC

Citations: 195 So. 3d 1141; 2016 WL 3087680; 2016 Fla. App. LEXIS 8184Docket: No. 4D14-3064

Court: District Court of Appeal of Florida; May 31, 2016; Florida; State Appellate Court

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The motion for rehearing is denied, and the prior opinion is replaced with a new one addressing a significant public issue. The City of Fort Pierce and the St. Lucie County Property Appraiser appeal a final summary judgment favoring Treasure Coast Marina and other appellees, who contest the City’s tax exemption for its marinas. The trial court ruled that the City marinas did not qualify for the ad valorem tax exemption under article VII, section 3(a) of the Florida Constitution, citing Florida Department of Revenue v. City of Gainesville as having narrowed the definition of "municipal or public purpose." The appellate court disagrees, asserting that Gainesville did not alter the legal standard for municipal purpose, which traditionally allows for tax exemption of municipal marinas. The court reverses the judgment, stating the City’s marinas, City Marina and Fisherman’s Wharf Marina, should be exempt. Riverfront, which operates Harbortown Marina, argued that the City's marinas function as private entities and do not serve a municipal purpose, leading to a lawsuit against the application of the tax exemption. The trial court sided with Riverfront, suggesting that the City's marinas were indistinguishable from private operations and thus ineligible for the exemption. However, the appellate court emphasizes that, under the 1968 Constitution, municipal property used for public purposes is exempt from taxation, a provision that is self-executing and does not require legislative approval as mandated by the 1885 Constitution.

The 1968 Constitution established that municipalities must both own and exclusively use property to qualify for tax exemptions. This change responded to the ruling in Daytona Beach Racing and Recreational Facilities District v. Paul, which had allowed a tax exemption for a municipally-owned but privately-operated racetrack by deeming it served a public purpose through community economic benefits. The framers aimed to limit that decision without altering the definition of 'municipal or public purpose.' The definition remained consistent with earlier interpretations under the 1885 Constitution. The case of Gainesville clarified that 'municipal or public purposes' for tax exemption must involve activities critical to the health, morals, safety, and welfare of the municipality's residents, emphasizing 'essential' as synonymous with 'necessity.' The court referenced earlier rulings to support this necessity standard, noting that tax-exempt status for vacant land aimed at preserving open spaces aligns with traditional municipal responsibilities. The Gainesville decision did not deviate from prior definitions of public purpose, indicating that the development of recreational facilities serves both to boost tourism and provide local recreation, consistent with historical judicial interpretations that grant significant discretion to legislative determinations of public purpose in recreational and entertainment projects.

The term 'municipal or public purpose' lacks a statutory definition under article VII, section 3(a), yet the Legislature has included marine facilities in its definition in similar contexts. Entities deemed to serve a municipal purpose include airports, maritime activities, convention centers, and marinas, particularly when access is granted to the public. Florida courts have recognized that constructing recreational facilities, such as public marinas, serves a valid public function. The case at hand parallels the decision in Islamorada, where a marina serving both residents and nonresidents was awarded a tax exemption despite competing with other marinas and generating profit. The Islamorada court affirmed that a marina qualifies for the exemption as it is a recreational facility managed without a non-governmental operator. The trial court's claim that Islamorada is outdated is contested; Islamorada defined 'municipal functions' as those enhancing the community's comfort and safety. Consequently, a city-owned marina, if not leased to a private entity, is exempt from ad valorem taxes. The trial court incorrectly relied on cases from Gainesville, which are distinguishable; in CAPFA, a student housing complex operated by a non-profit was deemed not to fulfill a municipal purpose due to competition with private providers and profit motives. Similarly, in Crapo, a city's communication towers were taxable because they were partially leased for profit-driven telecommunications, despite serving some municipal functions.

A city’s property, designated as a buffer between a generating plant and residential areas, was ruled not exempt from taxation due to the presence of private timber rights and for-profit operations by a private company. Unlike traditional municipal functions, this situation involved concurrent private use. When municipalities lease property to private entities, a stricter test applies, which does not pertain to properties exclusively owned and used by the municipality. The First District Court of Appeal, in Zingale v. Crossings at Fleming Island Community Development District, determined that recreational facilities owned by community development districts, such as golf courses and playgrounds, were exempt from ad valorem taxation, similar to parks operated by municipalities. The case of Zingale aligns with prior rulings, affirming that marinas owned and operated by the City serve a public purpose and qualify for tax exemption under established precedents. The City’s marinas provide public recreation, benefit the local economy, and are part of a larger recreational park, fulfilling the criteria for a "municipal or public purpose." Consequently, the court reversed and remanded the case, supporting the City’s entitlement to the tax exemption and highlighting the economic implications for Florida's boating community. A significant question was certified regarding the qualifications of municipally owned marinas for the tax exemption under the Florida Constitution. Additionally, it was noted that the benefits of municipal activities do not need to be limited to residents to meet the public purpose requirement.

Sebring clarifies that the definition of public purpose in bond validation differs from that in tax exemption cases, but this distinction is irrelevant to the current matter, which involves a government-government scenario rather than government-private. The Sebring case primarily addresses government-private situations and does not apply here, allowing for the relevance of Daytona Beach Racing. The municipality in question is the City of Moore Haven in Glades County, and its non-profit corporation acquired an apartment building in Orlando. Additionally, CAPFA misinterpreted the Gainesville opinion by asserting that McDavid was obsolete due to its basis in the 1885 Florida Constitution. However, Gainesville confirmed that decisions under the 1885 Constitution remain applicable and cited McDavid as a relevant case. Furthermore, Sebring Airport Authority v. McIntyre establishes that exemption is permissible only if the private entity's use could be performed by the municipality or represents a valid allocation of public funds.