Marshall Stranburg, in his official etc. v. Panama Commons L.P.

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
MARSHALL STRANBURG, in his
official capacity as Executive NOT FINAL UNTIL TIME EXPIRES TO
Director, Florida Department of FILE MOTION FOR REHEARING AND
Revenue, and DAN SOWELL, Bay DISPOSITION THEREOF IF FILED
County Property Appraiser,
CASE NO. 1D14-1671
Appellants,
v.
PANAMA COMMONS L.P.,
Appellee.
_____________________________/
Opinion filed April 8, 2015.
An appeal from the Circuit Court for Bay County.
Michael C. Overstreet, Judge.
Pamela Jo Bondi, Attorney General, and William H. Stafford, Assistant Attorney
General, Tallahassee, for Appellant Marshall Stranburg, as Executive Director of
Department of Revenue; Loren E. Levy of the Levy Law Firm, Tallahassee, for
Appellant Dan Sowell, as Bay County Property Appraiser.
M. Stephen Turner and David K. Miller of Broad and Cassel, Tallahassee, for
Appellee.
SWANSON, J.
Appellants seek review of a final summary judgment concluding that
appellee was entitled to a 2013 property tax exemption for its affordable housing
project under section 196.1978, Florida Statutes (2012). In granting summary
judgment for appellee, the trial court found that the Legislature’s attempt to
retroactively repeal this property tax exemption for the 2013 tax year was
unconstitutional and that appellee satisfied the statutory requirements for the
exemption. We affirm in all respects, limiting our discussion to the constitutional
issue.
Appellee 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. Appellee then renewed its exemption for the 2013 tax year by
filing a timely application. After appellee 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. Appellee 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 appellee upon finding that appellee’s 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
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new tax obligation not in effect on January 1, 2013; and that the 2012 version of
the statute controlled regarding appellee’s rights and duties in 2013. Afterwards,
the property appraiser issued a second notice of disapproval for the 2013 tax
exemption on the ground appellee did not qualify for an exemption under the 2012
version of the statute. The trial court rejected this conclusion as well and entered
final summary judgment for appellee. This appeal followed.
Although the issue before us appears to be one of first impression, we
believe the trial court correctly found the retroactive repeal of this tax exemption to
be unconstitutional because it impaired a vested right and imposed a new tax
obligation. Our supreme court has stated:
Article I, section 2, of the Florida Constitution
guarantees to all persons the right to acquire, possess, and
protect property. Section 9 of Article I provides that
“[n]o person shall be deprived of life, liberty or property
without due process of law.” These constitutional due
process rights protect individuals from the retroactive
application of a substantive law that adversely affects or
destroys a vested right; imposes or creates a new
obligation or duty in connection with a previous
transaction or consideration; or imposes new penalties.
For the retroactive application of a law to be
constitutionally permissible, the Legislature must express
a clear intent that the law apply retroactively, and the law
must be procedural or remedial in nature.
Maronda Homes, Inc. of Fla. v. Lakeview Reserve Homeowners Ass’n, Inc., 127
So. 3d 1258, 1272 (Fla. 2013) (citations omitted). The Legislature expressly
indicated the law repealing the tax exemption in this case would apply
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“retroactively to the 2013 tax roll.” Chs. 2013-72, § 11, at 1273-74, 2013-83, § 3,
at 1325, Laws of Fla. In doing so, the Legislature implicitly recognized the taxable
or tax exempt status of real property is determined on January 1 of each year under
section 192.042, Florida Statutes. Dade Cnty. Taxing Auths. v. Cedars of Lebanon
Hosp. Corp., 355 So. 2d 1202, 1204 (Fla. 1978); Page v. City of Fernandina Beach,
714 So. 2d 1070, 1072 (Fla. 1st DCA 1998). As a result, the effect of the law was
to retroactively eliminate appellee’s entitlement to a tax exemption on January 1,
2013, or impose a new tax obligation on appellee that did not exist on January 1,
2013. In other words, this was not a remedial statute, which operated to further a
remedy or confirm rights that already existed, or a procedural law, which provided
the means and methods for the application and enforcement of existing duties and
rights, but a substantive law altering duties and rights by imposing a retroactive tax
on previously exempt property. See Maronda, 127 So. 3d at 1272 (discussing
remedial, procedural, and substantive law).
