Beach condo owners prepare tax lawsuits

Article Courtesy of The Pensacola News-Journal
By Melissa Nelson Gabriel

Published November 4, 2016

 

Hundreds of Pensacola Beach condominium owners plan to file tax lawsuits against the county before the end of November.

In the lawsuits, the condominium owners will challenge a decision by Escambia County Property Appraiser Chris Jones not to apply a recent court ruling involving taxes on leased beach land to condominiums.
  

"The real question is why are condominium associations being treated differently than other taxpayers on the beach," said Ed Fleming, an attorney representing at least 15 beach condominium associations.
Fleming said the associations are waiting on 2016 property tax bills to file the lawsuits. County officials have said the bills should be mailed in the coming days.

The Florida Supreme Court in late July refused to hear the county's appeal of a tax suit filed by the developer of the Portofino resort condominium towers. In its decision not to hear the case, the high court upheld a lower court ruling prohibiting the county from collecting property taxes on 12 acres of undeveloped leased land where two new Portofino towers are scheduled to be built.

At issue in the various tax disputes is millions of dollars a year in county tax revenues from the beach.


Pensacola Beach was deeded to Escambia County by the federal government in the aftermath of World War II. Under the deed agreement, the county was prohibited from selling beach land outright. To promote residential and commercial development on the barrier island, the county developed a system of 99-year lease agreements. Under the agreements, leaseholders pay an annual lease fee to the Santa Rosa Island Authority in exchange for use of the leased land.

In a series of lawsuits dating back decades, beach residents have challenged the legality of the county assessing property taxes on land that is leased and not owned. The county began assessing property taxes on the beach in the 1980s after the area became heavily developed.

Following the Supreme Court's decision earlier this year not to hear the Portofino land case, Jones and his staff reviewed the lease agreements for thousands of beach properties. Whether or not a leaseholder was assessed 2016 property taxes on leased beach land depended on the wording of the original lease with the county. Various Santa Rosa Island Authority attorneys have worded leases differently through the decades. Some of the leases are automatically renewable and others are subject to review after the 99-year duration.

The county waived property tax on leases that are subject to review but assessed taxes on leases that are automatically renewable. The decision followed the court's determination that finite leases should not be subject to taxes. Because of the court ruling and the subsequent review of beach leases, the county did not assess property taxes this year on about half of the commercial and residential land leased on the beach.

But Jones said the review did not look at land where condominiums have been built.

"Condominiums represent a whole separate bucket of issues," he said.

Jones said the county will wait to act on the condominium tax issues until a court rules on a separate lawsuit filed by the Beach Club condominium homeowners association. That suit, pending before an appeals court, states that the condominium owners should not be assessed property taxes on the land on which their condominium tower was built because the 99-year lease agreement for the land is not automatically renewable.

Fleming said the condominium associations he represents plan to file lawsuits as soon as the 2016 property tax bills are received in the hope that the individual condominium owners will eventually receive refunds for the 2016 taxes. Fleming has encouraged the condominium owners to include a note in their 2016 tax payment stating that the taxes were paid in protest.

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