IN THE SUPREME COURT OF FLORIDA

CASE NO. SC11-2231

First District Court of Appeal Case No. 1D10-2050

1108 ARIOLA, L.L.C., et al, Petitioners,

v.

CHRIS JONES, Property Appraiser of Escambia County, and

JANET HOLLEY, Tax Collector of Escambia County, Respondents.

RESPONDENTS’ ANSWER BRIEF

ON REVIEW FROM THE FIRST DISTRICT COURT OF APPEAL

Elliott Messer, Esq. Florida Bar No. 054461 Thomas Findley, Esq. Florida Bar. No. 0797855 Messer, Caparello & Self, P.A. 2618 Centennial Place Tallahassee, Florida 32308 Telephone (850)222-0720

Counsel for Respondents

i

TABLE OF CONTENTS Page TABLE OF CONTENTS ............................................................................................... i TABLE OF CITATIONS ............................................................................................. iii STATEMENT OF THE CASE AND FACTS ............................................................. 1

A. Statement of the Case ............................................................................... 1

B. Statement of the Facts .............................................................................. 1

SUMMARY OF ARGUMENT .................................................................................. 12 ARGUMENT ............................................................................................................... 13

I. PETITIONERS’ BEACH HOMES AND CONDOMINIUM

UNITS SHOULD BE SUBJECT TO LOCAL GOVERNMENTAL AD VALOREM TAXATION ...................... 13

II. PETITIONERS ARE THE EQUITABLE OWNERS OF THEIR BEACH HOMES AND CONDOMINIUM UNITS FOR AD VALOREM TAX PURPOSES ........................................ 23

III. THE DECISION BELOW DOES NOT CONFLICT WITH

OTHER DECISIONS OF THIS COURT OR OTHER DISTSRICTS ..................................................................................... 44

IV. THE DECISION BELOW DOES NOT DIRECTLY

AFFECT A CLASS OF CONSTITUTIONAL OFFICERS ......... 47 V. THE FIRST DISTRICT WAS CORRECT IN NOT

ADDRESSING THE ENFORCEMENT ISSUE ............................ 48 CONCLUSION ............................................................................................................ 50 CERTIFICATE OF SERVICE.................................................................................... 51 CERTIFICATE OF COMPLIANCE .......................................................................... 52

ii

TABLE OF CITATIONS Page Cases 1108 Ariola v. Jones, 71 So.3d 892 (Fla. 1st DCA 2011) ...................................... 1, 22 Accardo v. Brown, 63 So.3d 798 (Fla. 1st DCA 2011) ..................................... 3, 22, 33 Alvin’s Stores, et al. v. Jones, No. 1D07-0149 (Fla. 1st DCA Oct. 22, 2007) .......... 23 AMFI v. Jones, No. 1D08-0402 (Fla. 1st DCA Oct. 28, 2008) ................................. 23 AMFI v. Kinney, 360 So. 2d 415 (Fla. 1978) ........................................................ 14, 22 Ammerman v. Markham, 222 So. 2d 423 (Fla. 1969) ................................................ 42 Archer v. Marshall, 355 So. 2d 781 (Fla. 1978).................... 14, 16, 17, 22, 24, 34, 38 Baird v. Commissioner, 68 T.C. 115 (1977) .............................................................. 39 Bancroft Inv. Corp. v. City of Jacksonville, 27 So. 2d 162 (Fla. 1946) ..................... 28 Bell v. Bryan, 505 So. 2d 690 (Fla. 1st DCA 1987) ............................................. 32, 49 Broadway & Fourth Ave. Realty Co. v. City of Louisville, 197 SW2d 238

(Ct.App.Ky. 1946) ............................................................................................ 40 Broward County v. Eller Drive Ltd. Partnership, 939 So. 2d 130 (Fla. 4th DCA

2006) .................................................................................................................. 35 Caufield v. Cantele, 837 So. 2d 371 (Fla. 2002) ........................................................ 14 Dade County School Bd. v. Radio Station WQBA, 731 So. 2d 638 (Fla. 1999) ....... 14 Dept. of Education v. Lewis, 416 So. 2d 455 (Fla. 1982) .......................................... 22 Dept. of Revenue v. Gibbs, 342 So. 2d 562 (Fla. 1st DCA 1977) .............................. 49

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Dept. of Revenue v. Johnston, 442 So. 2d 950 (Fla. 1983) ........................................ 46 Dept. of Revenue v. Skop, 383 So. 2d 678 (Fla. 5th DCA 1980) ............................... 27 Filbern Manor Apartments v. Board of Assessment Appeals, 589 A.2d 279 (Pa. Ct.

App. 1991) ......................................................................................................... 40 First Union Nat’l Bank of Florida v. Ford, 636 So. 2d 523 (Fla. 5th DCA 1993) ... 40 Gautier v. Lapof, 91 So. 2d 324 (Fla. 1956) ............................................................... 34 Gay v. Jemison, 52 So. 2d 137 (Fla. 1951) ..................................................... 36, 38, 39 Gellman v. Eden Point South Association, Inc., 504 So. 2d 43 (Fla. 3d DCA) ........ 40 Green v. City of Pensacola, 108 So. 2d 897 (Fla. 1st DCA 1959) ............................ 22 Helvering v. F&R Lazarus & Co., 308 U.S. 252, 60 S.Ct. 209, 84 L.Ed. 226 (1939) ...................................................................................................................................... 28 Hialeah, Inc. v. Dade County, 490 So. 2d 998 (Fla. 3d DCA 1986) ................... 31, 40 Kaulakis v. Boyd, 130 So. 2d 505 (Fla. 1962) ...................................................... 21, 22 King v. King, 652 So. 2d 1199 (Fla. 4th DCA 1995) ................................................. 42 Leon County Educational Facilities Authority v. Hartsfield, 698 So. 2d 526 (Fla.

1997) ................................................................................... 24, 28, 30, 39, 45, 46 MacNeill v. O’Neal, 238 So. 2d 614 (Fla. 1970) ........................................................ 14 Malu v. Security Nat’l Ins. Co., 898 So. 2d 69 (Fla. 2005) ........................................ 14 Marathon Air Services, Inc. v. Higgs, 575 So. 2d 1340 (Fla. 3d DCA 1991) ........... 36 Mikos v. Kings Gate Club, 426 So. 2d 74 (Fla. 2d DCA 1983) ..................... 28, 39, 34 Offutt Housing Co. v. County of Sarpy, 351 U.S. 253 (1956) ............................. 36, 38

iv

Parker v. Hertz Corp., 544 So. 2d 249 (Fla. 2d DCA 1989) ................... 27, 28, 34, 35 .......................................................................................................................... 39, 40, 41 Portofino Condominium Assoc. v. Jones, No. 1D07-2298 (Fla. 1st DCA Aug. 5,

2008) ...................................................................................................... 23, 25, 31 Regency Villas v. Keltner, 610 So. 2d 661 (Fla. 1st DCA 1992) ......................... 31, 43 Robbins v. Mt. Sinai Medical Center, 748 So. 2d 349 (Fla. 3d DCA 1999) ....... 46, 47 Robbins v. Welbaum, 664 So. 2d 1 (Fla. 3d DCA 1995) ........................................... 36 Sans Souci v. Division of Florida Land Sales and Condominiums, Dept. of Business

Regulation, 421 So. 2d 623 (Fla. 1st DCA 1982) ............................................ 43 Savoie v. State, 422 So. 2d 308 (Fla. 1982) ................................................................ 14 Sebring Airport Authority v. McIntyre, 642 So. 2d 1072 (Fla. 1994) ....................... 27 Sebring Airport Authority v. McIntyre, 783 So. 2d 238 (Fla. 2001) ................... 17, 18 .......................................................................................................................... 19, 20, 21 Serv. Metro Corp. v. Bell, 786 So. 2d 1216 (Fla. 1st DCA 2001) ................. 30, 34, 35 Southern Walls, Inc. v. Stilwell Corporation, 810 So. 2d 566 (Fla. 5th DCA) .... 41,42 Straughn v. Camp, 293 So. 2d 689 (Fla. 1974) .............................................. 14, 22, 37 The Crossings at Fleming Island v. Echeverri, 991 So. 2d 793 (Fla. 2008) ....... 20, 21 Ward v. Brown, 894 So. 2d 811 (Fla. 2004) ............................................. 19, 27, 29, 31 Ward v. Brown, 919 So. 2d 462 (Fla. 1st DCA 2005) ............................... 2, 22, 30, 32 .................................................................................................................... 33, 34, 39, 40 Williams v. Jones, 326 So. 2d 425 (Fla. 1975) ......................................... 13, 14, 15, 17 ........................................................................................... 18, 19, 20, 22, 23, 29, 34, 40

v

Wright Runstad Props. Ltd. P’ship v. United States, 40 Fed. Cl. 820 (1998) ........... 34 Zirin v. Charles Pfizer & Co., 128 So. 2d 594 (Fla. 1961) ........................................ 14 Statutes Fla. Stat. § 192.091 .................................................................................................. 21 Fla. Stat. § 194.171 .................................................................................................. 48 Fla. Stat. § 196.001 .................................................................................................. 27 Fla. Stat. § 196.199 ......................................................................... 24, 40, 41, 49, 50 Fla. Stat. § 196.1995 ................................................................................................ 17 Fla. Stat. § 197.332 .................................................................................................. 21 Fla. Stat. § 197.383 .................................................................................................. 21 Fla. Stat. § 197.432 ............................................................................................ 48, 49 Fla. Stat. § 197.3045 ................................................................................................ 21 Fla. Stat. § 199.023 .................................................................................................. 41 Fla. Stat. § 718.103 ........................................................................................9, 42, 43 Fla. Stat. § 718.104 .............................................................................................. 9, 43 Fla. Stat. § 718.106 .............................................................................................. 9, 42 Fla. Stat. § 718.120 ............................................................................................ 44, 43 Fla. Stat. § 1011.17 .................................................................................................. 21 Fla. Stat. § 1011.18 .................................................................................................. 21

vi

Florida Constitution Art. VII, § 6, Fla. Const. ............................................................................. 29, 32, 42 Art. VIII, § 1, Fla. Const. ......................................................................................... 21 Art. X, § 1, Fla. Const. ............................................................................................. 29 Laws of Florida 1947 Fla. Laws Ch. 24500 ......................................................................................... 3 Florida Attorney General Opinions 73 Op. Att’y Gen. 136 (1973) .................................................................................. 42 Other 42 Fla. Jurisprudence 2d, Property § 13 (1983) ...................................................... 31 Escambia County, Fla. Ordinance 89-11, § 4 .......................................................... 37 Rev. Rul. 69-89 ........................................................................................................ 39

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STATEMENT OF THE CASE AND FACTS1

A. Statement of the Case

Petitioners filed a complaint in the Circuit Court in Escambia County,

claiming that their privately held beach homes and condominium units on Santa

Rosa Island are exempt from local government ad valorem taxation. V1-2; V3-12.

