The City of Fort Pierce, Florida, a Florida municipal corporation, Fort Pierce Redevelopment Agency, etc. v. Treasure Coast Marina, LC, etc.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

THE CITY OF FORT PIERCE, FLORIDA, a Florida municipal
corporation, FORT PIERCE REDEVELOPMENT AGENCY, a dependent
special district of the City of Fort Pierce, KEN PRUITT, the ST. LUCIE
COUNTY TAX APPRAISER, and LISA VICKERS, the EXECUTIVE
DIRECTOR OF THE FLORIDA DEPARTMENT OF REVENUE,
Appellants,

v.

TREASURE COAST MARINA, LC, a Florida limited liability company,
RIVERFRONT DEVELOPMENT, LC, a Florida limited liability company,
and RAINCROSS HOLDINGS, LC, a Florida limited liability company,
Appellees.

No. 4D14-3064

[April 27, 2016]

Appeal from the Circuit Court for the Nineteenth Judicial Circuit, St.
Lucie County; William Roby, Judge; L.T. Case No. 562011CA002968.

Robert V. Schwerer and James T. Walker of Hayskar, Walker, Schwerer,
Dundas & McCain, P.A., Fort Pierce, for appellants The City of Fort Pierce
and Fort Pierce Redevelopment Agency.

Loren E. Levy and Jon F. Morris of The Levy Law Firm, Tallahassee, for
appellant Ken Pruitt, St. Lucie County Property Appraiser.

Pamela Jo Bondi, Attorney General, and Robert P. Elson, Assistant
Attorney General, Tallahassee, for appellant Department of Revenue.

Brigid F. Cech Samole and Jay A. Yagoda of Greenberg Traurig, P.A.,
Miami, and Jerry Stouck of Greenberg Traurig, LLP, Washington, D.C., for
appellees Treasure Coast Marina, LC, Riverfront Developers, LC, and
Raincross Holdings, LC.

Benjamin K. Phipps of Phipps & Howell, and Harry Morrison, Jr. of
Kraig Conn, Tallahassee, for Amicus Curiae Florida League of Cities.

WARNER, J.
 The City of Fort Pierce and Fort Pierce Redevelopment Agency (referred
to collectively as “the City”), along with Ken Pruitt, St. Lucie County
Property Appraiser, appeal from an order granting final summary
judgment in favor of appellees, Treasure Coast Marina, LC, d/b/a
Harbortown Marina, Raincross Holdings, LC, and Riverfront Developers,
LC (referred to collectively as “Riverfront”). The trial court determined that
the City was not entitled to an exemption from ad valorem taxes on
marinas owned and operated by the City, concluding that the marinas did
not serve a “municipal or public purpose” under article VII, section 3(a) of
the Florida Constitution. It relied on cases finding that Florida Department
of Revenue v. City of Gainesville, 918 So. 2d 250 (Fla. 2005), had narrowed
the legal standard for the exemption. We conclude, however, that
Gainesville did not change the legal standard, and that it used the same
definition of municipal or public purpose as in prior court opinions. Under
this definition, municipal marinas are traditionally considered exempt
from taxation. Thus, the tax exemption was properly applied to the City’s
marinas, and we reverse the final judgment.

The City owns and operates two marinas—City Marina and Fisherman’s
Wharf Marina. Riverfront, a privately-owned enterprise, owns and
operates Harbortown Marina. In tax years 2011-13, the Property
Appraiser exempted the City’s marinas from ad valorem taxes.
Harbortown Marina was not exempted. Riverfront thereafter brought suit
seeking declaratory and injunctive relief against application of the
exemption to the City’s marinas. The complaint alleged that it was
unconstitutional to exempt the City’s marinas, because they are
commercial enterprises, indistinguishable from a privately-owned
enterprise, not used exclusively for a municipal purpose, and not essential
to the health, morals, safety, and general welfare of the City’s people.

