Edward A. Crapo, as Alachua County etc. and John Power, as Alachua County Tax Collector v. Gainesville Area Chamber of Commerce, Inc. etc. , 274 So. 3d 453 ( 2019 )

FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D17-0452
_____________________________
EDWARD A. CRAPO, as Alachua
County Property Appraiser, and
JOHN POWER, as Alachua
County Tax Collector,
Appellants,
v.
GAINESVILLE AREA CHAMBER OF
COMMERCE, INC., a Florida Not
for Profit Corporation,
Appellee.
_____________________________
On appeal from the Circuit Court for Alachua County.
Monica J. Brasington, Judge.
May 2, 2019
BILBREY, J.
The Property Appraiser and Tax Collector for Alachua
County (hereafter, Alachua County) challenge a final summary
judgment holding real property owned by the Gainesville Area
Chamber of Commerce to be exempt from ad valorem taxation.
We affirm.
Prior to 2014, the Gainesville Area Chamber of Commerce
was granted an exemption from ad valorem taxation. However,
in 2014, the Chamber was denied that exemption. It challenged
that denial before the Value Adjustment Board, but the Board
denied relief. The Chamber then sought relief in the circuit
court. Finding the activities of the Chamber to serve a
“charitable purpose,” the circuit court held the Chamber was
entitled to an exemption. Alachua County now challenges that
holding.
Unless expressly exempted, all real property in the state is
subject to taxation. See § 196.001(1), Fla. Stat. (2014). However,
Article VII, section 3(a), of the Florida Constitution provides:
Such portions of property as are used predominantly for
educational, literary, scientific, religious or charitable
purposes may be exempted by general law from
taxation.
(Emphasis added).
The term “charitable purposes” is not defined in the
Constitution. But the term is defined in section 196.012(7),
Florida Statutes (2014), as providing
a function or service which is of such a community
service that its discontinuance could legally result in the
allocation of public funds for the continuance of the
function or service. It is not necessary that public funds
be allocated for such function or service but only that
any such allocation would be legal.
This statute is clear and unambiguous, and therefore, we do
not engage in any statutory construction. See State v. Jett, 626
So. 2d 691, 693 (Fla. 1993) (“It is a settled rule of statutory
construction that unambiguous language is not subject to judicial
construction, however wise it may seem to alter the plain
language.”). The question presented in this appeal is therefore a
simple one: do the activities of the Gainesville Chamber of
Commerce qualify as “charitable purposes” as the Florida
Legislature has defined that term in section 196.012(7)?
Alachua County has not challenged the findings of fact made
by the circuit court that
2
[t]he Chamber is the delegated local provider of
economic development and related functions and
services which grow the tax base, create jobs and
promote the prosperity and general welfare of the
Gainesville-Alachua County are. It was established in
Alachua County for the express purpose of improving
the quality of life in Alachua County through the
creation of jobs, increased capital investment, increased
local competitiveness for business development, and
general economic activity.
(Internal quotation marks omitted).
The trial court also found that the “Chamber does not use its
property for a profit-making purpose. All income generated by
the Chamber is used for charitable purpose.”
Given these activities, the Chamber performs a community
service such that a discontinuance of such service “could legally
result in the allocation of public funds for the continuance of the
function or service.” § 196.012(7). As the trial court further
found, “there is no doubt that economic development serves a
public purpose for which public funds can be allocated.” The
Department of Economic Opportunity, created by section 20.60,
Florida Statutes, is but one example of such a public service. The
purpose of this publically-funded department is to “create,
expand, and retain business in this state, to recruit business from
around the world, and to facilitate other job-creating efforts.”
§ 20.60(4)(a).
While not challenging the constitutionality of section
196.012(7), Alachua County argues that despite its unambiguous
language, a tax exemption for “charitable purposes” should be
limited to “benevolent” purposes, such as providing material
assistance to the needy. As the promotion of business and
economic development is not traditionally understood as a
charitable activity, property used for business and economic
development should not be entitled to a tax exemption under the
charitable purposes provision of the state constitution, Alachua
County argues.
