by Mike Sharkey
Staff Writer
The Jacksonville Airport Authority and Jacksonville Seaport Authority have filed suit against Property Appraiser Ernie Mastroianni and two other taxing authorities. The complicated civil suit was filed Dec. 11 in county court and it may be several months to a year before it’s resolved.
Although there are many extenuating circumstances and factors that will have to be taken into consideration, the two authorities are asking the courts to uphold a recent ruling by Circuit Court Judge Peter Fryefield that declared all municipal entities immune from paying ad valorem taxes. The ports contend this immunity extends to all of their properties and all of their tenants and have hired attorney Lamar Winegeart to represent them.
“I think they [the General Counsel’s Office] referred the matter to me because I have some experience in dealing with ad valorem taxes,” said Winegeart. “I represent the Port Authority only in tax questions.”
(It should be noted that normally the ports would have been represented by the General Counsel’s Office. However, because the suit involves two City entities, Lee Carlin of the General Counsel’s Office will represent the Property Appraiser’s Office.)
The suit also names Tax Collector Lynwood Roberts and L. H. Fuchs, executive director of the Florida Department of Revenue, as co-defendants. The date is significant because the next day Fryefield handed down his decision, which he says also includes the tenants of both ports.
“I believe I’m right,” said Fryefield. “They are exempt and that includes the tenants. It’s out of my hands and I expect it will go to appeal.”
So does everyone else. Doug Drozd, the City’s chief appraiser, said his office understands the ports are immune from ad valorem taxes, but also believes his office is correct to levy assessments against dozens of the ports’ tenants.
At issue is whether those leased properties are being used for government, religious, educational or non-profit uses or proprietal (for-profit) uses. According to Drozd, his office is relying heavily on a March 27, 1997 Florida Supreme Court ruling in the Port Canaveral vs. the Florida Department of Revenue case, which stated that for-profit businesses operating on government-owned property are subject to ad valorem taxation.
“Accordingly, we conclude that the fee interest in the property at issue is not exempt from ad valorem taxation because the property is leased to a nongovernmental entity for a nongovernmental use,” said the Florida Supreme Court in upholding a 5th District Court of Appeals decision. “We approve of the 5th District’s decision on both the immunity and exemption issues to the extent they are consistent with our opinion.”
Everyone involved in the case agrees the ports are immune from taxation. What they disagree about is whether the tenants are also.
In his filing, Winegeart wrote, “The Port Authority is immune from taxation and therefore no valid ad valorem taxes may be made on JPA properties.”
At stake is money, lots of it. With approximately 40 properties, and most being used for non-governmental purposes, the Property Appraiser’s Office has levied millions of dollars in ad valorem taxes. Winegeart said his suit seeks to recoup that money, but by law, he can only seek the previous four years worth of taxes.
“If they are immune now, they always have been,” argued Winegeart.
Further complicating the matter is Jacksonville’s status as a consolidated government. Winegeart concedes that under the current system, the State of Florida can tax municipalities if the use of the property is for non-governmental purposes. However, there’s a catch.
“The State can’t impose ad valorem taxes on counties,” said Winegeart. “Is the Port Authority an agency of our consolidated government? Is it operating as an agent of the county? The case is really about immunity and we’re all for it.”
Drozd believes the courts will ultimately uphold the 1997 Supreme Court decision.
“Generally speaking, the properties are owned by the ports and leased for profit and should be taxed,” said Drozd. “They believe they are exempt and that is not the way we and our attorney feel. We are working with them to determine the exact use of each property. In the Canaveral Port case, the Supreme Court ruled that the bottom line is, it’s not fair for some tenants to be taxed and some to be exempt. We tend to agree with that. I know Ernie does.”
Drozd didn’t have the numbers for the Airport Authority, but the Seaport Authority — between the Ed Austin Terminal, Talleyrand and Blount Island — have a market value of over $300 million, of which over $200 million is taxable.