Riverfront and the City each moved for final summary judgment, with
the Property Appraiser joining the City’s motion. After a hearing, the court
granted final summary judgment in favor of Riverfront. In its order, the
court noted that the parties had conceded there were no issues of material
fact. The court found that in Gainesville, 918 So. 2d at 256, the Florida
Supreme Court had modified and narrowed the definition of “municipal or
public purpose” with regard to ad valorem tax exemptions, and therefore
cases predating Gainesville did not apply. Under this interpretation of
Gainesville, the court found that the City’s marinas did not serve a
municipal or public purpose, because they previously operated as private
marinas and still competed with private marinas such as Harbortown.
Additionally, although the court declined to apply Islamorada, Village of
Islands v. Higgs, 882 So. 2d 1009 (Fla. 3d DCA 2003) (finding municipal
marinas traditionally serve a municipal or public purpose), because it

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predated Gainesville, the court nonetheless found Islamorada
distinguishable from the present case under its interpretation of
Gainesville. The court therefore enjoined application of the ad valorem tax
exemption to the City’s marinas for the 2014 tax year. The City, joined by
the Property Appraiser, now appeal from this order.

Under article VII, section 3(a) of the Florida Constitution, “[a]ll property
owned by a municipality and used exclusively by it for municipal or public
purposes shall be exempt from taxation.” This provision, added in the
1968 Constitution, was a change from the 1885 Constitution, which
required legislative authorization as to whether an activity served a
municipal or public purpose. Gainesville, 918 So. 2d at 257-58. The 1968
Constitution eliminated this requirement and made the exemption self-
executing. Id.

The 1968 Constitution also added the requirement that the
municipality both own the property as well as use it exclusively. Id. at
257. This was seen as a response to Daytona Beach Racing & Recreational
Facilities District v. Paul, 179 So. 2d 349, 353 (Fla. 1965), which applied
the tax exemption to a municipally-owned but privately-operated
racetrack, finding that it served a public purpose because it contributed
to the economic well-being of the community. See Gainesville, 918 So. 2d
at 260. The framers of the 1968 Constitution sought to limit the holding
of Daytona Beach Racing, not by changing the definition of what
constituted a “municipal or public purpose,” but by requiring both
ownership and exclusive use of the property by the municipality. Id. at
259-60. As such, the meaning of “municipal or public purpose” remained
the same as in prior decisions:

There is nothing in the language of article VII, section 3(a) that
evinces an intent to create a more restrictive definition of
“municipal or public purposes” for property that is owned and
used exclusively by the municipality than the definition applied
to “municipal purposes” under the 1885 Constitution in [State
ex rel. Harper v. McDavid, 200 So. 100 (Fla. 1941),] and
[Saunders v. City of Jacksonville, 25 So. 2d 648 (Fla. 1946),]
through the 1968 adoption of the current provision.

Id. at 263. Gainesville therefore concluded that “the ‘municipal or public
purposes’ for which municipally owned property must be exclusively used
in article VII, section 3(a) to qualify for an ad valorem tax exemption
encompass activities that are essential to the health, morals, safety, and
general welfare of the people within the municipality.” Id. at 264.

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 In applying this definition, the Gainesville court focused on the word
“essential,” which it concluded meant “necessity.” Id. The court found
that prior cases also rested on the necessity of the municipal activity in
determining tax exemptions. Id. at 264-65. Most apropos to this case, the
court noted that “the tax-exempt status upheld in [City of Sarasota v.
Mikos, 374 So. 2d 458 (Fla. 1979),] for vacant land held by a municipality
to preserve natural open spaces or for future needs is consistent with the
traditional municipal function of providing parks for the municipal
population.” Id. at 265 (emphasis added) (citation omitted); cf. City of
Miami Beach v. Hogan, 63 So. 2d 493, 495 (Fla. 1953) (stating that “[i]n all
heavily populated municipalities the police power should be exercised by
municipal officials to afford all of the people light, air, [and] an opportunity
for recreation”) (emphasis added).