3
The dissent agrees with Alachua County, but in its analysis,
undertakes judicial construction of an unambiguous statute. See
Mendenhall v. State, 48 So. 3d 740 (Fla. 2010) (holding courts
should not construct an unambiguous statute). Further, the
dissent has overlooked the plain meaning of section 196.012(7) to
impose what it believes should be the meaning of “charitable
purposes” under the statute: to provide relief to the needy.
While relief to the needy is a laudable charitable purpose, the
statute is not so limited. Creating an ambiguity where one did
not previously exist would exceed our authority. As the Florida
Supreme Court explained in Velez v. Miami-Dade County Police
Department, 934 So. 2d 1162, 1164-65 (Fla. 2008):
[W]e are without power to construe an unambiguous
statute in a way which would extend, modify, or limit,
its express terms or its reasonable and obvious
implications. To do so would be an abrogation of
legislative power.
(Quotation marks and citations omitted).
The dissent relies on the Florida Constitution explaining
that the “plain meaning of the word ‘charitable’ as used in the
Florida Constitution is controlling, and the statute must be
construed as limited to that meaning.” (Dissent at p. 13). As
noted, Article VII, section 3(a) of the Florida Constitution does
indeed provide that the Legislature is to enact laws exempting
from taxation property used “predominantly for education,
literary, scientific, religious or charitable purposes. . . .”
However, as also noted, the Constitution does not define the term
“charitable.” Therefore, the “plain meaning” on which the dissent
relies is not actually provided by our Constitution. Instead, the
dissent tries to invoke a well-established canon of construction to
reach its conclusion.
The dissent asserts that the Chamber, which argues for
affirmance of the lower court’s ruling under review, improperly
equates “charitable purposes” with “public purposes.” But this
ignores the fact that it was the Legislature which first equated
charitable purpose, for determining tax exemption, with public
purpose. The Legislature plainly stated in section 196.012(7)
4
that a charitable purpose is an activity for which “public funds”
could be legally allocated.
In conclusion, the function of the Chamber mirrors some of
the functions already undertaken by the State, and thus, the
Chamber performs a function the discontinuance of which could
result in the legal allocation of public funds. Therefore, the
Chamber is entitled to an exemption from ad valorem taxation
pursuant to the application of the unambiguous terms of section
196.012(7). The trial court’s judgment granting such an
exemption is AFFIRMED.
ROBERTS, J., concurs; KELSEY, J., dissents with opinion.
_____________________________
Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
_____________________________
KELSEY, J., dissenting.
The Alachua County Property Appraiser challenges the
lower tribunal’s decision granting the Gainesville Area Chamber
of Commerce a charitable exemption from ad valorem property
tax under section 196.012(7), Florida Statutes (2014), which
provides as follows:
“Charitable purpose” means a function or service which
is of such a community service that its discontinuance
could legally result in the allocation of public funds for
the continuance of the function or service. It is not
necessary that public funds be allocated for such
function or service but only that any such allocation
would be legal.
Id.Although the majority holds that this statute requires no
interpretation, the operative phrase is ambiguous: “of such a
5
community service that its discontinuance could legally result in
the allocation of public funds for the continuance of the function
or service.” As the Chamber’s argument illustrates, it is possible
to interpret this language so broadly that every legal expenditure
of public funds would become a “charitable” purpose. To equate
“public” purpose with “charitable” purpose is to ignore the limited
constitutional grant of exemption authority. Further, such an
interpretation would eliminate any separate charitable
exemption, contrary to well-settled rules of construction requiring
us to give effect to every statute and portion thereof.
See Hechtman v. Nations Title Ins. of N.Y., 840 So. 2d 993, 996
(Fla. 2003) (“It is an elementary principle of statutory
construction that significance and effect must be given to every
word, phrase, sentence, and part of the statute if possible, and
words in a statute should not be construed as mere surplusage.”).