The trial court entered Final Summary Judgment in favor of Respondents, holding

Petitioners are equitable owners of their beach homes and condominium units.

V34-84. Thus, Petitioners’ properties are subject to local governmental real

property ad valorem taxes. V34-84. The First District Court of Appeal affirmed.

1108 Ariola v. Jones, 71 So. 2d 892 (Fla. 1st DCA 2011)(“Ariola Opinion”). The

First District certified the question of whether Petitioners are equitable owners. This

Court accepted discretionary review.

B. Statement of the Facts.

The tax assessments at issue relate to real property improvements and

condominium units on land subject to 99-year leases. The great majority of the

leaseholds have options to renew for additional, multiple 99-year terms. In most

instances, the leases were to developers, who sold condominium units to Petitioners.

1 The record will be cited to the volume number and the document within that volume (e.g., V1-2 means Volume 1, document 2). If a page number within a document is specified, that would be designated following the document number.

2

In their initial brief, Petitioners include only vague references to the terms of

the relevant leases and closing documents, without citation to the record. See

Petitioners’ Initial Brief, p. 5-7. These vague references can be misleading. For

example, Petitioners ignore the fact that the majority of interests in this case are

condominium units. The underlying leases were to developers, who constructed

condominium towers and sold condominium units to Petitioners with an assignment

of a leasehold interest in the underlying land. Respondents have undertaken, in the

section below entitled “The underlying land leases and Declarations of

Condominium,” to provide record citations for those leases that Petitioners have

represented to be “common” to all.

1. Petitioners’ beach homes and condominiums are used for purely private purposes.

In their brief in the lower court, Petitioners conceded that their beach homes

and condominium units are used for purely private purposes. Petitioners’ First

District Brief, p. 2. Petitioners admitted: “[n]one of the leaseholds is used for

public purposes.” Id. The Property Appraiser assessed Petitioners’ private homes

and condominium units as real property for purposes of ad valorem taxation, based

on the outcome of a similar case in Santa Rosa County. Ward v. Brown, 919 So.

2d 462 (Fla. 1st DCA 2005).

3

The land underlying Petitioners’ improvements and condominium units is

the subject of long-term leases from Escambia County to the developers of the

parcels. The land was conveyed by the United States to Escambia County in 1947.

V3-12, Ex. 1. By Special Act, the Legislature created the Santa Rosa Island

Authority (“SRIA”) to serve as agent for the County to promote private

development. Ch. 24500, Laws of Florida (1947). The SRIA authorized private

development on the island, including construction of single family residences,

townhomes and condominiums. Petitioners concede that “[a]ll of the leases at

issue are for 99-year terms” and many “have an option for the lessee to renew for

further 99-year terms.” Petitioners’ First District Brief, p. 4.

A portion of this tract of land from the federal land grant was subleased by

Escambia County to Santa Rosa County. The land subleased to Santa Rosa

County was the land underlying the improvements in Ward v. Brown and the

“companion” case, Accardo v. Brown, 63 So. 2d 798 (Fla. 1st DCA 2011). Per the

sublease between Escambia County and Santa Rosa County, the subleases in Ward

and Accardo were “substantially upon the same terms, considerations, conditions

as like leases then in use [in Escambia County].” V31-74, Tab 6.

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2. The underlying land leases and Declarations of Condominium.

Petitioners attached representative leases to their Complaint with the

representation that they contained provisions “common” to all Petitioners. V3-12,

par. 35. The most common example allows for not only one 99-year renewal after

the original 99-year term, but also “an option for further renewals” into the future

after 198 years. V1-2; V3-12 (e.g., Futral Lease). The trial court noted the leases

contained “similar, if not precisely the same, language.” V34-84, p. 7. The First

District noted “the parties treated these leases as identical for purposes of

determination of the issues in this case.” Ariola Opinion, p. 8. The leases

attached as Exhibits 4-8 to the Complaint “show the lease provisions common to

the respective residential, townhouse and condominium leases which are material

to this Complaint.” V3-12 (emphasis added) (also included in Appendix, Tab 3).

The first lease containing provisions in “common” to the other leases is the

lease pertaining to Ann Futral (“Futral Lease”). V3-12, par. 35, Ex. 4. The Futral

Lease term is 99 years with an option to renew for additional 99 year periods. Id.;

Futral Lease, par. 1 and 14. The rental is $340 per year. The renewal provision

gives Petitioner the “right and privilege at his election to renew this lease for a

further term of 99 years, by giving the Authority written notice of such election to

renew not later than six (6) months prior to the expiration of the original term.

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Such renewal shall be on like covenants, provisions and conditions as are in this

lease contained, including an option for further renewals.” Id., Futral Lease, par.

14 (emphasis added). Thus, Petitioner may extend the lease on the same

conditions in the original lease by giving unilateral notice. The renewed lease

then provides for options for further 99-year renewals after the first 198 years.

Under the lease, Petitioner bears the burden of repair and maintenance. Id., Futral

Lease, par. 5. The property may be transferred or mortgaged. Id., par. 13.

The second lease containing provisions “common” to all relates to the

interest of The Michael T. Merritt Corporation (“Merritt Lease”). V3-12, par. 35,

Ex. 5. The Merritt Lease term is 99 years with an option to renew for additional

99 year periods. Id., Merritt Lease, par. 1 and 16. The rental is $420 per year.

The renewal provision grants Petitioner the “right and privilege at his election to

renew this lease for a further term of 99 years, by giving the Authority written

notice of such election to renew not later than six (6) months prior to the

expiration of the original term. Such renewal shall be on like covenants,

provisions and conditions as are in this lease contained, including an option for

further renewals . . . .” Id., Merritt Lease, par. 16 (emphasis added). Thus,

Petitioner may extend the lease on the same conditions in the original lease by

giving unilateral notice. The renewed lease would then provide for options for

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further 99-year renewals. Petitioner bears the burden of repair and maintenance.

Id., par. 5. The interest may be transferred or mortgaged. Id., par. 15.

The third lease containing provisions “common” to all relates to Joseph

Endry (“Endry Lease”). V3-12, par. 35, Ex. 6. The Endry Lease term is 99 years

with an option to renew for additional 99 year periods. Id., Endry Lease, par. 1,

20. The renewal provision grants Petitioner the “right and privilege at his election

to renew this lease for a further term of 99 years, by giving the Authority written

notice of such election to renew not later than six (6) months prior to the

expiration of the original term. Such renewal shall be on like covenants,

provisions and conditions.” Endry Lease, par. 20. The renewed lease then

provides for options for further 99-year renewals. Petitioner bears the burden of

repair and maintenance. Id., par. 9. The interest may be transferred or mortgaged.

Id., par. 18. The lease provides that lessee “shall pay promptly and prior to

delinquency all ad valorem real property taxes assessed against the leasehold

estate, the leased property or the improvements thereon . . . .” Id., par. 21.

The fourth lease containing provisions “common” to all pertains to Johnnie

Sue Harper Allen (“Allen Lease”). V3-12, par. 35, Ex. 7. The Allen Lease term is

99 years with an option to renew for additional 99 year periods. Id., Allen Lease,

par. 3 and 4. Petitioner bears the burden of maintenance and repair. Id., par. 8, 13.

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The sole risk of loss of the premises is on the lessee. Id., par. 9. The interest may

be transferred or mortgaged. Id., par. 15. The lease provides lessee “shall pay and

discharge all existing and future taxes . . . assessments . . . and burdens assessed,

charged or imposed upon the Leased Property.” Id., par. 14.

The fifth lease containing provisions “common” to all pertains to Little

Sabine Investment Group, Inc. (“LSIG Lease”). V3-12, par. 35, Ex. 8. The LSIG

Lease term is 99 years with an option to renew for additional 25 year periods

thereafter. Id., LSIG Lease, par. 3, 23. Such renewal shall be on like terms to the

original lease. Id., par. 23. The lessee bears the burden of maintenance and repair.

Id., par. 8, 13. The risk of loss for the premises is on the lessee. Id., par. 9. The

property may be transferred or mortgaged. Id., par. 14. The lessee “shall pay and

discharge all existing and future taxes . . . assessments . . . and burdens assessed,

charged or imposed upon the Leased Property.” Id., par. 15.

Petitioners admit they all have 99-year leasehold interests, many of which

contain unlimited rights to renewal. V34-84; V31-76 (summary of interrogatory

responses). Petitioners also admit they have the burden to repair and maintain the

improvements. V34-84, p. 5 (citing Response to Request for Admissions, #1).

Petitioners admit they have the right to rent their interests to third parties for the

production of income, and many Petitioners who rent their units take depreciation

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deductions over useful life periods prescribed by the Internal Revenue Service

(generally 27.5 years). V34-84, p. 8-9 (citing Response to Request for Admissions,

#4 and 8 and the Notice of Filing Federal Tax and Closing Information).