Because Gainesville did not recede from older cases defining a
“municipal or public purpose,” Daytona Beach Racing provides guidance
on what constitutes a public purpose. “[T]he purpose of the [speedway]
facility is both to increase trade by attracting tourists and to provide
recreation for the citizens of the District. We have on numerous cases
approved as a public purpose the development of recreational facilities.”
Daytona Beach Racing, 179 So. 2d at 352. Indeed, under the 1885
Constitution, the courts gave wide latitude to the legislative judgment of
what constituted a public purpose: “The development of the law in this
State on this question and particularly a study of the legislative history
with relation to public projects of a recreational and entertainment nature
reveals the allowance to the public bodies of an extremely wide latitude in
this field.” Panama City v. State, 93 So. 2d 608, 613 (Fla. 1957).

The Legislature has defined “municipal or public purpose” in the
context of determining whether a private lessee of governmental property
may qualify for a statutory exemption:

Governmental, municipal, or public purpose or function shall
be deemed to be served or performed when the lessee under any
leasehold interest created in property of the United States, the
state . . . , or any municipality . . . is demonstrated to perform
a function or serve a governmental purpose which could
properly be performed or served by an appropriate
governmental unit or which is demonstrated to perform a
function or serve a purpose which would otherwise be a valid
subject for the allocation of public funds.

§ 196.012(6), Fla. Stat. (2014). Under this statute, airports, maritime and
port activities, convention centers, visitor centers, sports stadiums, parks,

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and beaches are all entities or uses deemed to serve a municipal purpose
“when access to the property is open to the general public with or without
a charge for admission.” Id. Under this definition, a marina would most
definitely qualify as a public or municipal purpose.

Additionally, marinas are generally considered a traditional municipal
function. “Florida courts have long recognized that governmental
construction or promotion of recreational facilities, including a public
marina, constitutes a valid public function.” Page v. Fernandina Harbor
Joint Venture, 608 So. 2d 520, 523 (Fla. 1st DCA 1992), disapproved of on
other grounds, Sebring Airport Auth. v. McIntyre, 642 So. 2d 1072 (Fla.
1994); see also Islamorada, 882 So. 2d at 1010-11; Panama City, 93 So.
2d at 613.

The present case is similar to Islamorada, which also involved the
application of the “ad valorem tax exemption when the marina serves both
residents and nonresidents, despite (1) operating in competition with other
marinas in the area and (2) generating a profit for the municipality.”
Islamorada, 882 So. 2d at 1010. The Islamorada court held that that such
a marina was entitled to the tax exemption because it “is a recreational
facility that is available to residents and nonresidents and is operated
without the involvement of a non-governmental lessee or operator.” Id. at
1010-11. Although the trial court in this case found that Islamorada was
no longer good law, we disagree. As noted above, we disagree with the trial
court’s finding that Gainesville mandated a narrower definition of
municipal or public purpose.

Islamorada actually defined “municipal functions,” characterizing them
as “functions created for or granted for the benefit and advantage of the
community included within the corporate boundaries[,] which ‘specifically
and peculiarly promote the comfort, convenience, safety and happiness of
the citizens of the municipality rather than the welfare of the general
public.’” Id. at 1011 (citation omitted) (quoting Greater Orlando Aviation
Auth. v. Crotty, 775 So. 2d 978, 981 (Fla. 5th DCA 2000)). Under this
definition, “[m]unicipal operation of a marina is a legitimate municipal
corporate undertaking for the comfort, convenience, safety, and happiness
of the municipality’s citizens. . . . When a city operates a marina it owns,
marina property it has not leased to a nongovernmental entity is exempt
from ad valorem taxation.” Id. (emphasis omitted) (quoting Page v. City of
Fernandina Beach, 714 So. 2d 1070, 1076 (Fla. 1st DCA 1998)).

In finding that Islamorada is no longer good law, the trial court relied
on the applications of Gainesville in CAPFA Capital Corp. 2000A v.
Donegan, 929 So. 2d 569 (Fla. 5th DCA 2006), and City of Gainesville v.

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Crapo, 953 So. 2d 557 (Fla. 1st DCA 2007). This reliance was misplaced,
as both cases are distinguishable from Islamorada and the present case.

In CAPFA, the Fifth District Court of Appeal found that a student
housing complex, created and administered by a municipality but
operated by a non-profit corporation, did not qualify as a municipal or
public purpose for the following reasons: it was not within the range of
services historically provided by municipalities; it competed with private
providers; and it was operated with the intent of making a profit.1 CAPFA,
929 So. 2d at 574.