Because the Chamber’s and the majority’s interpretation of the
statute renders the existence of a charitable exemption
superfluous, and exceeds the Florida Constitution’s limited grant
of authority to enact tax exemptions, we must reverse.
I. Governing Rules of Construction.
We construe the Florida Constitution and Florida Statutes
de novo. Garcia v. Andonie, 101 So. 3d 339, 343 (Fla. 2012). All
property is subject to taxation unless expressly exempted.
§ 196.001(1), Fla. Stat.; Capital City Country Club, Inc. v. Tucker,
613 So. 2d 448, 452 (Fla. 1993). The constitution’s limited grant
of tax exemption authority is “the touchstone against which the
Legislature’s enactments are to be judicially measured.” Sebring
Airport Auth. v. McIntyre, 783 So. 2d 238, 244 (Fla. 2001). “The
legislature is without authority to grant an exemption from taxes
where the exemption does not have a constitutional basis.”
Tucker, 613 So. 2d at 451; see also Archer v. Marshall, 355 So. 2d
781, 783-84 (Fla. 1978) (noting the legislature has no power to
create a tax exemption that the Florida Constitution does not
authorize) (citing Presbyterian Homes of the Synod of Fla. v.
Wood, 297 So. 2d 556 (Fla. 1974)). Courts are obligated to
construe legislation to effect a constitutional outcome whenever
possible. Fla. Dep’t of Rev. v. Howard, 916 So. 2d 640, 642 (Fla.
2005). Tax exemptions must be strictly construed against
taxpayers. Tucker, 613 So. 2d at 452; see also Nat. Ctr. For
6
Constr. Educ. & Research Ltd. v. Crapo, 248 So. 3d 1256, 1257-58
(Fla. 1st DCA 2018) (emphasizing strict construction against tax
exemptions).
II. The Chamber’s Exemption Claim.
To qualify for a tax exemption, the applicant has the burden
of proving first that it is a nonprofit organization. § 196.195(2),
(4), Fla. Stat. In addition, “[e]ach applicant must affirmatively
show that no part of the subject property, or the proceeds of the
sale, lease, or other disposition thereof, will inure to the benefit of
its members, directors, or officers or any person or firm operating
for profit or for a nonexempt purpose.” § 196.195(3), Fla. Stat.
The applicant also must satisfy the substantive requirements of
the exemption under the Florida Constitution and Florida
Statutes.
Before 2014, the Chamber had received the charitable
exemption; but beginning in that year, the Property Appraiser
denied the exemption. 1 The Chamber challenged the denial
before the Value Adjustment Board, 2 which affirmed the Property
1 Each property appraiser is a constitutional officer charged
with determining whether real property is subject to ad valorem
tax; and if so, valuing the property and assessing tax on it. Art.
VIII, § 1(d), Fla. Const. Because tax appraisers are constitutional
officers, their decisions are clothed with a presumption of
correctness. Straughn v. Tuck, 354 So. 2d 368, 371 (Fla. 1977).
The state’s 67 property appraisers as a group make up a class of
constitutional or state officers for purposes of the Florida
Supreme Court’s review jurisdiction. Art. V, § 3(b)(3). Each
property appraiser is entitled to exercise professional judgment
in applying the tax laws and regulations to specific factual
contexts, and is equally entitled to a change of mind. Each tax
year stands alone. The Chamber does not argue that the Property
Appraiser had no authority to change his mind about the
exemption.
2 A value adjustment board “is a quasi-judicial body
established for the primary purpose of hearing taxpayer petitions
and complaints against decisions of the appraiser.” Redford v.
Dep’t of Rev., 478 So. 2d 808, 810 (Fla. 1985). A taxpayer has the
7
Appraiser’s denial of the exemption. The Chamber then
challenged the denial de novo in circuit court, resulting in the
order now on appeal, which interpreted “charitable purpose” in
section 196.012(7) as eliminating any requirement of a
traditional charitable purpose under the plain meaning of
“charitable.”