Petitioners admit they have the ability to convey their property interests and

realize the full benefit of capital appreciation. V34-84, p. 9 (citing Response to

Request for Admissions, #5). Petitioners also have the right to encumber their

interests with debt. V34-84, p. 9 (citing Partial Stipulation of Facts). All of the

Petitioners are private persons or entities, who use their properties for purely

private purposes. V34-84, p. 4 (Response to Request for Admissions, #9 and 10).

Many individuals deduct mortgage interest expense on their federal tax returns.

V34-84, p. 9 (citing Notice of Filing Federal Tax and Closing Documents). When

these interests are sold, the closing documents, including HUD statements in the

record, generally report a “contract sales price.” Id.

Petitioners’ beach homes and condominium units are deemed by the lessor,

i.e., the County, to consist of uniquely classified “real property,” which it deems to

be “equivalent of fee simple ownership.” V9-31 (emphasis added). Although

there are provisions in many of the leases, which provide that bare legal title to the

improvements is in the County, such rights are “subject, however, to the term of

years and option to renew granted to lessee.” V3-12, Futral Lease, par. 4. Thus,

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even bare legal title is subject to Petitioners’ rights and control until an undefined

point in the future.

Over half of the properties in this case are condominium units. V34-84, p.

9. Petitioners produced boxes of condominium declarations relating to these

interests. V10-34. These documents describe the interests as “condominium

units.” Chapter 718, Florida Statutes, provides that a condominium unit is a “form

of ownership of real property.” §718.103(11), Fla.Stat. (2011). When Petitioners

obtain condominium units, they purchase “real property” interests, even if the

underlying land was leased. §718.106(1), Fla. Stat. (“A condominium parcel

created by the declaration is a separate parcel of real property, even though the

condominium is created on a leasehold.”)

Petitioners’ condominium units came into existence as distinct units of real

property upon the filing of Declarations of Condominium. Section 718.104,

Florida Statutes, provides that a condominium is “created by recording a

declaration.” V10-34. For example, the prospectus for Deep Water Cove, a

Condominium, provides for an “owners’ association” and “ownership” of units

along with an undivided interest in the common elements. Id. The Declaration, at

Paragraph I, provides the realty is submitted to “condominium ownership pursuant

to Chapter 718, Florida Statutes.” Id. Article XVI of the Deep Water Cove

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Declaration provides “the owner of each condominium unit, at his own expense,

shall see to and be responsible for the maintenance of his unit.” Id. Article XIX

further provides the unit owners’ association will insure the buildings and the unit

owners will insure the interior. Id. Article XIX.F provides unit owners will not

necessarily have to reconstruct in the event of substantial damage to the buildings.

Id. Similar condominium declarations have been filed for Emerald Isle Resort

Condominium, in which it is expressed that a condominium unit at Emerald Isle is

a “form of ownership of real property.” Id. Emerald Isle Declaration, p. 3. Id.

Other Petitioners own units in Sans Souci Condominiums. V34-84, p. 10;

V10-34 (See Declaration of Condominium of Sans Souci). The Sans Souci

Declaration states each unit is “defined by the Condominium Act.” Id. The

Condominium Act treats these as units of real property. For Sans Souci, the SRIA

leased land, which was assigned to a developer who built the condominiums. The

SRIA joined in the Declaration, subjecting its interests to condominium

ownership. Id. (See Declaration signature page). The Declaration stated: “[I]n

the event said taxes are ever assessed on said property, the apartment owner shall

pay said taxes on his unit and his proportionate share of the land and common

elements.” Id. (See Declaration, par. 2.11).

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Neither the SRIA nor the County does any maintenance or repair on the

improvements or condominium units. V9-31, Bolman deposition, p. 20. The

SRIA does not track the identities of the parties who hold these improvements and

condominium units. Id., p. 18. The SRIA has no responsibility for upkeep or

maintenance. Id. The SRIA employs no building inspectors and makes no attempt

to maintain data on the condition of the improvements. Id., p. 19, 47. The SRIA

has never had a lease expire. Id., p. 32. Moreover, there has never been a default

in a lease that required the SRIA to re-take the leased premises. Id. The SRIA

pays no insurance premiums on any of the properties. Id., p. 38-39. The SRIA has

not collected any proceeds from insurance claims on these properties. Id., p. 39.

Even for properties destroyed by hurricanes, the SRIA has not received insurance

proceeds or filed any legal action to require rebuilding. Id., p. 32, 40-41.

Petitioners, not the SRIA, receive the full benefit of capital appreciation. Id., p.

45. The County does not share in appreciation, nor does it track the value of

improvements. Id., p. 45-46.

3. Impact of preferential tax treatment sought by Petitioners.

The exemption from local real property taxes sought by Petitioners would

provide a distinct economic advantage over other private owners of real property

in Escambia County. This advantage is substantial, as documented in the

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Escambia County Budget Manager’s Affidavit. V9-31 (Lovoy Affidavit). The

lease fees are not deposited in the general fund of Escambia County. Id. None of

the lease fees support public schools, even though residents of Pensacola Beach

have the right to send their children to Escambia County schools. Id. Instead,

lease fees are used for SRIA administration, maintenance of the beach and parks

on the beach, salaries for lifeguards, ambulance support on the beach, and

promotion of the businesses and activities on the beach. Id.

Without the payment of real property ad valorem taxes, Petitioners would

pay nothing to the general fund of Escambia County. Id. They would pay no part

of general law enforcement costs, maintenance of County parks, maintenance of

County buildings, neighborhood services, long range planning, Pre-Trial Release,

emergency management, emergency communications, animal control, library

services, maintenance of County roads and drainage systems, mass transit system,

Health Department, Property Appraiser, Tax Collector, Clerk of Court, Supervisor

of Elections, Medical Examiner’s Office, mandated costs such as Medicaid

payments, Baker Act payments, indigent burials, and court administration. Id.

SUMMARY OF ARGUMENT

The certified question of whether Petitioners have equitable ownership for ad

valorem tax purposes has already been answered by this Court. In Williams v.

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Jones, 326 So. 2d 425 (Fla. 1975), and its progeny, this Court has held the

Petitioners’ interests on Santa Rosa Island are “tantamount to ownership” and

“equivalent of fee simple ownership.” The law relating to Santa Rosa Island local

tax matters has been crystallized by 40 years of case law, including four Florida

Supreme Court opinions and six First District Court of Appeal cases, all adverse to

Petitioners. This Court has held private leaseholders of governmental property on

Santa Rosa Island must pay local government real property taxes at “parity” with

other private owners in other parts of Escambia County. Williams v. Jones, 326

So.2d at 432. The Williams v. Jones Court held there is no “constitutional

exemption” upon which Petitioners can base their claim for preferential tax

treatment. This Court further held that any attempt to create one legislatively for

these interests on Santa Rosa Island “would undoubtedly be discriminatory and

violative of the equal protection provisions of the Florida and United States

Constitutions.” Id. Thus, the opinion of the First District should be affirmed.

ARGUMENT

I. PETITIONERS’ BEACH HOMES AND CONDOMINIUM UNITS SHOULD BE SUBJECT TO LOCAL GOVERNMENTAL AD VALOREM TAXATION.

Standard and Scope of Review: The standard of review is de novo. In

terms of the scope of review, this Court has the authority to consider any issue

14

raised in the lower courts. Moreover, this Court can affirm the First District on

alternative grounds argued in the lower tribunal.2

Argument: Petitioners contend their private beach homes and

condominium units on Santa Rosa Island are exempt from local government ad

valorem taxation. This Court has addressed similar issues in at least four prior

cases. AMFI v. Kinney, 360 So. 2d 415 (Fla. 1978); Archer v. Marshall, 355 So.

2d 781, 784 (Fla. 1978); Williams v. Jones, 326 So. 2d 425 (Fla. 1975); Straughn

v. Camp, 293 So. 2d 689 (Fla. 1974). In each case, this Court rejected arguments

for preferential treatment made by petitioners on Santa Rosa Island. This Court

has held that Petitioners’ interests are “tantamount to ownership” and “equivalent

of fee simple ownership.” Archer v. Marshall, 355 So. 2d at 784; Williams v.

Jones, 326 So. 2d at 436. These cases hold that Petitioners must pay local

2 This Court is not limited to the certified question and may consider all

issues raised in the lower courts. Zirin v. Charles Pfizer & Co., 128 So. 2d 594, 596 (Fla. 1961); Caufield v. Cantele, 837 So. 2d 371, 377 n.5 (Fla. 2002); Savoie v. State, 422 So. 2d 308, 310 (Fla. 1982). Respondents raised several constitutional issues below. The trial court held preferential tax treatment for Petitioners would be unconstitutional. This Court is not limited to the reasons set forth by the lower courts. Dade County School Bd. v. Radio Station WQBA, 731 So. 2d 638, 645 (Fla. 1999); MacNeill v. O’Neal, 238 So. 2d 614, 615 (Fla. 1970); Malu v. Security Nat’l Ins. Co., 898 So. 2d 69, 73 (Fla. 2005). Radio Station WQBA and Malu address the “tipsy coachman” doctrine, allowing an appellate court to affirm despite finding error below, if there is an alternative basis to affirm.

15

governmental ad valorem taxes at “parity” with other citizens in order to fund

schools, police, and other local governmental services.

A. Williams v. Jones

In 1975, petitioners on Santa Rosa Island made the same argument now

made in this case, that is, they should be taxed at the reduced intangible tax rate.

