Pensacola Beach Tax Ruling Reversed

The First District Court of Appeals (1st DCA) on Monday reversed Escambia
County Property Appraiser Chris Jones’ imposition of ad valorem taxes to
leasehold land at Pensacola Beach. The three-judge appeals panel unanimously
found that the leasehold interest in the land is taxable solely as intangible personal
property, and that the land is not “equitably owned” by the tenants.
Under the ruling, the Escambia County Tax Collector will be required to
refund taxes paid by Island Resorts since 2011, and pay court costs incurred by
Island Resorts. The action by the First DCA reversed a trial ruling by Escambia
County Circuit Judge Edward Nickinson.
Although the ruling involves an appeal by one leaseholder, Island Resorts
Investment, Inc., the attorneys for Island Resorts, Ed Fleming and Todd Harris, say
that it has far-reaching implications for all land at Pensacola Beach that involves
true leases, and not the leases in perpetuity that were addressed by the Florida
Supreme Court opinion addressing certain leases out of Navarre Beach, the
Accardo v. Brown decision. Fleming and Harris are representing two other clients,
Portofino Towers and Beach Club, involving the identical issue that was presented
in Island Resorts. Appeals on those two cases will be governed by today’s ruling.
“The ruling makes it clear that a lease of government-owned land that is
truly a lease, and not a conveyance masquerading as a lease, must be taxed solely
in the manner required by the Florida Legislature, said Ed Fleming, who together
with Todd Harris represented Island Resorts. Fleming said the First DCA clearly
distinguished the situation addressed in the Accardo v. Brown case arising out of
certain Navarre Beach leases. “The Accardo opinion turned on the fact that the
Navarre Beach leases were not true leases,” Fleming said. “A lease is, by
definition, of limited duration, and the leases addressed in Accardo were perpetual
leases. It is very clear that a lease that never ends is not a true lease, but is
tantamount to a conveyance of fee simple title. Thus, the interest is taxed as an
ownership versus a leasehold interest.”
As a result of Chris Jones’ decision to tax all land leases at Pensacola Beach
as if they created “equitable title,” the Escambia County Commissioners have
voted to roll back lease fees, and have substantially cut funding to the state-created
agency for managing beach development – the Santa Rosa Island Authority
“The SRIA has made Pensacola Beach one of Florida’s most unique
beaches,” said Todd Harris, co-counsel in the Island Resorts case. “Absent the
SRIA, development at Pensacola Beach would likely have occurred in the same
manner as beach communities where the land is owned by private interests. Such
beaches are typically condo-intensive, to the exclusion of public spaces, beach
access, restaurants, shops and many other amenities which help make the
government-owned land at Pensacola Beach a treasure and an economic engine for
the entire area.”
The Property Appraiser can ask the Florida Supreme Court to review the
First District Court’s opinion, Fleming said. However, that review is discretionary
on the part of the Florida Supreme Court. “Given the fact that the First District
Court of Appeal applied the same analysis applied in Accardo, distinguishing true
leases from conveyances disguised as leases, we believe the Supreme Court will
find no reason to grant review,” Fleming said.