The Chamber is a typical chamber of commerce as defined in
section 501.973(1)(b) of the Florida Statutes. The Chamber is not
a tax-exempt charity under the Internal Revenue Code—i.e., not
a 501(c)(3) organization. Instead, it is registered under Internal
Revenue Code section 501(c)(6), which covers business leagues,
chambers of commerce, boards of trade, and the like. 3 The
Chamber did not show that “no part” of its property “will inure to
the benefit of . . . any person or firm operating for profit or for a
nonexempt purpose,” nor even address that specific statutory
requirement. See § 196.195(3), Fla. Stat. The contrary is obvious
from the nature and specifics of the Chamber’s extensive
evidence. That failure alone is sufficient to disqualify the
Chamber from receiving a tax exemption, because it makes it
impossible for the Chamber to satisfy the statutory definition of a
nonprofit applicant. See § 196.195(4), Fla. Stat.
The Chamber nevertheless relies on its economic
development activities, because it interprets the statutory
definition of “charitable purpose” in section 196.012(7) as
eliminating any need for a traditional “charitable” purpose. The
Chamber presented extensive record evidence of its functions,
option to contest an assessment before the VAB or directly in
circuit court. § 194.171, Fla. Stat. A party that is unsuccessful
before the VAB may file suit in circuit court. §§ 194.036(2),
194.171, Fla. Stat. Proceedings in circuit court are de novo, not
appeals or reviews of VAB decisions. § 194.036(3), Fla. Stat.
3 Tax-exempt status under the Internal Revenue Code is
potentially relevant but not determinative of entitlement to a
Florida charitable exemption. A Florida chamber of commerce is
permitted to be organized under either section 501(c)(3) or
501(c)(6) of the Internal Revenue Code. § 501.973(1)(b)1., Fla.
Stat.
8
which it describes as being to “grow the tax base, create jobs, and
promote economic development.” The lower tribunal found that
the Chamber works through “the creation of jobs, increased
capital investment, increased local competitiveness for business
development, and general economic activity.” The Chamber
develops and implements strategic planning for economic
development, brings local leaders into marketing and business-
development efforts, tries to attract and then help new
businesses coming to the area, helps local businesses expand
their reach and activities, hosts and promotes job fairs and
networking activities, and numerous other activities along the
same lines. To repeat, the Chamber’s argument is that all of
these activities satisfy the definition of “charitable” in section
196.012(7) because the statute refers to activities for which
government could legally pay (whether government actually pays
for them or not), which the Chamber interprets as eliminating
any requirement that such activities be “charitable” within the
traditional plain meaning of that word.
III. The Statute Cannot, and Does Not, Eliminate
“Charitable.”
A. The Plain Constitutional Meaning Controls.
We must begin with the plain language of the Florida
Constitution, authorizing the Florida Legislature to enact
“charitable” exemptions from ad valorem taxation, among other
exempt categories. Art. VII, § 3(a), Fla. Const. In the context of
institutions, “charitable” means “liberal in benefactions to the
needy; of or relating to charity; ‘charitable institutions.’”
“Charity” means “an institution engaged in relief of the poor;
public provision for the relief of the needy.” Merriam-Webster
Online Dictionary, Charitable, Charity (last visited October 29,
2018).
The statute implementing the charitable exemption, now
section 196.012(7), originally consisted only of what is now its
first sentence, without the word “legally” in it, thus: “‘Charitable
purpose’ means a function or service which is of such a
community service that its discontinuance could result in the
allocation of public funds for the continuance of the function or
service.” The Legislature inserted the word “legally” into this
9
sentence in 1976, producing this statute: “‘Charitable purpose’
means a function or service which is of such a community service
that its discontinuance could legally result in the allocation of
public funds for the continuance of the function or service.” Ch.
76-234, § 13, Laws of Fla. 4 The final amendment occurred in
1991, when the Legislature added what is now the last sentence
in the statute: “It is not necessary that public funds be allocated
for such function or service but only that any such allocation
would be legal.” Ch. 91-196, § 1, Laws of Fla.
