Supreme Court of Florida
____________
No. SC15-774
____________
DAN SOWELL, et al.,
Appellants,
vs.
PANAMA COMMONS L.P.,
Appellee.
[June 2, 2016]
POLSTON, J.
In Stranburg v. Panama Commons L.P., 160 So. 3d 160 (Fla. 1st DCA
2015), the First District Court of Appeal held that Panama Commons’ right to due
process was violated by applying the 2013 repeal of the ad valorem tax exemption
under section 196.1978, Florida Statutes (2012), to the 2013 tax year.1 However,
because Panama Commons’ interest in the tax exemption under section 196.1978
had not vested, we reverse.
1. This Court has jurisdiction of the appeal under article V, section 3(b)(1)
of the Florida Constitution.
I. BACKGROUND
As the First District explained,
[Panama Commons] is a nonprofit Florida limited partnership
that constructed a ninety-two-unit affordable housing project in
Panama City. The Bay County Property Appraiser granted the project
a full tax exemption for the 2012 tax year under section 196.1978.
[Panama Commons then timely filed its exemption application for the
2013 tax year.] After [Panama Commons] filed its application, the
Legislature passed legislation eliminating the tax exemption for
affordable housing property owned by limited partnerships
retroactively to the 2013 tax roll. On June 19, 2013, the property
appraiser issued a notice of disapproval for the 2013 tax exemption,
citing the 2013 change in the law. [Panama Commons] then
challenged the property appraiser’s decision in circuit court, claiming
the retroactive repeal of the tax exemption for limited partnerships
was unconstitutional. The trial court granted a partial summary
judgment for [Panama Commons] upon finding that [its] right to a tax
exemption vested on January 1, 2013; that the retroactive repeal of
this tax exemption was unconstitutional because it impaired a vested
right and imposed a new tax obligation not in effect on January 1,
2013; and that the 2012 version of the statute controlled regarding
[Panama Commons’] rights and duties in 2013.
Stranburg, 160 So. 3d at 162.
On appeal, the First District agreed with the trial court and held that the
statutory repeal was unconstitutionally applied to the 2013 tax year because
Panama Commons’ substantive right to the ad valorem tax exemption under
section 196.1978 had vested on January 1, 2013, before the repeal was enacted.
The First District recognized “that claims for tax exemptions are subject to
statutory conditions” and that “the property appraiser had until July 1, 2013, to
deny [Panama Commons’] application.” Id. at 163. However, the First District
-2-
concluded that “these procedural provisions did not render [Panama Commons’]
substantive right to renewal of the tax exemption contingent rather than vested in
nature.” Id. This is so because “[b]y setting January 1 as the date on which the
taxable or tax exempt status of real property is to be determined, the Legislature
has created a constitutionally protected expectation that the substantive law in
effect on that date will be used to make the determination.” Id.
Judge Benton dissented to the First District’s decision, explaining that “no
Florida case holds that the ‘right’ to a property tax exemption vests on January 1.”
Id. at 164 (Benton, J., dissenting).
II. ANALYSIS
Appellants argue that applying the 2013 repeal of the exemption under
section 196.1978 to the 2013 tax year does not violate due process because a
property owner does not have a vested right to the exemption before its exemption
application is granted and before the tax roll is certified. In response, Panama
Commons contends that its right to the ad valorem tax exemption for the 2013 tax
year vested on January 1, 2013, before the repeal was enacted. The parties
acknowledge that the de novo standard of review applies. We hold that due
process is not violated in this case by applying the 2013 repeal of the exemption
-3-
for limited partnerships under section 196.1978 to Panama Commons for the 2013
tax year.2
As this Court explained in Maronda Homes, Inc. of Florida v. Lakeview
Reserve Homeowners Ass’n, Inc., 127 So. 3d 1258, 1272 (Fla. 2013) (quoting
constitution), “[a]rticle I, section 2, of the Florida Constitution guarantees to all
persons the right to acquire, possess, and protect property,” and “[s]ection 9 of
article I provides that ‘[n]o person shall be deprived of life, liberty or property
without due process of law.’ ” However, “all [real] property is subject to taxation
unless expressly exempt and such exemptions are strictly construed against the
party claiming them.” Sebring Airport Auth. v. McIntyre, 642 So. 2d 1072, 1073
(Fla. 1994); Parrish v. Pier Club Apartments, LLC, 900 So. 2d 683, 688 (Fla. 4th
DCA 2005) (“[A]ll real property in the state is subject to [ad valorem] taxation
‘unless expressly exempted,’ see section 196.001(1), Florida Statutes, and statutes
providing for an exemption are to be strictly construed with any ambiguity
resolved against the taxpayer and against exemption.”); see also Hous. by Vogue,
Inc. v. Dep’t of Revenue, 403 So. 2d 478, 480 (Fla. 1st DCA 1981) (“Exemptions
to taxing statutes are special favors granted by the Legislature and are to be strictly
construed against the taxpayer.”).
2. We do not address Appellants’ alternative argument that Panama
Commons is not entitled to the tax exemption under the 2012 law.