This Court emphatically rejected the argument, concluding petitioners had rights

“tantamount to ownership of the fee.” Williams v. Jones, 326 So. 2d at 436. This

Court held it would “undoubtedly” be unconstitutional, if petitioners on Santa

Rosa Island were allowed to escape local government real property taxes and pay

only intangibles tax, while similarly situated residents on the mainland bear the

full local tax burden. The Court held:

Basically, the Petitioners [on Santa Rosa Island] contend for a constitutional exemption from ad valorem real estate taxation where none exists and, if it did, such an exemption would undoubtedly be discriminatory and violative of the equal protection provisions of the Florida and United States Constitutions.

Id. at 432 (emphasis added). In other words, there is no “constitutional

exemption” to allow their leaseholds to be taxed at the reduced intangibles tax

rate. In Williams v. Jones, this Court explained:

To accept the [beach homeowners’] contention . . . would not only result in such leasehold interests being taxed on the reduced intangible personal property ad valorem rate but would also deprive the political subdivisions wherein the leaseholds are

16

situated from raising revenues from such source in order to defray the costs of the services supplied to the users thereof, services which include, especially, the education of the children of such users. The holder of a lease on Santa Rosa Island requires no less police protection, fire protection or education of his or her children than does his or her neighbor in the county who occupies under a fee simple title. Id., at 431 (emphasis added). This Court held Santa Rosa Island properties

should be taxed “on a parity with other real property in the private sector devoted

to similar uses.” Id. at 430 (emphasis added). This Court also examined the Equal

Protection issue of whether properties on Santa Rosa Island could avoid local

taxation, while similar properties not on the beach were taxable, holding: “No

rational basis exists for such a distinction.” Id. (emphasis added).

This Court re-emphasized the point in Archer v. Marshall, 355 So. 2d at

784, holding: “[T]hese leaseholders have the equivalent of fee simple ownership

. . . .” (emphasis added). In Archer, this Court struck yet another attempt by the

petitioners on Santa Rosa Island to “manipulate” the form of the transactions in

order to avoid local governmental taxes. Id. at 785. This Court found Petitioners

enjoy all the benefits of their improvements:

[I]t cannot be said that Escambia County has or will receive any improvements of value upon the termination of the lease agreements. Certainly the improvements which have been made upon this property [specifically, on Santa Rosa Island] will have long since been destroyed prior to the end of the leases.

17

Archer v. Marshall, 355 So. 2d at 784. Thus, this Court has consistently held: (1)

Petitioners’ interests are equivalent to fee simple ownership; and (2) no statute

could support the intangibles tax treatment sought by Petitioners, because there is

no support in the Florida Constitution for such treatment.

B. Sebring Airport Authority v. McIntyre Petitioners have argued that the 1980 revisions to Chapter 196 were capable

of altering the conclusions of Williams v. Jones. Yet, the Legislature has no

ability to modify the constitutional principles described in Williams v. Jones, as

the Florida Constitution contains no “constitutional exemption” to support the

treatment sought by Petitioners. In fact, this Court confirmed the vitality of

Williams v. Jones more than twenty years after the 1980 revisions in Sebring

Airport Authority v. McIntyre, 783 So. 2d 238 (Fla. 2001).

Sebring involved a similar attempt to contort the definition of “public

purpose” to create a tax exemption. Sebring examined a statutory exemption

purporting to define public purpose to include private racetracks and sports

stadiums, despite no authority for such an exemption in the Florida Constitution.3

3 Whether sport stadiums or racetracks were good economic development tools was not relevant in Sebring. It is also not relevant in this case, despite the argument in the Portofino amicus brief. The Legislature has provided for an exemption based on economic development in Section 196.1995, Florida Statutes (2011). Yet, Petitioners have not applied for, nor do they qualify for, that

18

Justice Lewis wrote the unanimous opinion in Sebring, citing the same portions of

Williams v. Jones, which are quoted above.

The Sebring Court held that the statute in that case “attempts to create an ad

valorem tax exemption for private, profit-making ventures conducted upon

property leased from a governmental entity – a result which the Florida

Constitution does not allow.” Id. at 241 (emphasis added). This fact pattern is

similar to the case at bar, in which Petitioners suggest they are fulfilling some public

purpose.4

The Sebring Court noted Williams v. Jones set the “guiding principles” for

the legal analysis. This Court found Williams v. Jones was “premised on a

constitutional foundation that all privately used property must bear the proper tax

In Sebring, this Court held the Legislature had no power to fashion such a

definition, because only the Florida Constitution can authorize ad valorem tax

exemptions. Similarly, in this case, there is no authority in the Florida Constitution

to exempt privately used beach homes and condominiums.

(..continued) exemption. In terms of the governmental exemption under review, the economic impact is not a factor. Thus, the economic data filed by Portofino is both outside the record and irrelevant. 4 To the extent Petitioners rely on bond validation proceedings to argue their private condominiums serve a public purpose, Sebring held: “bond validation cases . . . are not analogous to tax exemption cases, and the legal theories cannot be used interchangeably”; “in tax exemption cases . . . tax exemption necessarily involves a direct shift in tax burden from the exempt property to other, non-exempt properties.” Sebring, 783 So. 2d at 250.

19

burden.” Id. at 243. The Sebring Court noted Williams v. Jones gave effect to the

1968 changes to the Florida Constitution and the “governmental-governmental”

standard, requiring both government ownership and use to meet the governmental

exemption. Id. at 246. Because purely private uses, such as Petitioners’ use of

beach homes and condominium units, are not governmental uses, there is no

constitutional basis for exempting them.

This Court has established, in an interlocutory appeal filed by some of the

Petitioners in this case, that Petitioners seek an exemption. Ward v. Brown, 894

So. 2d 811, 812 and 816 (Fla. 2004)(“we also reject the petitioners’ claim that they

are not claiming an exemption”). In the parlance of Sebring, Petitioners claim an

exemption for privately used beach homes and condominiums, a “result which the

Florida Constitution does not allow.” Sebring, 783 So. 2d at 241. Sebring also

quoted the core part of Williams v. Jones, which held, if petitioners on Santa Rosa

Island were to pay tax at the “reduced intangible personal property ad valorem

rate,” this would deprive the local government of essential revenues. Sebring, 783

So. 2d at 248. This Court quoted the Williams v. Jones holding that no

constitutional exemption existed to support intangibles treatment “and, if it did,

such an exemption would undoubtedly be discriminatory and violative of the equal

20

protection provisions of the Florida and United States Constitutions.” Sebring,

783 So. 2d at 248 (quoting Williams, 326 So. 2d at 431-32).

Sebring also addressed the argument now raised in Petitioners’ brief,

relating to the appropriate deference accorded to the Legislature. Contrary to

Petitioners’ argument, this Court held the Legislature’s power to classify is limited

by the Florida Constitution: “[T]he Legislature’s authority was not unbridled . . .

the Court is responsible for measuring legislative acts ‘with the yardstick of the

Constitution.’” Id. at 245. In this case, the Florida Constitution provides no

authority for the Petitioners’ claim for an exemption.

C. Standing of the Tax Collector

Petitioners’ interpretation of the statutes leads to the unconstitutional result

discussed in Williams v. Jones. It is a basic tenet that statutes must be construed in

a manner that avoids an unconstitutional result. The Tax Collector in this case had

standing to raise these constitutional issues, because the tax exemption statutes do

not prescribe duties of the Tax Collector. Instead, the tax exemption statutes

define duties committed to the Property Appraiser. Thus, the rule barring an

official from challenging statutes defining their duties does not apply to the Tax

Collector. In fact, the rule, as summarized in The Crossings at Fleming Island v.

Echeverri, 991 So. 2d 793 (Fla. 2008), did not address the standing of a Tax

21

Collector. As the watchdog for local government and school revenues, the Tax

Collector must have standing to challenge dubious exemptions. Otherwise,

exemptions favoring special interests in an unauthorized manner, such as that

involved in Sebring, would go unchecked.

An additional basis for the Tax Collector’s standing is found in the “public

funds exception,” which allows officials whose duties involve the collection and

disbursement of public funds, to raise constitutional questions. Kaulakis v. Boyd,

138 So. 2d 505 (Fla. 1962). The Crossings Court did not address this exception:

“[W]e decline to review whether the public funds exception is applicable to

property appraisers wishing to challenge the constitutionality of statutes.”

Crossings, 991 So. 2d at 797. Here, the Tax Collector is within the exception,

because she is the constitutional officer charged with the duty to collect and

disburse funds to schools and local taxing units. See Art. VIII, § 1(d), Fla. Const.;

§197.332, Fla. Stat. (2011) (duties of tax collector include collection of taxes,

interest and costs); §197.383 (tax collector distributes taxes to taxing units);

§197.3045; §1011.17 and 1011.18, Fla. Stat. (2011) (tax collector’s duty to collect

money for local schools). Finally, the Tax Collector stands to lose funds from her

own budget. §192.091, Fla. Stat. (2011). Thus, she has direct economic standing.

22

In Kaulakis, this Court confirmed, under the public funds exception, an

entity has not just a right, but also a duty to challenge such statutes. 138 So. 2d at

507; Dept. of Education v. Lewis, 416 So. 2d 455 (Fla. 1982). In Green v. City of

Pensacola, 108 So. 2d 897 (Fla. 1st DCA 1959), the Court held the Comptroller

had standing to challenge a tax exemption: “[T]he necessity of protecting the

public funds is of paramount importance, and the rule denying to ministerial

officers the right to question the validity of the Act must give way to a matter of

more urgent and vital public interest.” Id. at 901. The Tax Collector is analogous

to the Comptroller in Green. As collection agent for local taxes, the Tax Collector

has a duty of “paramount importance” to collect the proper amount of tax. This

“vital public interest” justifies the Tax Collector’s standing to challenge

unconstitutional exemptions that would unlawfully deplete local tax revenues.

D. Summary.

There are now four Florida Supreme Court cases; three published First

District cases; and three per curiam affirmed opinions, all adverse to Petitioners.