Under both the 1885 and 1968 Florida Constitutions, and
with or without the statute’s two amendments, Florida court
decisions for decades have treated cases arising under the statute
as if the statute contemplates a “charitable” purpose consistent
with the plain meaning of the word. The supreme court in Miami
Battlecreek v. Lummus, 192 So. 211 (Fla. 1939), addressed a
request for a combination exemption as a scientific, educational,
and charitable institution operating as a “medical institution,
hospital, and sanitarium” with a health-education component.
The institution accepted paying patients as well as the indigent;
the paying patients outnumbered and subsidized the indigent. Id.
at 213-14. In discussing the charitable aspect of the combined
exemption request, the court described it as being “for the
promotion of the general welfare,” approved the lower tribunal’s
definition of a charity as “a gift or dedication of real or personal
property . . . for the public benefit,” and held that a charitable
institution is characterized by “the benefit conferred upon the
public . . . and the consequent relief, to some extent, of the burden
upon the state to care for and advance the interests of its
citizens.” Id. at 216-18. The court noted that the institution was a
tax-exempt charity under federal law, and that no one directly or
indirectly profited from the institution’s activities. Id. at 218.
These factors parallel the ordinary meaning of the word
“charitable.”
4 The Attorney General opined that this amendment, adding
“legally” to the first sentence of the statute, was merely a
clarifying amendment that did not change the law’s meaning. Op.
Att’y Gen. Fla. 77-64 (1977).
10
Relying in part on Miami Battlecreek, the Second District in
a case involving a home for the elderly, virtually all of whom paid
full freight, held that the charitable tax exemption “cannot be
granted under Florida Law . . . absent demonstration that the
applicant is committed to a purpose which is charitable, in a true
definitive sense, and that the property is being used for such
purpose.” Haines v. St. Petersburg Methodist Home, Inc., 173 So.
2d 176, 180 (Fla. 2d DCA 1965) (emphasis added). The court went
on to construe both “charitable” and “benevolent” in this context
in their “objective sense of providing relief to those unable to help
themselves,” with an emphasis on gifts to the poor and helpless:
“Charity” is sometimes used interchangeably with
“benevolence” or “beneficence” in describing good-will, or
a helpful attitude or kindly acts, but “charity” is
commonly understood more objectively as denoting gifts
to the poor or positive steps taken to relieve distress and
suffering of those unable to help themselves. It is the
latter concept, and not the former, that is consistent
with the constitutional and statutory terminology
relative to the present case. In context with “charitable”
the word “benevolent” is used in the statute, though not
in the Constitution, and it has been observed that
although every charitable purpose is benevolent the
converse is not always true. . . . In the case here, in view
of the facts and the ground on which the exemption is
sought, we ascribe to the word “benevolent” the same
meaning as “charitable” used in its objective sense of
providing relief to those unable to help themselves.
Id. at 181 (footnote omitted). The court further noted that if it
accepted the plaintiff’s expansive definition of the charitable tax
exemption rather than adhering to the narrow constitutional
intent, the resulting flood of exemptions would require legislative
remedy: “If our courts should adopt and adhere to the loosely
subjective concept of a charitable institution with respect to tax
exemption, it would be an enlargement of constitutional meaning
presaging further inequity and deterioration of an ad valorem
system that could be redeemed only by ultimate reform through
legislative channels.” Id. at 181 n.6.
11
After adoption of the Florida Constitution of 1968 and the
Tax Reform Act of 1971, the courts continued to interpret the
charitable tax exemption consistent with the plain meaning of
“charitable.” Presbyterian Homes was representative of a spate of
litigation surrounding the tax-exempt status of housing “provided
by church or charitably oriented organizations” for the elderly
where some residents were not poverty-stricken. 297 So. 2d at
558. The narrow issue presented was the construction of the
“predominant” use test, which replaced the earlier “exclusive” use
test. Id. The Florida Supreme Court continued to apply the plain
meaning of “charitable.” The court rejected a statutory income
test as being too narrow to conform to the controlling exemption
provisions of the Florida Constitution, which it construed as
focused on the charitable nature of the institution providing the
service. It noted that the charitable use was the provision of
homes for the aged by “modern charitable and religious”
institutions, in response to the “drawbacks and hardships [of age]
which require special care and attention that are aggravated by
indigency.” Id. at 559. The court cited several earlier cases
utilizing that plain meaning of “charitable,” and affirmed that
such homes, otherwise qualified, would satisfy the charitable tax
exemption.