-4-
“It is well established that one legislature cannot bind its successors with
respect to the exercise of the taxing power, and that contract rights are ordinarily
not beyond the taxing power but are generally subject thereto.” Straughn v. Camp,
293 So. 2d 689, 694 (Fla. 1974). Thus, when rejecting an impairment of contracts
claim, this Court in Daytona Beach Racing & Recreational Facilities District v.
Volusia County, 372 So. 2d 419, 420 (Fla. 1979), explained that “a subsequent
legislature has the unquestioned authority to repeal prior tax exemption statutes.”
Furthermore, this Court has explained that a due process “retroactivity
analysis is two-pronged, asking first if the relevant provision provides for
retroactive application, and second if such application is constitutionally
permissible.” Fla. Hosp. Waterman, Inc. v. Buster, 984 So. 2d 478, 487 (Fla.
2008). Regarding the first prong, “[i]n order to determine legislative intent as to
retroactivity, both the terms of the statute and the purpose of the enactment must be
considered.” Id. at 488 (emphasis omitted) (quoting Metro. Dade Cty. v. Chase
Fed. Hous. Corp., 737 So. 2d 494, 500 (Fla. 1999)). Regarding the second prong,
this Court has explained the following:
A retrospective provision of a legislative act is not
necessarily invalid. It is so only in those cases wherein
vested rights are adversely affected or destroyed or when
a new obligation or duty is created or imposed, or an
additional disability is established, on connection with
transactions or considerations previously had or expiated.
-5-
McCord v. Smith, 43 So. 2d 704, 708-09 (Fla. 1949); cf. [State Farm
Mut. Auto. Ins. Co. v. ]Laforet, 658 So. 2d [55, 61 (Fla. 1995)].
Generally, due process considerations prevent the State from
retroactively abolishing vested rights. See [Dep’t of Transp. v.
]Knowles, 402 So. 2d [1155, 1158 (Fla. 1981)].
Chase Federal, 737 So. 2d at 503.
In this case, application of the repeal to Panama Commons for the 2013 tax
year passes constitutional muster because Panama Commons’ right to the
exemption under section 196.1978 had not vested before the repeal was enacted.
“A vested right has been defined as ‘an immediate, fixed right of present or future
enjoyment’ and also as ‘an immediate right of present enjoyment, or a present,
fixed right of future enjoyment.’ ” Buster, 984 So. 2d at 490 (quoting City of
Sanford v. McClelland, 163 So. 513, 514-15 (1935)). Panama Commons did not
have an immediate and fixed right to the exemption, but rather an expectation.
And a statute does not operate unconstitutionally simply if it “upsets expectations
based in prior law.” Landgraf v. USI Film Products, 511 U.S. 244, 269 (1994).
Receiving an ad valorem tax exemption under section 196.1978 for a
particular tax year is contingent upon many factors. For example, “[e]very person
or organization who, on January 1, has the legal title to [real property] shall, on or
before March 1 of each year, file an application for exemption.” § 196.011(1)(a),
Fla. Stat. (2013). Failure to timely file an application by “March 1 of any year
shall constitute a waiver of the exemption privilege for that year.” Id. Then, the
-6-
property appraiser must review the exemption application and notify its filer “in
writing on or before July 1” if the property “is not entitled to any exemption or is
entitled to an exemption to an extent other than that requested.” § 196.193(5)(a),
Fla. Stat. (2013). And Judge Benton, in his dissent to the First District’s decision,
described these additional steps of the statutory scheme:
Also on or before July 1, the property appraiser must assess the
value of all real property, and submit the assessment roll with the
amount of each exemption to the Department of Revenue for review.
§§ 193.023(1); 193.114(2)(g); 193.1142(1)(a), Fla. Stat. (2013).
Upon completing the assessment of all property, the property
appraiser must certify to each taxing authority the taxable value of
property in the taxing authority’s jurisdiction. § 200.065(1), Fla. Stat.
(2013). Each taxing authority then prepares a tentative budget,
computes a proposed millage rate, advises the property appraiser of
the proposed millage rate, and holds a public hearing. See §
200.065(2)(a)1., (b), (c), Fla. Stat. The property appraiser uses this
proposed millage rate to prepare and mail a notice of proposed
property taxes to each taxpayer in late August. See §§ 200.065(2)(b);
200.069, Fla. Stat. (2013). After the taxing authority adopts a
tentative budget, it must hold another public hearing in order to adopt
a final budget and a final millage rate, either by a millage-levy
resolution or by ordinance. See § 200.065(2)(d), Fla. Stat. Only then
are ad valorem real property taxes levied. “ ‘Levy’ means the
imposition of a tax, stated in terms of ‘millage,’ against all
appropriately located property by a governmental body authorized by
law to impose ad valorem taxes.” § 192.001(9), Fla. Stat. (2013).
Separately, after any changes are made to the assessment roll by
the value adjustment board and the property appraiser, the property
appraiser must deliver the certified assessment roll to the tax collector.
See §§ 193.122(1)-(3); 197.322(1)-(2); 197.323(1), Fla. Stat. (2013).