In Crapo, the First District Court of Appeal found that a city’s
communication towers were subject to ad valorem taxation because they
were partially leased to private providers, who sold telecommunications
services for profit. Crapo, 953 So. 2d at 565. Although the city also used
the towers for governmental communications serving a municipal or public
purpose, the property was not used exclusively by the municipality. Id. A
property used by the city as a buffer between its generating plant and
residential development was also not exempt, as a private company
retained timber rights and was conducting a for-profit timber operation.
Id. at 565-66. Thus, CAPFA did not involve a traditional municipal
function,2 while Crapo involved concurrent use by private interests. Where
the municipality leases the property to a private interest, “a separate and
more restrictive test” applies. Gainesville, 918 So. 2d at 260.3 This test
does not apply to property owned and used exclusively by a municipality.
Gainesville, 918 So. 2d at 261.

Further, Gainesville has been applied in harmony with Islamorada. In
Zingale v. Crossings at Fleming Island Community Development District,
960 So. 2d 20, 25 (Fla. 1st DCA 2007), quashed on other grounds by
Crossings at Fleming Island Cmty. Dev. Dist. v. Echeverri, 991 So. 2d 793
(Fla. 2008), the First District Court of Appeal found that public
recreational facilities owned and operated by a community development

1 The municipality was the City of Moore Haven located in Glades County.
CAPFA, 929 So. 2d at 569. Its non-profit corporation purchased the apartment
building in the Orlando area. Id.
2 Additionally, CAPFA incorrectly characterized the Gainesville opinion, finding

that McDavid was no longer applicable because it was decided under the 1885
Florida Constitution. CAPFA, 929 So. 2d at 573. However, Gainesville stated
that cases decided under the 1885 Constitution were still applicable, and
explicitly cited McDavid as an example. Gainesville, 918 So. 2d at 258.
3 See Sebring Airport Auth. v. McIntyre, 783 So. 2d 238, 246-48 (Fla. 2001)

(allowing exemption only if the private entity’s use could be performed by the
municipality or would be a valid allocation of public funds).

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district, including a golf course, pedestrian playground, and swimming
facility, were exempt from ad valorem taxation. The court found that the
property “should be treated the same as parks and recreation
opportunities traditionally provided by municipalities, which are explicitly
recognized as exempt property by the Court in Gainesville.” Id. (citing Sun
‘N Lake of Sebring Improvement Dist. v. McIntyre, 800 So. 2d 715, 723 (Fla.
2d DCA 2001) (holding that golf courses or tennis courts, owned and
operated by a municipality and held open to the public, may serve a public
purpose); Page, 714 So. 2d at 1070 (finding that a marina operated by a
city serves a public purpose)). Zingale, in applying Gainesville, is
consistent with Islamorada. Both cases support the City’s entitlement to
the constitutional tax exemption on the marinas it owns and operates.

We conclude that the City’s marinas serve a “municipal or public
purpose” under Islamorada, Gainesville, and the cases predating
Gainesville. The marinas are open to public use, are exclusively owned
and operated by the City, and are part of a larger recreational park
complex, providing recreation for local residents and supporting the local
economy by attracting non-local residents. Thus, not only do the City’s
marinas serve a purpose that has been repeatedly and explicitly recognized
as a “municipal or public purpose,” see, e.g., Zingale, 960 So. 2d at 25,
they also operate specifically “for the comfort, convenience, safety, and
happiness of the municipality’s citizens[,]” Islamorada, 882 So. 2d at 1011
(quoting Page, 714 So. 2d at 981), and serve the public purpose of
developing recreational facilities in “increas[ing] trade by attracting
tourists and [providing] recreation for the citizens[,]” Daytona Beach
Racing, 179 So. 2d at 352.

We therefore reverse and remand for a declaration in favor of the City,
holding constitutional the Property Appraiser’s application of the ad
valorem tax exemption to the City’s marinas.

STEVENSON and FORST, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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