The District Courts of Appeal likewise continued to require a
traditional charitable purpose to qualify for a charitable
exemption. See Public Hous. Assistance, Inc. v. Havill, 571 So. 2d
45 (Fla. 5th DCA 1990) (affirming charitable exemption for low-
income housing project created through government grants and
producing no income); Southlake Comty. Found., Inc. v. Havill,
707 So. 2d 361 (Fla. 5th DCA 1998) (rejecting application of
exemption for merely “affordable” housing project as contrasted
with that involved in Public Housing); Mikos v. Plymouth
Harbour, Inc., 316 So. 2d 627, 634-35 (Fla. 2d DCA 1974) (On
Petition for Rehearing) (reversing grant of charitable tax
exemption to home for the aged that was “the equivalent of a
high priced condominium providing luxury living” that catered to
high-income residents, and remanding for the owner to attempt
to show that if the home stopped operating, government would
need to provide those residents with housing).
12
In 1957, the Attorney General squarely rejected the
proposition that chambers of commerce and builders exchanges
qualified for the charitable exemption from ad valorem taxation.
Op. Att’y Gen. Fla. 57-149 (1957). The reasoning was the same as
is employed in the cases cited above and in this opinion: to begin
with the language of the constitution, to construe it narrowly,
and to reject application of the charitable exemption to such
organizations. The Attorney General reasoned that the primary
purpose of a chamber of commerce is to promote business, and
therefore it has been denied the exemption in jurisdictions
addressing the issue; and that cultivating business relations,
bringing together competitors in business, and other such
purposes does not qualify for a charitable exemption.
The common theme of these and similar authorities is that
the reviewing courts either expressly held that a traditional
charitable purpose was required, or implicitly required such a
traditional charitable purpose. Most cases involved hospitals
serving predominantly indigent patients, and organizations
providing housing to the indigent, whether elderly or not. The
plain meaning of the word “charitable” as used in the Florida
Constitution is controlling, and the statute must be construed as
limited to that meaning. Sebring, 783 So. 2d at 244. We must
either construe the statute consistent with its constitutional
underpinnings, or declare it unconstitutional. When the statute is
properly construed, it becomes clear that the Chamber is not
qualified for a charitable tax exemption.
B. Merging “Public” and “Charitable” Purposes
Is Improper.
The Chamber’s interpretation of the charitable-exemption
statute, extending it to any activity for which a governmental
entity could legally expend funds, improperly broadens the
“charitable” purpose to become synonymous with any “public”
purpose. This violates the rule that tax exemptions must be
strictly construed. See Tucker, 613 So. 2d at 452. Interpreting the
statute without reference to its underlying constitutional
limitations would create vast if not limitless exemptions.
Further, contrary to the Chamber’s interpretation, the
charitable and public purpose exemptions emanate from separate
13
provisions of the Florida Constitution and separate provisions of
the Florida Statutes. The municipal or public purpose exemption
is a direct creation of the constitution, while the constitution
merely authorizes the other categories of tax exemption; and the
two categories of exemption are defined separately in light of
their constitutional underpinnings. Compare Art. VII, § 3(a), Fla.
Const. (“All property owned by a municipality and used
exclusively by it for municipal or public purposes shall be exempt
from taxation.”); § 196.012(6), Fla. Stat. (separately defining and
regulating “[g]overnmental, municipal, or public purpose or
function”) with Art. VII, § 3(a), Fla. Const. (“Such portions of
property as are used predominantly for educational, literary,
scientific, religious or charitable purposes may be exempted by
general law from taxation.”); § 196.012(7), Fla. Stat. (defining
“charitable purpose” as “such a community service that its
discontinuance could legally result in the allocation of public
funds for the continuance of the function or service”). If the two
sets of provisions meant the same thing, there would be no need
for both. Well-settled rules of construction require us to give
separate effect to the separate provisions. Fla. Dep’t of Rev. v.