This usually occurs sometime in October. Within 20 working days of
receiving the certified assessment roll, the tax collector sends each
taxpayer a notice stating the amount of current taxes due. §
197.322(3), Fla. Stat. (2013). Section 197.333, Florida Statutes
(2013), provides that “[a]ll taxes shall be due and payable on
-7-
November 1 of each year or as soon thereafter as the certified tax roll
is received by the tax collector.” Taxes assessed on November 1
become delinquent on April 1 of the following year. See id.
Stranburg, 160 So. 3d at 164 (Benton, J., dissenting).
Here, the Legislature enacted the statutory repeal of the exemption under
section 196.1978 for limited partnerships before the certification of the tax roll,
meaning before Panama Commons’ right to the exemption had vested. In fact,
“[t]he amended statute was the law in effect when the Property Appraiser acted on
[Panama Commons’] application, and was binding on him.” Id. at 165 (Benton, J.,
dissenting). Consequently, Panama Commons’ constitutional right to due process
was not violated.
This Court has previously upheld the application of taxation changes.
Specifically, in Roger Dean Enterprises, Inc. v. Department of Revenue, 387 So.
2d 358, 360 (Fla. 1980), this Court held that it was “constitutional for the Florida
corporate income tax to be imposed on a gain from properties sold prior to the
amendment of the Florida constitution permitting such tax when said gain is
reported on the installment basis in tax years subsequent to the passage of the
amendment.” This Court’s decision explained that “[o]ther states have been
almost unanimous in holding there is no unconstitutional denial of due process.”
Id. at 364.
-8-
Additionally, the United States Supreme Court has repeatedly concluded that
the retroactive application of tax laws is permissible when the period of
retroactivity is limited. For example, in United States v. Carlton, 512 U.S. 26, 30-
32 (1994), the United States Supreme Court upheld the retroactive application of a
statute that narrowed an estate tax deduction, concluding (1) the retroactive
application was rationally related to the legitimate legislative purpose of correcting
the unintended breadth of the deduction, and (2) the retroactivity period of slightly
more than one year was “modest.” When dispensing with Carlton’s argument that
due process was violated because he detrimentally relied on the deduction that was
retroactively narrowed, the United States Supreme Court explained that “[t]ax
legislation is not a promise, and a taxpayer has no vested right in the Internal
Revenue Code.” Id. at 33.
Finally, contrary to the First District’s conclusion and Panama Commons’
argument, Panama Commons’ right to the exemption under section 196.1978 for
the 2013 tax year did not vest on January 1, 2013. The First District reached this
conclusion by relying on section 192.042, Florida Statutes (2013); however, that
section is inapplicable here. Section 192.042 simply provides that on January 1 of
each tax year “[a]ll property shall be assessed [by the county property appraiser]
according to its just value.” This case does not involve a dispute regarding the
property’s just value.
-9-
The First District also relied on Dade County Taxing Authorities v. Cedars
of Lebanon Hospital Corp., Inc., 355 So. 2d 1202 (Fla. 1978), and Page v. City of
Fernandina Beach, 714 So. 2d 1070 (Fla. 1st DCA 1998). But, as Judge Benton
explained, “the decisions in both Cedars and Page, turned on the actual use of
property on January 1, not on which tax exemption statute was in effect on January
1. See Cedars, 355 So. 2d at 1204 (‘[I]t is immaterial that the corporation intended
to use the property for an exempt purpose subsequent to January 1; the controlling
factor was that, as of the assessment date, it was not actually in use for such
purpose.’ (emphasis omitted)); Page, 714 So. 2d at 1076 (‘[T]he “actual physical
use” to which real property is being put on January 1 of the tax year in question is
dispositive on the question of ad valorem taxation.’).” Stranburg, 160 So. 3d at
165 (Benton, J., dissenting). “In the present case, by contrast, [Panama
Commons’] use of its real property on January 1, 2013, was not in issue.” Id.
III. CONCLUSION
Accordingly, because Panama Commons’ right to the tax exemption under
section 196.1978 had not vested before the Legislature repealed the exemption for
limited partnerships in 2013, we hold that applying the repeal to Panama Commons
for the 2013 tax year does not violate due process. We reverse the First District’s
decision and remand for proceedings consistent with this opinion.
It is so ordered.
- 10 -
LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, CANADY, and PERRY,
JJ., concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
An Appeal from the District Court of Appeal – Statutory or Constitutional
Invalidity
First District - Case No. 1D14-1671
(Bay County)
Loren Eugene Levy and Jon Franklin Morris of The Levy Law Firm, Tallahassee,
Florida,
for Appellant Dan Sowell
Pamela Jo Bondi, Attorney General, Timothy E. Dennis, Chief Assistant Attorney
General, Allen C. Winsor, Solicitor General, and William Henry Stafford, III,
Senior Assistant Attorney General, Tallahassee, Florida,
for Appellant Marshall Stranburg
David Keller Miller and Martin Stephen Turner of Broad and Cassel, Tallahassee,
Florida,
for Appellee
- 11 -