We recognize that claims for tax exemptions are subject to statutory
conditions such as filing an application in a timely manner. See Zingale v. Powell,
885 So. 2d 277, 285 (Fla. 2004); Horne v. Markham, 288 So. 2d 196, 199 (Fla.
1973). Under section 196.011(1)(a), Florida Statutes, appellee had to file its
renewal application for the tax exemption by March 1, 2013, unless certain
statutory exceptions were applicable. Under sections 196.011(6)(a) and
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196.193(5)(a), Florida Statutes, the property appraiser had until July 1, 2013, to
deny appellee’s application. However, these procedural provisions did not render
appellee’s substantive right to renewal of the tax exemption contingent rather than
vested in nature. By 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. To the extent the dissent believes
appellee’s right to the tax exemption could not vest until the property appraiser
ruled on appellee’s application, which occurred after the repeal of the tax
exemption, we simply cannot agree that appellee’s substantive right to renewal of
the tax exemption hinged on how promptly the property appraiser acted on
appellee’s timely application.
AFFIRMED.
WETHERELL, J., CONCURS; BENTON, J., DISSENTS WITH OPINION.
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BENTON, J., dissenting.
Under Florida’s statutory scheme for ad valorem property taxation,
appellee’s expectation of an affordable housing property tax exemption for the
2013 tax year was not a vested right when the Legislature repealed the provision
under which it had obtained an exemption for the 2012 tax year. While “due
process prevents the Legislature from retroactively abolishing or curtailing” rights
that have actually vested, Maronda Homes, Inc. of Fla. v. Lakeview Reserve
Homeowners Ass’n, Inc., 127 So. 3d 1258, 1272 (Fla. 2013), even a truly
“‘retrospective provision of a legislative act is not necessarily invalid.’” Metro.
Dade Cnty. v. Chase Fed. Hous. Corp., 737 So. 2d 494, 503 (Fla. 1999) (quoting
McCord v. Smith, 43 So. 2d 704, 708–09 (Fla. 1949)). The constitutional question
is whether a vested right is diminished, and none was in the present case.
Accordingly, I respectfully dissent.
No exemption from ad valorem taxation exists unless a property owner
makes timely application, see § 196.011(1)(a), Fla. Stat. (2013), and the property
appraiser grants the application (or fails to deny it by July 1). See § 196.193(5)(a),
(b), Fla. Stat. (2013). As the majority opinion notes, property owners must file the
exemption application with the property appraiser “on or before March 1 of each
year.” § 196.011(1)(a), Fla. Stat. If the property owner fails to file an exemption
application by the March 1 deadline then, absent extenuating circumstances, the
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property owner waives “the exemption privilege for that year.” Id. Assuming a
timely application, the property appraiser must notify the property owner in writing
on or before July 1 of the same year if the property appraiser determines that the
applicant’s property is “not entitled to any exemption or is entitled to an exemption
to an extent other than that requested in the application.” § 196.193(5)(a), Fla.
Stat.
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
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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 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.
The statutory scheme notwithstanding, under the majority opinion’s view,
the “right”1 to a property tax exemption vests on January 1. But no Florida case
holds that the “right” to a property tax exemption vests on January 1. The majority
opinion relies ultimately on a single statutory subsection, section 192.042(1),
1
As a general rule, tax exemptions are not deemed vested rights and tax
exemption statutes may be modified or repealed unless “their repeal would impair
vested rights under a contract.” See 16A C.J.S. Constitutional Law § 395 (2015).
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Florida Statutes (2013), which requires only that all real property “be assessed
according to its just value” “on January 1 of each year.” The courts have, indeed,
also held that January 1 is the determinative date for ascertaining the use to which
potentially exempt property is put. See Dade Cnty. Taxing Auths. v. Cedars of
Lebanon Hosp. Corp., 355 So. 2d 1202, 1204 (Fla. 1978) (relying on section
192.042[(1)], Florida Statutes); Page v. City of Fernandina Beach, 714 So. 2d
1070, 1072 (Fla. 1st DCA 1998) (same). But 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.”).
In the present case, by contrast, appellee’s use of its real property on January
1, 2013, was not in issue. Appellee was not entitled to a tax exemption because,
when the Property Appraiser denied its 2013 exemption application, no exemption
was legally available to it under section 196.1978, Florida Statutes (2013). The
2013 Legislature amended section 196.1978, Florida Statutes, to eliminate the
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exemption. The amended statute was the law in effect when the Property
Appraiser acted on the application, and was binding on him.
The law amending section 196.1978, Florida Statutes provided that the
changes be applied “retroactively to the 2013 tax roll.” Ch. 2013-83, § 3, at 1325,
Laws of Fla. The language the Legislature used makes unmistakably clear its
intent to repeal the tax exemption for 2013, the then current tax year, which it was
permitted to do. The potentially confusing use of the word “retroactively” does not
alter the fact that the 2013 repeal applied to 2013 and to no prior tax year. See
Chase Fed., 737 So. 2d at 503.
