We therefore conclude that the taxpayers are the equitable owners of the real
property at issue and that section 196.199(2)(b), Florida Statutes, is inapplicable
here. The certified question of great public importance is answered in the
affirmative, and the decision of the First District Court is approved.
The entire ruling can be found here.
Background: Santa Rosa County Property Appraiser Greg Brown began assessing taxable values on improvements to Navarre Beach properties soon after taking office in 2000. A suit filed by leaseholders in 2001 and subsequent years argued that leased property cannot be taxed. Santa Rosa County Circuit Judge Paul Rasmussen ruled in 2004 that 99-year renewable leases are tantamount to “equitable ownership” because leaseholders can profit by renting or sub-leasing their improved property or “selling” their lease. Leaseholders appealed, but a trio of state appeals court judges upheld Rasmussen’s ruling. Leaseholders unsuccessfully asked the full appeals court and, later, the Florida Supreme Court to review Rasmussen’s decision.Using statements made by the leaseholders’ attorneys and an appellate court justice, and a legal opinion from the Florida Department of Revenue, Brown extended the concept of equitable ownership to the leased land for this year’s tax billing.
According to the ruling, most plaintiffs’ leases are for 99-year terms and most have options to renew for another 99 years, guaranteeing the leaseholder will get all the useful life out of the structures; plaintiffs have the right to use or rent the improvements, transfer property rights and realize any appreciation in value from sale or rental income; and plaintiffs receive the full benefit of any capital gain or appreciation in property value.
M.J. Menge of Shell, Fleming, Davis & Menge in Pensacola, represented the leaseholders, whom Geeker ruled against on grounds very similar to “equitable ownership.” His success in past leaseholder taxation cases helped convince Navarre Beach leaseholders to file a new challenge , despite their earlier setbacks.
A letter distributed to Navarre Beach leaseholders Menge indicated that, despite earlier rulings, “Florida Law is very much on our side” and “when the issues are framed correctly, there is a good chance the Florida Supreme Court will eventually overturn the ruling on taxing the improvements.”
Read more in the March 27 issue of Navarre Press or subscribe online here.