TALLAHASSEE – The Florida Supreme Court refused to hear a case regarding beach property that is being developed by a company leasing the land after an appeals court said the company is not responsible for paying property taxes. 

Portofino resorts wants to construct two towers on the land they are leasing in Escambia County. The Escambia County Property Appraiser Chris Jones, an elected official for Escambia County, was disappointed at the result from the highest court, according to the Pensacola News Journal. He told local news outlets that it will create confusion among property owners there about who is responsible or not responsible for paying property taxes on the land. 

The land is at Pensacola Beach. An appeals court earlier in May rejected the case from being reheard and the Supreme Court sided with an earlier appeals court decision that the county cannot collect property taxes from the land it leases to Portofino, which reversed a local court ruling. This is a win for Portofino and may open the door to new claims as the county will have to reimburse those taxes already collected from the company. 

Daniel Weiss is a Miami property tax attorney for Tannebaum Weiss PL and runs a consultancy called Property Tax Adjustments and Appeals Inc. (PTTA) in Miami. One of his prior cases was referenced by a court judge ruling regarding this case.

Weiss explained how the seemingly unusual ruling was concluded by the courts. It is centered around the theory related to the burdens and obligations of ownership. There has been a history of leasehold issues in the state but the courts have maintained a consistent opinion on how land that is leased may actually have ownership burdens and obligations and other agreements do not meet such criteria. Appraisers often head to court to sort it out when new rules and regulations pose uncertainty or possible opportunity for tax revenue. 

"They always ask courts to review it where there's a slight change in the legislature," Weiss said. 

Weiss represented a client in Hialeah Inc. v. Dade County. In that case, Hileah Inc. was found by the court to have had actual burdens of obligation and ownership so it had to pay up. Because its 30-year arrangement with the city municipality at the time was effectively an arrangement for financing a mortgage, the court said the title was only held by the city as a security. In other words, if there is perpetual renewal of a lease like a 99-year lease with the option to purchase for $1 at the expiration of the terms, then these obligations and burdens of ownership meet the test.

"That's the test," Weiss said. "If they rest with the lessee then they are the equitable owner. If not all are held by them, then they are not."

Weiss said this case is a bit unusual, involving a constitutional officer.

"This one is a little unusual," Weiss said. "Often, the Supreme Court will hear the case because there is a separate jurisdictional provision that allows the Supreme Court to take jurisdiction of a case involving a constitutional officer and an appraiser in the state of Florida is an elected official, also making them a constitutional officer."

How leases are written matter. Weiss said two 2014 cases define how this law is applied. One is Accardo v. BrownThis case involved property lease on Santa Rosa Island. Greg Brown was the property appraiser. This other case was 1108 Ariola LLC v. Jones. Chris Jones, the same appraiser from this recent decision, was also involved in the other suit in 2014. In the Accardo case, there was a provision of the lease that stated the lessee could perpetually renew the lease for 99 years, making both the improvements and land taxable on Santa Rosa Island, the court ruled. In the other case, there was no finding of lease perpetuity or the possibility thereof so they were not subject to the tax. 

Ed Fleming and Todd Harris represented the developers in Pensacola, Island Resorts.

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