Williams v. Jones, 326 So. 2d at 436; Archer v. Marshall, 355 So. 2d at 784; AMFI

v. Kinney, 360 So. 2d 415; Straughn v. Camp, 293 So. 2d 689; Ward v. Brown,

919 So. 2d 462 (Fla. 1st DCA 2005); 1108 Ariola v. Jones, 71 So. 3d 892 (Fla. 1st

DCA 2011)(this case); Accardo v. Brown, 63 So. 2d 798 (Fla. 1st DCA 2011)(the

23

“companion case); Portofino Condominium Assoc. v. Jones, No. 07-2292–2298

(Fla. 1st DCA Aug. 5, 2008)(per curiam); Alvins Stores et al. v. Jones, No. 07-

0149 (Fla. 1st DCA Oct. 22, 2007)(per curiam); AMFI v. Jones, No. 08-0402 (Fla.

1st DCA Oct. 28, 2008)(per curiam). These Courts have looked at extensive trial

records and all the types of leases on Santa Rosa Island.5

II. PETITIONERS ARE THE EQUITABLE OWNERS OF THEIR BEACH HOMES AND CONDOMINIUM UNITS FOR AD VALOREM TAX PURPOSES.

These cases have

consistently construed Petitioners’ rights to be equivalent to fee simple ownership,

mandating the assessment of local government property taxes.

Standard and Scope of Review: The standard of review is de novo. In

terms of the scope of review, this Court has the authority to consider any issue

raised in the lower courts. Moreover, this Court can affirm the First District on

alternative grounds argued in the lower tribunal.

Argument: The certified question is whether Petitioners are equitable

owners of their condominium units and beach homes. This Court answered that

question long ago by holding these interests on Santa Rosa Island to be

“tantamount to ownership of the fee,” Williams v. Jones, 326 So. 2d at 436, and

5 Williams v. Jones noted one lease (which is not in this case), which had only a 25 year term. Nevertheless, it was subject to the same ruling. Williams v. Jones, 326 So. 2d 429, n. 1.

24

“equivalent of fee simple ownership,” Archer v. Marshall, 355 So. 2d at 784.

Although these precedents directly answer the certified question, Petitioners’ brief

fails to cite or mention these adverse Florida Supreme Court cases.

A. These are not “ordinary leases.”

The case at bar involves only improvements and condominium units, not the

underlying land. The Legislature has determined that private improvements on

government leaseholds are subject to full ad valorem taxes at real property tax

rates. Section 196.199(2)(b), Florida Statutes, mandates that result:

Nothing in this paragraph shall be deemed to exempt . . . buildings, or other real property improvements owned by the lessee from ad valorem taxation. For purposes of these tax statutes, the concept of equitable ownership

applies. In Leon County Educational Facilities Authority v. Hartsfield, 698 So. 2d

526, 528 (Fla. 1997), this Court cited many prior cases, holding: “The concept of

equitable ownership in ad valorem taxation has long been a part of Florida law.”

The suggestion that Petitioners have “ordinary leases” does a disservice to

this Court’s prior analysis, which held Petitioners’ interests on Santa Rosa Island

to be the “equivalent of fee simple ownership.” Certainly, most “ordinary leases”

have not been adjudicated by the highest court in the State to be the “equivalent of

fee simple ownership.” Thus, there is nothing “ordinary” about the situation on

25

Santa Rosa Island. There is no other context in which individuals pay hundreds of

thousands, if not millions, of dollars for beach homes and condominium units, but

avoid paying taxes to local government and school districts. There is nothing

“ordinary” about receiving the entire enjoyment of beach homes and condominium

units during one’s lifetime through a 99-year lease, with renewal options for

additional 99-year periods.6

In lieu of the traditional analysis of the “benefits and burdens” or “bundle of

sticks” argument, in which courts examine the benefits and burdens as a bundle,

Whether characterized as perpetual, these

extraordinary periods allow Petitioners to enjoy unfettered use of private beach

homes and condominium units throughout their lifetimes without paying local

taxes. This is not “ordinary.” To the contrary, the situation on Santa Rosa Island

is so unique that it has drawn the scrutiny of this Court in four cases and the

scrutiny of the First District in many more cases.

6 The Portofino condominium associations, whose unit owners occupy five towers and 765 luxury condominium units were unsuccessful litigants in the Portofino case. They have now filed an amicus curiae brief, despite the finality of their own case. They urge the same arguments as an amicus curiae, which were previously rejected. This time, however, Portofino misrepresents its own record on appeal, by stating they have no options to renew. Portofino Brief, p. 1 (“none of these leases grant to the tenants the right to renew”). In truth, the Portofino leases all had 99 year original terms, with options to renew for additional 99 year periods. Appendix, Tab 4: Portofino, No. 07-2292 - 2298 (Record on Appeal - V39-115, Ex. C)(Portofino lease giving “full right and privilege at its election to renew this lease for a further term of ninety-nine years”).

26

Petitioners prefer to analyze each stick in isolation. Yet, no single benefit or

burden controls the outcome of the analysis, whether it is the right to pledge the

property; the right to income from the property; the right to capital appreciation;

an option to purchase; unfettered use of the property; the right to transfer interests

without restraint; or the typical burdens associated with ownership.

Another distinction between Petitioners’ interests and “ordinary leases” is

the fact that the majority of Petitioners purchased condominium units. The

developers, with the consent of Escambia County, committed these interests to the

condominium form of “ownership” under Chapter 718, Florida Statutes. These

condominium units are distinct parcels of real property under Chapter 718.

Petitioners’ effort to compare this situation to an “ordinary” tenancy is not

helpful for another reason. In ordinary tenancies, there is no avoidance of tax, if

both parties are private entities. In the typical situation, the tax burden is based on

negotiation between parties, not equitable ownership. Petitioners’ alleged fear of

sweeping more leases into the tax “net” is factually unreasonable, as parties to an

ordinary lease negotiate who will pay local ad valorem taxes, and there is no

possibility of avoidance based upon an equitable ownership argument.

27

B. Petitioners’ Claims must be strictly construed against them.

Petitioners’ argument that their private beach homes and condominium units

are exempt from real property ad valorem taxation must be “strictly construed”

against them. §196.001(1), Fla.Stat. (2011) (real property is subject to tax, unless

“expressly” exempt); Sebring Airport Auth. v. McIntyre, 642 So. 2d 1072, 1073

(Fla. 1994); Dep’t of Revenue v. Skop, 383 So. 2d 678 (Fla. 5th DCA 1980).

This Court has left no doubt that Petitioners seek an exemption. In an

interlocutory appeal in Ward v. Brown, 894 So. 2d 811 (Fla. 2003)(Brown I), this

Court held similar leaseholders on Santa Rosa Island were seeking an exemption:

“We reject the petitioners’ claim that they are not claiming an exemption . . . .” Id.

at 816. This Court held: “It is apparent that petitioners are seeking some form of

the ‘exemption’ related to government-owned and leased property.” Id. Thus,

Petitioners’ claim must be strictly construed. Sebring Airport Authority, 642 So.

2d at 1073 (governmental exemption “strictly construed against the party claiming

[the exemption]”); Parker v. Hertz Corp., 544 So. 2d 249 (Fla. 2d DCA 1989).

Petitioners’ argument must also be viewed in light of the rule that substance,

not form, controls the outcome of tax disputes. In Parker v. Hertz, the Court

addressed an assessment of tax on improvements held by a corporate lessee, Hertz

Corporation, on land leased from the government. The leased land was used for

28

Hertz’s rental car business at an airport during a governmental lease for only 25

years, which provided Hertz would not have legal title to the improvements after

the 25 year term. The Court held:

[W]e are persuaded that Hertz as a matter of law is endowed with sufficient indicia of ownership justifying the imposition of an ad valorem tax upon the improvements. In reaching our endpoint in this matter, we have followed the doctrine enunciated in Helvering v. F&R Lazarus & Co., 308 U.S. 252, 255, . . . ‘[i]n the field of taxation, administrators of the laws and the courts are concerned with substance and realities, and formal written documents are not rigidly binding.

Parker v. Hertz, 544 So. 2d at 250 (emphasis added); see also Bancroft Inv. Corp

v. City of Jacksonville, 27 So. 2d 162 (Fla. 1946); Mikos v. Kings Gate Club, 426

So. 2d 74 (Fla. 2d DCA 1983)(cases employing substance over form to find

equitable ownership in entities that did not have legal title).

In their companion brief in Accardo, Petitioners call equitable ownership a

“court invented” theory that has no place in construing ad valorem statutes. Yet,

this Court in Leon County, 698 So. 2d at 528, held the opposite in confirming

“equitable ownership in ad valorem taxation has long been a part of Florida law.”

This Court stated: “The Appellant rests its thesis on a literal interpretation of the

quoted statute defining exemptions, but this court is not limited to that. It is

authorized to look through form to fact and substance to answer the question of

tax exemption or tax liability.” Id. at 528-29. This Court then went on to cite

29

prior cases with approval, where equitable ownership controlled over legal title,

including cases in which taxpayers had no option to purchase or ability to ever

obtain legal title. Id. at 529 (citing Mikos v. Kings Gate Club, Inc., 426 So. 2d 74

(Fla. 2d DCA 1983). In fact, the Florida Constitution requires analysis of “legal

or equitable title” in determining ad valorem tax status. Art. VII, §6, Fla. Const.

Ultimately, this Court must view this case in light of the fundamental

principle that, in a democracy, every person must bear their fair share of taxation.

In discussing the issue of taxation on Santa Rosa Island, this Court held: “We

approach it on the premise that this is a democracy in which every parcel of

property is expected to bear its due portion of the burden of government, unless

exempted by the legislature in the manner provided by Section 1, Article X of the

Constitution. Courts have no more important function than to direct the current of

the law in harmony with sound democratic theory.” Williams v. Jones, 326 So. 2d

425 at 429 (quoting Justice Terrell in Bancroft).