As noted, “due process prevents the Legislature from retroactively
abolishing or curtailing” only rights that have actually vested. Maronda Homes,
127 So. 3d at 1272; see Chase Fed., 737 So. 2d at 503. A vested right is “‘an
immediate, fixed right of present or future enjoyment.’” Campus Commc’ns, Inc.
v. Earnhardt, 821 So. 2d 388, 398 (Fla. 5th DCA 2002) (quoting City of Sanford v.
McClelland, 163 So. 513, 514–15 (Fla. 1935)). “‘[T]o be vested, a right must be
more than a mere expectation based on an anticipation of the continuance of an
existing law; it must have become a title, legal or equitable, to the present or future
enforcement of a demand, . . . .’” Div. of Workers’ Comp., Bureau of Crimes
Comp. v. Brevda, 420 So. 2d 887, 891 (Fla. 1st DCA 1982) (quoting Aetna Ins.
Co. v. Richardelle, 528 S.W.2d 280, 284 (Tex. Civ. App. 1975)). Until and unless
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an application for exemption is granted, an ad valorem property tax exemption is
nothing more than an expectation.
All real property is subject to taxation “[u]nless expressly exempted from
taxation.” § 196.001, Fla. Stat. (2013); see also Hous. by Vogue, Inc. v. State,
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.”), aff’d, 422 So. 2d 3 (Fla. 1982). Just as the
Legislature may enact statutes authorizing the grant of tax exemptions, “it lies
within the legislature’s prerogative to repeal tax exemptions and impose taxes on
lands previously exempt.” Straughn v. Camp, 293 So. 2d 689, 695 (Fla. 1974); see
also Daytona Beach Racing & Recreational Facilities Dist. v. Volusia Cnty., 372
So. 2d 419, 420 (Fla. 1979) (“[A] subsequent legislature has the unquestioned
authority to repeal prior tax exemption statutes.”).
The majority opinion holds that appellee had a vested right to the affordable
housing property tax exemption prior to applying for the exemption, prior to
receiving notice of the Property Appraiser’s determination, prior to the Property
Appraiser’s certification of the tax roll, 2 and prior to the levy of any tax. But
2
After the tax roll is certified, mistakes in the property appraiser’s
judgment, including mistakes in granting and denying exemptions, cannot be
corrected unless they are errors of omission or commission. See § 197.122(1), Fla.
Stat. (2013); Ward v. Brown, 892 So. 2d 1059, 1059–60, 1062 (Fla. 1st DCA
2003), aff’d, 894 So. 2d 811 (Fla. 2004); see also Underhill v. Edwards, 400 So. 2d
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appellee was never granted an exemption on its property for the 2013 tax year.
Appellee had a “‘mere expectation based on an anticipation of the continuance of
an existing law’” that it would receive the exemption for the 2013 tax year after it
had received the exemption for the 2012 tax year under the 2012 statute. Brevda,
420 So. 2d at 891 (citation omitted). The Property Appraiser denied appellee’s
exemption application based upon section 196.1978, Florida Statutes (2013), the
law in effect when he acted. Just as the Legislature has made ad valorem tax
exemptions applicable in the tax year in which they were enacted or expanded, 3 so
the 2013 Legislature had the constitutional prerogative to make the repeal of the
exemption at issue here apply to the 2013 tax year.
The Legislature’s repeal of a tax exemption it had previously expanded in
order to encourage limited partnerships to provide affordable housing may be
questionable as a matter of policy, considering the long-term financing often
required for such projects. This would, of course, be equally true under the
majority opinion’s view that the repeal takes effect in 2014, not in 2013 as the
129, 132 (Fla. 5th DCA 1981) (holding that “a determination in 1977 that the
property should not have been exempted in 1976 is a change in judgment and is
prohibited under the cited cases”). By implication, a property appraiser may
change his or her judgment regarding an exemption until the tax roll is certified.
3
See Ch. 2012-193, § 33, at 2675, Laws of Fla. (providing that a number of
amendments to tax exemption statutes would “first apply to ad valorem tax rolls
for 2012”); Ch. 2011-93, § 6, at 1708, Laws of Fla. (providing that the newly
created ad valorem tax exemption for deployed servicemembers under section
196.173, Florida Statutes “shall take effect upon becoming a law, and first applies
to ad valorem tax rolls for 2011”).
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Legislature specified. But, whatever the wisdom of its choice, the Legislature was
free to repeal the provision authorizing the exemption previously available to
appellee. I would reverse the judgment below, and remand with directions to grant
appellants’ motions for summary judgment.
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