New Sea Escape Cruises, Ltd., 894 So. 2d 954, 957 (Fla. 2005).
The Florida Supreme Court in Sebring set out the same
principles of constitutional and statutory interpretation on which
I rely here, with a special emphasis on principles governing tax
exemptions. 738 So. 2d at 244-45. The court invalidated a
provision of section 196.012(6) that purported to extend a public
purpose tax exemption to lessees of public property when the
lessees used the property in profit-making enterprises—in that
case a raceway and related activities being operated on property
leased from a local airport authority. Id. at 247-53. The supreme
court’s analytical process was identical to our reasoning here. The
court re-emphasized the primacy of the constitutional grant or
limitation of authority to create tax exemptions. 783 So. 2d at 244(“[I]t is the constitution itself, rather than ‘common usage,’ which
is the touchstone against which the Legislature’s enactments are
to be judicially measured . . . .”) (footnote omitted).
The Sebring court rejected the lessee’s attempt to import into
the tax-exemption statutes authorized under article VII the
broader authority for the issuance of bonds for public-private
14
partnerships under article VII, section 10, dealing with pledging
credit. 783 So. 2d at 241, 251; see also Fla. Dep’t of Rev. v. City of
Gainesville, 918 So. 2d 250, 263-64 (Fla. 2005) (refusing to
construe “municipal purposes” for use and spending under article
VIII as synonymous with “municipal or public purposes” under
article VII’s exemption provisions). Yet the Chamber’s
interpretation of the statutory definition of “charitable purpose”
in section 196.012(7) as being co-extensive with any “public
purpose” under separate provisions partakes of the same
analytical error. Although the taxpayer in Sebring, like the
Chamber here, relied on the argument that its activities provided
benefits to the public in the form of entertainment opportunities,
community and business competitiveness, and economic
development, the court soundly rejected the argument: “[A]s long
as the people of Florida maintain the constitution in the form we
are required to apply today, neither we nor the Legislature may
expand the permissible exemptions [from taxation] based on this
type of argument . . . . It is not for this Court or the Legislature to
grant ad valorem taxation exemptions not provided for in the
present constitutional provisions.” 783 So. 2d at 253.
This Court in City of Gainesville v. Crapo, 953 So. 2d 557,
563 (Fla. 1st DCA 2007), likewise held that municipal purposes
in Article VIII are “distinct from and broader than the definition
of public purposes in Article VII.” Accordingly, the Court held
that “an activity may serve valid municipal purposes under
article VIII, section 2(b) and constitute a permissible municipal
function but still not serve a municipal or public purpose under
article VII, section 3(a).” Id.In support of its argument that “charitable” means “public,”
the Chamber misplaces its reliance on Turner v. Trust for Pub.
Land, 445 So. 2d 1124 (Fla. 5th DCA 1984). The court there did
not address the constitutional limitation to “charitable” functions.
This case involved the sale of a large parcel of land in Volusia
County owned by the Trust for Public Land. Id. at 1124-25. The
Trust was a non-profit organization, and was a charitable
organization under Internal Revenue Code section 501(c)(3). 445
So. 2d at 1125. The land was given to the Trust, which later sold
it to a water management district substantially below appraised
value. Id. The property appraiser denied an exemption on the
15
property because the Trust had received it for free and then made
a profit on it. The circuit court rejected the property appraiser’s
argument, and he appealed. On appeal, the court reasoned that
the mere fact that the Trust received money from the sale was
not controlling; but rather that the Trust’s subsequent and
typical use of such funds to further its environmental purposes
exclusively for public benefit constituted a charitable purpose. Id.
at 1126. The court did not address the public/charitable
dichotomy, but rather focused solely on the Trust’s receipt of
money following a gift, and whether simply holding vacant land
constituted a “use” of the land. Id. The court relied on out-of-state
cases involving municipal purposes. Id. Thus, while the Chamber
argues that the Turner court implicitly equated charitable and
municipal purposes, the argument raised here was not raised
there, and we cannot properly conclude that the court intended to
create precedent on an issue not expressly argued and decided.