C. The First District correctly concluded Petitioners are Equitable Owners of their Beach Homes and Condominium Units.

The courts below correctly held Petitioners are equitable owners of their

beach homes and condominium units. In this case, the companion case Accardo;

and in Ward v. Brown, the First District consistently applied basic legal principles

to find leaseholders on Santa Rosa Island had sufficient “benefits and burdens” of

30

ownership to constitute equitable ownership. Petitioners attempt, at page 14 of

their brief, to understate the rigor of the First District’s analysis by paraphrasing it

as requiring only a finding of “some benefits and burdens.” This less rigorous test

has never been suggested by any party or employed by any Court. Instead, the

First District and this Court examine the bundle of rights as a whole to determine

whether virtually all of the benefits and burdens of ownership are with the

leaseholder. Several factors for equitable ownership were noted in Ward:

Appellants have the [1] right to use or rent the improvements, [2] encumber their interests, [3] transfer their property rights, and [4] realize any appreciation in value from sale or rental income. They must [5] insure and [6] maintain the improvements and are [7] responsible for the payment of any taxes. Therefore, appellants are the equitable owners of the property.

Ward v. Brown, at 463. Petitioners represent in their brief, at page 10, that the

First District somehow disagreed with the trial court in Ward. To the contrary, the

Ward Court held: “Because we agree with the trial court that appellants have

sufficient rights and duties regarding the property to make them equitable owners,

we affirm.” Ward v. Brown, 919 So. 2d at 463 (emphasis added) (citing Serv.

Metro Corp. v. Bell, 786 So. 2d 1216 (Fla. 1st DCA 2001) and Leon County Educ.

Facilities Auth. v. Hartsfield, 698 So. 2d 526 (Fla. 1997).7

7 Portofino amicus concedes Ward was correctly decided: “In finding the existence of equitable ownership, the Ward court did nothing more than apply the

31

Petitioners exercise rights of dominion and control over their property, just

like any other citizen of Escambia County. Petitioners went to closings; paid

hundreds of thousands of dollars for condominium units and beach homes;

executed closing documents; enjoyed unfettered possession; enjoyed rental

income; enjoyed capital appreciation; enjoyed federal income tax benefits,

including depreciation and other deductions; and took on the burdens of

ownership. In Hialeah, Inc. v. Dade County, 490 So. 2d 998, 1000 (Fla. 3d DCA

1986), the Court cited 42 Fla. Jurisprudence 2d, Property sec. 13 (1983):

“Ownership of property implies the right of possession and control thereof, as well

as the right to dispose of, alienate, or transfer the property rights freely and

without interference or restraint.” Petitioners have all these rights, which are

transferred in a free and open market without restraint. Regency Villas v. Keltner,

610 So. 2d 661, 663 (Fla. 1st DCA 1992) (Santa Rosa Island properties “freely

resell on the open market”).

As additional support, Justice Polston in Ward also noted the Florida

Constitution treats leases with initial terms of 99 years as equitable ownership.

(..continued) well-established principle that equity regards substance over form, and so a court will look past the form and to the fact and substance of a transaction to determine the true nature of the ownership interest in the property.” Portofino also wrote: “The holding in Ward was in harmony with applicable statutory authority . . .” Portofino Amicus Brief in Ariola, p. 6.

32

The Court held: “[T]he Florida Constitution expressly contemplates equitable

ownership for leases with initial terms of 99 years by providing homestead

exemptions for leaseholds in excess of 98 years.” Ward v. Brown, 919 So. 2d at

464 (emphasis added) (citing Art. VII, §6(a), Fla. Const.)

After Ward, Petitioners’ continued reliance on Bell v. Bryan, 505 So. 2d 690

(Fla. 1st DCA 1987), is simply misplaced, because Bell did not address equitable

ownership in the appellate decision. In fact, the First District has receded from

Bell. Ariola Opinion, p. 14. (“The effect of Ward was to recede from Bell 1 sub

silentio.”) Accordingly, this Court should reaffirm that Petitioners have interests

“equivalent to fee simple ownership.”

D. The Interests in Escambia County are indistinguishable from those in Santa Rosa County.

At page 34 of their brief, Petitioners argue that Ward v. Brown is

distinguishable. Yet, there is no material difference between the leases in the two

cases. The First District concluded: (a) “the parties treated these leases as

identical for purposes of determination of the issues in this case”; and (b)

“[l]ooking at the benefits and burdens of ownership, these Escambia County

leaseholders are no different than the Santa Rosa County leaseholders in Ward v.

Brown or Accardo v. Brown.” Ariola Opinion, pp. 8, 13-14.

33

The leases in the case at bar are for 99 years with options to renew for

additional 99-year periods, just as they were in Ward and Accardo. A lease of 198

years with more options to renew after that may not technically be “perpetual.”

However, it is certainly long enough to confer the total use and enjoyment of

improvements during the lifetime of any Petitioner.

Perpetuity has never been a prerequisite to equitable ownership. In fact,

seven published decisions from this Court and the First District hold Petitioners’

interests are equivalent to fee simple ownership, despite their contention the

interests are not perpetual. Certainly, Ward v. Brown was not contingent on a

finding of perpetuity, given the reference to leases with an “initial term of 99

years” as satisfying the equitable ownership test under the Florida Constitution.

Ward, 919 So. 2d at 464 (emphasis added).

In fact, the terms of the leases in Santa Rosa County, as analyzed in Ward

and Accardo, were required to be “substantially upon the same terms,

considerations, conditions as like leases then in use [in Escambia County].” V31-

74, Tab 6; Ariola Opinion, p. 9. Therefore, the same result should obtain in

Escambia County (the case at bar) as resulted in Santa Rosa County in Accardo

and Ward. Petitioners’ argument overlooks language in Ward that the controlling

statutes do not confer ownership only in the instance of leases in perpetuity, but

34

also confer ownership in “any other circumstances from which equitable

ownership can be found.” Id. at 464 (emphasis added)(citing Parker v. Hertz,

544 So. 2d 249)(involving a 25 year lease in which the title remained in the

landlord after the lease term). Ward also cited cases conferring the equivalent of

ownership when the lease “will outlast the useful life of the capital improvement,”

as is the case here. Id. at 464 (citing Wright Runstad Props. Ltd. P’ship v. United

States, 40 Fed. Cl. 820, 825 (1998).

Numerous other cases have also found equitable ownership, without any

lease in perpetuity or option to purchase. Petitioners make no attempt to

distinguish Williams v. Jones and Archer v. Marshall, which dealt with the very

leases involved in this case, in which this Court concluded petitioners had rights

“equivalent to fee simple ownership.” Petitioners’ reliance on the 1956 case of

Gautier v. Lapof, 91 So. 2d 324 (Fla. 1956), based on distinguishable facts, hardly

supplants four subsequent decisions of this Court, plus three published decisions

of the First District, all supporting the conclusion that these interests on Santa

Rosa Island are the equivalent of ownership.

Petitioners are unable to fit many decisions, including those involving Santa

Rosa Island, into their narrow framework for equitable ownership. These cases

include Service Metro and Mikos v. Kings Gate, both of which found equitable

35

ownership, despite no perpetual rights or options to purchase. In Service Metro,

the First District held that a private corporation was the equitable owner of a

building, even though legal title was with Escambia County. The private party

had no perpetual right to possession or option to purchase. Justice Polston

authored the opinion: “We agree that Service Metro has sufficient rights and

duties regarding the property to make it the equitable owner.” Service Metro, 786

So. 2d at 1217. Petitioners’ argument that Service Metro was based on an

unconstitutional accommodation to aid a private corporation is wrong, as the

Court held: “[W]e do not reach the circuit court’s ruling that Escambia County’s

acceptance of bare legal title was an unconstitutional accommodation by the

County to aid a private corporation ….” Service Metro, 786 So. 2d at 1217.

The Ward Court also relied on Parker v. Hertz, 544 So. 2d 249, which held

that a private lessee of government realty under a 25-year lease owned the

improvements for tax purposes. Even though Hertz had no legal title after the 25

year period, it was deemed the owner for ad valorem tax purposes. Another

similar case not accounted for by Petitioners’ analysis is Broward County v. Eller

Drive Ltd. Partnership, 939 So. 2d 130 (Fla. 4th DCA 2006), in which Broward

County had a 50-year lease with a private party. The Court noted: “The lease in

the instant case does not expressly state which party has ownership of the building

36

during the term of the lease.” Id. at 132. At the end of the lease, the

improvements would become the property of Broward County. Nevertheless, the

Court held: “the lease provides [the private lessee] with sufficient dominion over

the building to conclude that [the private lessee] owns the structure.” Id., at 133.

The indicia of ownership in that case included the use for private purposes; the

responsibility for maintaining and insuring the property; and the obligation for

paying taxes. Id., at 134.

In another case in which the taxpayer could never attain legal title, the Third

District held in Robbins v. Welbaum, 664 So. 2d 1 (Fla. 3d DCA 1995), that the

equitable owner is the party who has the essential benefits and burdens of

ownership on January 1st of the tax year. In Robbins v. Welbaum, the Court held a

party had equitable ownership based on a possessory interest in real property held

in trust for only a 10-year period. Id. at 1. The Court held: “Neither the statute

nor the constitution places such a time limit on beneficial title, and we decline to

do so as well.” Id. at 2; see also Offutt Housing Co. v. County of Sarpy, 351 U.S.

253 (1956); Gay v. Jemison, 52 So. 2d 137 (Fla. 1951); Marathon Air Services,

Inc. v. Higgs, 575 So. 2d 1340 (Fla. 3d DCA 1991)(additional cases finding

ownership for tax purposes without any perpetual rights or options to purchase).

