Eagle Harbor housing community argues for exemption 

By Diana Marrero   -   Times-Union staff writer 

FLEMING ISLAND -- Beyond the finely manicured lawns of the idyllic 1,500-home Eagle Harbor community brews a $3 million controversy pitting Clay County tax assessors against developers. 

The precedent-setting fight over property taxes has community development districts such as Eagle Harbor contending they should be exempt from a large share of taxes because they are in essence miniature governments responsible for providing their own services to residents. 

Clay County tax officials, however, don't agree with the contention and want developers to ante up $67,839 in property taxes. 

Eagle Harbor's owner, The Crossings Community Development District, plans to fight the assessment in court, arguing the Property Appraiser's Office has no right to tax more than $3 million worth of property, which includes a golf course; swim and tennis center with a 185,000-gallon pool; and conservation lands. 

Property Appraiser Wayne Weeks acknowledged that Eagle Harbor had received an exemption for some of its development years ago, but said his staff sometimes catches things that should have been taxed all along and has to correct it. 

From 1994 to 1998, the county did not tax conservation lands valued at $138,000, losing out on roughly $12,500 in taxes. From 1995 to 1998, it did not tax an $800,000-valued swim and tennis center, losing $60,421 in taxes. 

A golf course valued at $2.6 million that was sold to the district in 1999 has always paid property taxes, but developers say they should get a tax break on that property, too. The break would amount to nearly $50,000 a year. 

"Maybe [the district] has gotten away with it for a while," said Larry Levy, the legal counsel for the Property Appraiser's Office, "but property appraisers are starting to look at [these districts] more critically." 

The issue is relatively new and affects only community development district-designated properties. In Clay County, there is one other such district -- Fleming Island Plantation Community Development District -- but it has not asked for an exemption, according to board Chairman Bob Porter. 

At the heart of the issue is a decision in a Highlands County case in which a judge said community development districts are not government entities with general government powers and are not tax-exempt. 

"They try to say they're a government. ... That's not true," said Levy, who serves as general counsel for the Property Appraisers Association of Florida. 

"Such districts are, in fact, little more than financing vehicles for developers that have received the 'blessing' of the county," Circuit Judge J. Dale Durrance ruled in 1999. Although the decision is being appealed, many counties have started using the decision within the past year to tax such districts. 

Developers see it differently. 

"We're accomplishing the very purpose for which we were created -- to pay for our growth ourselves," said Rob Bradley, an attorney for the law firm that represents the district. "All we're asking for in return is that we're accorded the respect belonging to a government." 

Weeks argues that the private golf club and swim and tennis center do not serve a public purpose. 

"You or I could not just go up to the swim park and walk right in," he said. 

Community development districts can issue tax-free government bonds to build roads, drainage systems and sewers, even though they can also be used to create posh landscaping, recreation centers and swimming pools. Conventional developers usually pay for the infrastructure themselves and pass along the cost in the price of the houses. 

Districts, though, can tax residents hundreds of dollars a year, for up to 30 years, to repay the bonds. 

Since the Legislature passed development-friendly legislation in 1980 that allowed the creation of community development districts, such entities have flourished. There are now more than 100, many of them in wealthy South Florida counties. 

Duval County property valuation officials are unaware of any districts in the county with such a designation. 

Jim Nicholas, an urban planning professor at the University of Florida who helped write the 1980 law that opened the doors for the creation of such districts, said it was never intended for tax-free bonds to help finance such things as golf courses. 

"If it had been pointed out that it would go to fund golf courses, it would have been a very quick end to the legislation," he said. "It certainly has become confused." 

Nicholas said being able to get tax-free bonds to help finance a golf course that would then be exempt from property taxes would be a double whammy. 

Although Nicholas still supports development districts as a way to fund infrastructure more cheaply, he said abuses have tainted the concept and spurred states such as Colorado and Hawaii to repeal or refuse to allow the districts. 

In St. Johns County, problems with a community development district for Julington Creek Plantation led to a class-action lawsuit by seven residents against the district's board and the plantation's developer in early 1999. Residents claimed they were being forced to pay fees to the county to offset infrastructure costs as well as paying a $360-a-year assessment for the same work. 

Bradley acknowledged that some districts have not been run properly, but said The Crossings is doing things right. He said the district has a five-member board made up of residents, meets monthly about how assessments will be used and does not make a profit. 

Any revenues generated from the golf course or other facilities owned by the district go back to the district or are used to pay off the bond debt, he said. A proposed district budget shows the district does not expect to have any excess revenues next year. 

John Smith, who lives in Eagle Harbor in a home that is not part of the development district, doesn't support the district's arguments. He said the public is not welcome in some of the facilities, even if officials contend they're open to anyone. 

Smith said he tried to get his 9-year-old child admitted to the Eagle Harbor pool -- which is complete with a 110-foot winding water slide, diving boards and beach volleyball -- only to be discouraged from doing so. The only way a person from outside Eagle Harbor could use the pool is to pay $1,800 for a yearly membership. 

"I told them I wouldn't pay a dime to use their pool," he said. "Either they open it up to all residents, or they should pay taxes." 

Van Royal, project manager for Magnolia Point and Country Club in Green Cove Springs -- a development that does not have designation as a development district -- considers it unfair to not tax another private developer on recreational facilities similar to his just because it operates under a community development district. 

Taxing the recreational facilities of a private developer is proper, Royal said. 

"We've never complained about paying taxes," he said.