Even if Turner could validly be read as an express holding on
that issue, that interpretation of section 196.012(7) exceeds the
Florida Constitution’s grant of exemption-making authority.
C. The Statute Was Not Intended To Exceed The
Constitution.
Given that the Legislature is not at liberty to expand tax
exemptions beyond what the Constitution authorizes, we must
adopt a constitutionally-valid construction of the statute, or
invalidate it outright. In this case, if the statute is interpreted in
light of its constitutional underpinning and precedent, it is
unnecessary to invalidate it. The language of the statute is not
ambiguous:
“Charitable purpose” means a function or service which
is of such a community service that its discontinuance
could legally result in the allocation of public funds for
the continuance of the function or service. It is not
necessary that public funds be allocated for such
function or service but only that any such allocation
would be legal.
§ 196.012(7), Fla. Stat. (2014). It is not the statute that goes too
far, but rather the overbroad interpretation being placed upon it.
The problem with the Chamber’s argument is that it ignores the
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constitution’s limited grant of exemption authority. The statute’s
threshold reference to a “community service” must be construed
within the boundary of that limited charitable exemption
authority. That is the interpretation given to the charitable
exemption continuously in court decisions and an attorney
general opinion. The Chamber’s argument also improperly
presupposes that the Legislature intended to overrule all earlier
precedent construing the charitable exemption as embodying the
plain meaning of the word “charitable.” To the contrary, the
Legislature is presumed to know, and to incorporate into its
enactments, relevant case law existing prior to an amendment.
Williams v. Jones, 326 So. 2d 425, 435 (Fla. 1975). The charitable
exemption must be limited to charitable services within the plain
meaning of the word “charitable”—services for the needy and
those otherwise unable to help themselves.
The two amendments to the statute, referencing legal
expenditure of public funds, are not properly read as expanding
the exemption beyond the constitutional expectation of such a
traditionally charitable function. Rather than expanding the
exemption, it appears that the language was intended to restrict
it by precluding application of the charitable exemption to
purposes for which government could not lawfully expend public
funds. Private individuals and entities can make charitable
expenditures that government cannot. The statute recognizes
that limitation.
The Chamber’s broad interpretation of the statute is also not
supported by the Legislature’s description of the 1991
amendment adding the last sentence to the law. Nothing in the
legislative history supports the Chamber’s interpretation. To the
contrary, the public policy rationale for the statutory amendment
was described as a way to ensure that “important public services
are continued” and that “such services could be provided at no or
minimal cost to those that could not afford such services from
private, for-profit organizations.” Fla. S. Comm. on Fin., Taxation
and Claims, S.B. 1226, Staff Analysis 2 (Apr. 3, 1991). That is
what the Legislature intended to do in implementing the
charitable exemption—adhere to the plain-meaning definition of
“charitable” used in the constitution’s limited grant of exemption
authority.
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IV. Conclusion.
Section 196.012(7) is not properly severed from its
constitutional mooring. The fundamental, constitution-imposed
requirement of a “charitable” purpose, in light of the plain
meaning and historic usage of that word, controls the
interpretation and application of the statute. The lower tribunal
erred in ruling otherwise, and we must reverse.
_____________________________
John C. Dent, Jr., and Jennifer A. McClain of Dent & McClain,
Chartered, Sarasota, for Appellant Edward A. Crapo, and Robert
C. Swain, Senior Assistant County Attorney, Gainesville, for
Appellant John Power.
Paul A. Donnelly and Jung Yoon of Donnelly & Gross,
Gainesville, for Appellee.
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