37

The tax cases cited above relied on principles distinct from the principle of

“equitable conversion.” Ad valorem tax cases take a different approach, as the tax

cases arise in the context of private use of public property. This Court has

consistently held that when governmental entities lease real property to private

parties for purely private use, and the private party has the benefits and burdens of

ownership, such properties are subject to real property ad valorem taxation.

Straughn v. Camp, 293 So. 2d 689, 696 (Fla. 1974)(addressing Santa Rosa Island);

Sebring, 783 So. 2d 238 at 250.

Contrary to Petitioners’ argument, the “lessor” in this case, Escambia

County, has formally decreed in an ordinance that the rights granted to the

Petitioners are real property interests "equivalent of fee simple ownership." V9-31

(Escambia County Ordinance 89-11, §4). Petitioners’ effort to describe their

rights as less than beneficial ownership is employed only to avoid taxation. In all

other respects, Petitioners exercise rights of dominion and control over their

residences and condominium units, just as any other citizen of Escambia County.

This Court has analyzed these circumstances and held that Escambia County

will receive nothing of value from these improvements, because “the

improvements which have been made upon this property [specifically, on Santa

Rosa Island] will have long since been destroyed prior to the end of the leases.”

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Archer v. Marshall, 355 So. 2d at 784. Thus, this Court has found that Petitioners

will receive the full benefit of the improvements during the lease terms.

This Court has used similar analysis in other tax cases. In Gay v. Jemison,

52 So. 2d 137 (Fla. 1951), this Court compared the length of the governmental

lease of 75 years with the expected useful life of the building thereon, which was

shorter, to conclude that the buildings were privately owned. Id. at 138-39. Even

though the United States held “bare title” to the land, the lessee borrowed the

money to finance the improvements; bore the risk of loss; bore the cost of

maintenance; bore the cost of insurance; and received all of the income from the

rental of the improvements. Id. at 139. Therefore, the buildings were deemed to

be privately owned.

In Offutt Housing Co. v. County of Sarpy, 351 U.S. 253 (1956), the United

States Supreme Court examined the same issue: “The lease is for 75 years; the

buildings have an estimated useful life of 35 years. The enjoyment of the entire

worth of the buildings and improvements will therefore be petitioner’s.” Id. at

261. The Court held, irrespective of the Government’s “paper title” and regulatory

control over the improvements, the property was subject to tax at the “full value of

the buildings and improvements.” Id. at 261-62.

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Many Petitioners rent to third parties and depreciate their realty on their tax

returns.8

Petitioners admit they have the burdens of ownership, including obligations

to repair, maintain and insure their properties. They admit they are contractually

responsible for payment of taxes associated with the properties. They also bear

the full risk of loss on the improvements. The case law identifies all of these

burdens as part of the analysis of equitable ownership. Leon County, 698 So.2d

526 (Fla. 1997); Ward v. Brown, 919 So. 2d at 463; Gay v. Jemison, 52 So. 2d at

In Parker v. Hertz, the Court cited depreciation as a factor in

determining ownership. Hertz argued, because it would not have title to the

improvements at the end of the 25-year lease term, it could not be considered the

owner. The Court disagreed: “Hertz’s proprietary use of the improvements for its

commercial objectives, when coupled with the benefit of recapturing some amount

of its capital investment through depreciation, was perceived . . .as ample

compensation for subsequently parting with title.” Parker v. Hertz, 544 So. 2d at

252. Thus, the improvements were equitably owned by Hertz.

8 One must be an equitable owner to take depreciation deductions. Rev.Rul. 69-89, 1969-1 C.B. 59; Baird v. Commissioner, 68 T.C. 115 (1977). Here, the amicus FAPTP, in the companion case, agrees that Petitioners’ enjoyment of depreciation deductions signifies that they are equitable owners. FAPTP Brief, p. 10 (“If the lessee is the equitable owner of the property, then the lessee gets to claim the depreciation deduction.”) By taking depreciation deductions, these Petitioners acknowledge that they are equitable owners for federal tax purposes.

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138-39; First Union Nat’l Bank of Florida v. Ford, 636 So. 2d 523, 524 (Fla. 5th

DCA 1993); Parker v. Hertz, 544 So. 2d at 251.9

This Court’s conclusion in Williams v. Jones that the 99-year leasehold

interests on Santa Rosa Island are “tantamount to ownership of the fee” or the

“equivalent of fee ownership” is not affected by Section 196.199(7), Florida

Statutes, which provides that lessees of governmental property for terms of 100

years or more are deemed to be the legal owners of such property. Many courts

have held that, despite section 196.199(7), lessees were equitable owners of

improvements in cases involving lease terms less than 99 years.

Most recently, Ward v. Brown rejected the argument that section 196.199(7)

precluded taxation of improvements. Ward v. Brown cited Hialeah, Inc. v. Dade

County, 490 So. 2d 998 (Fla. 3d DCA 1986), rev. denied, 500 So. 2d 544 (Fla.

1986), which directly addressed the argument based on section 196.199(7):

Section 196.199(7) merely establishes two exceptions to the general rule that leaseholds or other possessory interests in government

9 See also Gellman v. Eden Point South Association, Inc., 504 So. 2d 43, 44 (Fla. 3d DCA 1987)(condominium owners who possessed certain land surrounding their buildings through a 99-year lease were the owners of such land); Filbern Manor Apartments v. Board of Assessment Appeals, 589 A.2d 279 (Pa. Ct. App. 1991)(buildings on 99-year lease were owned by lessee for tax purposes); Broadway & Fourth Ave. Realty Co. v. City of Louisville, 197 SW2d 238 (Ct.App.Ky. 1946)(“tenant’s permanent improvement, standing on his 99 year lease . . . may well be a legal subject of taxation as the tenant’s own property”).

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owned property are subject to intangible personal property taxation . . . The exceptions set forth in section 196.199(7) do not guide this court’s determination as to whether section 199.023(1)(f) applies in the first place, i.e., is the property government owned?

Id. at 1000 (emphasis added). Thus, the threshold question, irrespective of the

term of the lease, is who is the equitable owner of the improvements.

The Parker v. Hertz Court reached the same result in response to the same

argument now made by Petitioners on the grounds of section 196.199(7):

Section 196.199(7) plays no part in determining Hertz’s [the private lessee’s] status as the owner of the improvements. Simply stated, we do not perceive the sweep of the word “owned” appearing in section 196.199(2)(b) to be measurable exclusively by section 196.199(7). Section 196.199(7) is a legislative declaration, the purpose and effect of which are confined to its terms. There is nothing within section 196.199(7) barring the examination of extrinsic criteria in deciding a question of ownership under section 196.199(2)(b).

Parker, at 251 (emphasis added). Thus, irrespective of the conclusive

presumption applicable to 100-year leases, the Court held that a private lessee for

25 years was “as a matter of law . . . endowed with sufficient indicia of ownership

justifying the imposition of an ad valorem tax upon the improvements.” Id. at

250.7

7 In a case involving a “cooperative apartment,” the Fifth District held that the co-op was owned for homestead purposes even though the occupant did not have title to the property. Southern Walls, Inc. v. Stilwell Corporation, 810 So. 2d 566 (Fla. 5th DCA), rev. denied, 829 So. 2d 919 (Fla. 2002). The Court analyzed the

Both the case law cited above and Article VII of the Florida Constitution

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(equitable ownership for 98 year leases) completely contradict any assertion that

there is a cutoff at 100 years that has relevance to equitable ownership.

E. Petitioners’ condominium units are distinct units of real property.

With respect to those Petitioners who have condominium units, the

Legislature has determined that a condominium unit is a “form of ownership of

real property.” §718.103(11), Fla.Stat. (2011); see also Ammerman v. Markham,

222 So. 2d 423 (Fla. 1969) (constitutional imperative that condominium units are

real property for ad valorem tax purposes); Op. Att’y Gen. Fla. 73-136 (1973)

(“Article VII, §6(a) . . . declares the condominium form of ownership to be real

estate for homestead tax exemption purposes”).

When Petitioners purchased their condominium units, they purchased real

property interests. This conclusion holds true, even though the land underlying

the development was leased. Section 718.106(1), Florida Statutes, provides: “A

condominium parcel created by the declaration is a separate parcel of real

(..continued) situation in which an individual received shares in a cooperation and a long term lease, rather than title. The court held: “we find that this is a distinction without a difference.” Id. The Court also cited King v. King, 652 So. 2d 1199 (Fla. 4th DCA 1995), in which a “life estate interest in a condominium” was owned for similar purposes. Id. The Southern Walls Court noted: “What is significant is that a co-op owner owns the unit, pays valuable consideration for it, and has the right to the exclusive possession of it for the duration of the lease.” Id. These cases make clear that long term interests in condominium or co-op property, even if not described as fee simple absolute, are the equivalent of ownership.

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property, even though the condominium is created on a leasehold.” This

ownership right is exclusive. §718.103(27), Fla. Stat. (2011).

Petitioners’ condominium units came into existence as distinct units of real

property upon the filing of the Declarations of Condominium. Section 718.104,

Florida Statutes, provides a condominium is “created by recording a declaration.”

In this case, the County has never claimed an interest in any condominium unit.

To the contrary, the County agreed to submit its own interest to the condominium

form of ownership. Under section 718.104(6), Florida Statutes: “A person who

joins in, or consents to the execution of, a declaration subjects his or her interest in

the condominium property to the provisions of the declaration.” Thus, the County

agreed to subject its interests to the condominium form of real property

ownership.8

8 Tax assessments of condominium units must be imposed separately on each unit. Section 718.120, Florida Statutes, entitled “Separate taxation of condominium parcels . . .”, requires the Property Appraiser to assess ad valorem taxes separately against each condominium parcel.

See also Sans Souci v. Division of Florida Land Sales and

Condominiums, Dept. of Business Regulation, 421 So. 2d 623, 627-28 (Fla. 1st

DCA 1982), on later appeal, 448 So. 2d 1116 (Fla. 1st DCA 1984)(First District

ruled that these condominium unit owners are the legal owners of their units);

Regency Villas Condominium Assoc., Inc. v. Keltner, 610 So. 2d 661 (Fla. 1st

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DCA 1992)(“Residents of the condominiums purchased their respective units and

received a sublease . . . of the land . . .”).

The fact that these condominium units are sold, not leased, is reflected not

only in case law, but also in closing documents, which show a “contract sales

price” paid by Petitioners. Other documents reflect that the County leased the land

to various developers, contemplating that condominiums would be developed and

sold. The County willingly consented and has characterized Petitioners’ rights as

equivalent to fee simple ownership. The County agreed to declarations of

condominium to allow for the sale of privately owned condominium units.

Based on the foregoing, Petitioners have virtually all of the benefits and

burdens of ownership of their beach homes and condominium units. Therefore,

the First District’s conclusion that the Petitioners are the equitable owners of their

beach homes and condominium units should be affirmed.

III. THE DECISION BELOW DOES NOT CONFLICT WITH OTHER DECISIONS OF THIS COURT OR OTHER DISTRICTS.

Standard and Scope of Review: The standard of review is de novo.

Argument: Petitioners argue that the opinion below conflicts with

decisions from other districts. Certainly, the opinion below did not express any

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conflict with any of the cases cited by Petitioners in this portion of their brief. To

the contrary, the cited cases are either supportive or distinguishable.

A. The opinion does not conflict with Leon County.

The First District’s opinion did not conflict with Leon County Educational

Facilities Authority v. Hartsfield, 698 So. 2d 526 (Fla. 1997)(“Leon County”). To

the contrary, the opinion below cited Leon County to defeat one of the points

raised by Petitioners. The First District opinion quoted from the trial court’s

citation to Leon County for the proposition that equitable ownership does NOT

require either a perpetual lease or an option to purchase. Ariola Opinion, p. 9.

Thus, it is hard to fathom how the cases allegedly conflict, when the two cases

employ the same analysis and reach the same result that an entity without legal

title was the equitable owner for ad valorem tax purposes.

Despite Petitioners’ effort to diminish the role of equitable ownership in tax

law, this Court in Leon County noted “The concept of equitable ownership in ad

valorem taxation has long been a part of Florida law.” Leon County, 698 So. 2d at

528. This principle is also embedded in the Florida Constitution’s use of

“equitable title” to justify ad valorem tax exemptions in Article VII. The appellate

opinion below and Leon County both relied on the same legal analysis of this well

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established principle. In addition, both opinions found equitable ownership to

exist in a party that did not have legal title.

Analysis of equitable ownership is always factually intensive. The

attributes vary from case to case. Therefore, equitable ownership cases must be

limited to their own facts. In the opinion below, the First District cited a long and

unique history of these tax issues on Santa Rosa Island. Ariola Opinion, p. 2.

Similarly, in Leon County, this Court limited its holding to “only . . . the

stipulated facts of this case.” 698 So. 2d at 530. Because these cases are so

unique, the cases are nearly always distinguishable on the facts. In such instances,

a “conflict” does not exist. Dept. of Revenue v. Johnston, 442 So.2d 950 (Fla.

1983). In summary, both the opinion below and this Court’s opinion in Leon

County rely on the same equitable ownership analysis to reach the same holding

that an entity without legal title was determined to be the equitable owner for ad

valorem tax purposes. There is no conflict.

B. The opinion does not conflict with Robbins.

In this case, the First District expressed no conflict with Robbins v. Mt.

Sinai Medical Center, Inc., 748 So. 2d 349 (Fla. 3d DCA 1999). The opinion did

not cite Robbins, presumably because the facts in that case are so far afield from

the facts on Santa Rosa Island. Robbins addressed a medical equipment lease,

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which carried an option to purchase at full fair market value. Because there

was neither a nominal option, nor any other attribute of equitable ownership in

that equipment lease, the Third Circuit declined to find equitable ownership of the

equipment. Unlike the analysis in this case, Robbins also focused on why the

option was illusory, because it was subject to “Lessor’s approval.” Robbins held:

Lessee does not qualify as an equitable owner of the properties. . . . Lessee did not have a true option to purchase the leased properties in the first place. By virtue of the properties’ leases, Lessee could either purchase the properties for fair market value, return the properties to Lessor or renew the properties’ leases for a new term. . . . any choice exercised by Lessee was subject to Lessor’s approval. In essence, this was not an option to purchase . . .

Id. at 351-52. The emphasis of the court was that, if there was an option to

purchase, it would have to be “nominal” to support equitable ownership. Id. at

351. Certainly, an illusory option on a short term equipment lease with a dubious

“option” to buy at fair market value is distinguishable from the instant facts.

IV. THE DECISION BELOW DOES NOT DIRECTLY AFFECT A CLASS OF CONSTITUTIONAL OFFICERS.

Standard and Scope of Review: The standard of review is de novo.

Argument: Petitioners contend the opinion below affects a class of

constitutional officers. As noted in the lower tribunal’s opinion, however, the

circumstances on Santa Rosa Island are unique. The only property appraisers

affected are Mr. Chris Jones in Escambia County and Mr. Greg Brown in Santa

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Rosa County. The holding that private parties on Santa Rosa Island should pay

property taxes does not portend the addition of any other property to the tax rolls

in other parts of the state.

V. THE FIRST DISTRICT WAS CORRECT IN NOT ADDRESSING THE ENFORCEMENT ISSUE.

Standard and Scope of Review: The standard of review is de novo.

Argument: The First District concluded the issue of whether the Tax

Collector had the ability to issue liens or sell tax certificates was “premature.”

Ariola Opinion, p. 14. Respondents agree that this matter was not ripe, as no

controversy existed on the issue. The Tax Collector had neither created tax liens

nor sold tax certificates on any of Petitioners’ parcels.

The Tax Collector has not initiated collection procedures, because

collection activity is automatically stayed by the Petitioners’ complaint. §194.171,

Fla. Stat. (2011). The Tax Collector will not be in a position to consider collection

measures, unless and until (1) the automatic stay under section 194.171, Florida

Statues, is lifted at the conclusion of the case; and (2) some Petitioner refuses to

pay lawfully assessed taxes. Under Section 197.432, Florida Statutes, tax

certifications may not be sold until taxes have not been paid. Until some

Petitioner refuses to pay after appeals are exhausted, no tax certificate will be

issued. Petitioners present unwarranted alarm on this issue. No party argues that

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the Tax Collector can affect the County’s bare legal title by the sale of a tax

certificate. The Tax Collector has consistently maintained that any tax certificates

that may be issued upon non-payment of taxes will apply only to Petitioners’

interests. This construction is consistent with the uniform scheme in Florida for

the collection of ad valorem taxes, including Section 197.432(10), Florida

Statutes, which prohibits a lien on the government’s interest. Because Petitioners

are equitable owners of their beach homes and condominium units, however,

Section 196.199(2)(b) requires the imposition of real property ad valorem taxes

and the collection of such taxes by all lawful means.

Petitioners cite Bell for this point as well, again without noting that the First

District receded from Bell. Ariola Opinion, p. 14. Petitioners also cite a pre-Bell

case, Dep’t of Revenue v. Gibbs, 342 So. 2d 562 (Fla. 1st DCA 1977), which

suffers from the same defects. The Gibbs Court ruled that a tax lien could not

apply to leasehold interests in governmentally owned property. However, both

Gibbs and Bell ignored equitable ownership. The instant matter, by contrast,

involves the question of liens on privately-owned improvements and

condominium units on government leaseholds, not the government’s bare legal

title. This is a critical distinction. Because Gibbs did not deal with improvements

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owned by a tenant on a government leasehold under Section 196.199(2)(b), it is

not controlling. The First District’s opinion on this issue should be affirmed.

CONCLUSION

Petitioners have rights “tantamount to ownership” and “equivalent of fee

simple ownership.” Under the weight of authority of four Florida Supreme Court

opinions and six First District Court of Appeal cases, Petitioners’ privately used

beach homes and condominium units must be assessed local government real

property taxes at “parity” with other private owners of property in Escambia

County. This Court has held there is no “constitutional exemption” upon which

Petitioners can base their claim for preferential intangibles tax treatment. This

Court has held any attempt to create one legislatively “would undoubtedly be

discriminatory and violative of the equal protection provisions of the Florida and

United States Constitutions.” Therefore, this Court should affirm.

Respectfully submitted, _______________________ Elliott Messer, Esq. Florida Bar No. 054461 Thomas M. Findley, Esq. Florida Bar No. 0797855 Messer, Caparello & Self, P.A. 2618 Centennial Place Tallahassee, Florida 32308 Telephone: (850) 222-0720 Counsel for Respondents

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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing sent by

U.S. Mail to Danny L. Kepner, Esq., Shell, Fleming, Davis & Menge, P.A., 226

South Palafox Street, 9th Floor, Pensacola, FL 32502; and Talbot D’Alemberte,

Esq. and Patsy Palmer, Esq., D’Alemberte & Palmer PLLC, Post Office Box

10029, Tallahassee, FL 32302-2029; Robert B. George, Esq., Katie L. Dearing,

Esq., Christian P. George, Esq., Liles, Gavin, Costantino, George & Dearing, P.A.,

225 Water Street, Suite 1500, Jacksonville, FL 32202, and Edward P. Fleming,

Esq., McDonald, Fleming, Moorhead, 25 West Government Street, Pensacola, FL

32502 on this ___th day of June, 2012.

Thomas M. Findley

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I hereby certify that the font requirements of Rule 9.210(a), Florida Rules of

Appellate Procedure, have been complied with in this Brief and the size and style

of type used in this brief is Times New Roman 14 point.

CERTIFICATE OF COMPLIANCE

_____________________________ Thomas M. Findley