In resolving a case that’s taken more turns than a car on a California mountain road, the Florida Supreme Court has weighed in on the side of Gulf Breeze in a years-old legal dispute pitting the city against the Santa Rosa County Property Appraiser’s Office over the tax-exempt status of Pensacola’s Tiger Point Golf Club.
It was in 2016 that Property Appraiser Greg Brown’s office first challenged the exempt status of the golf course.
The course first came into the hands of Gulf Breeze in 2012 when the city purchased it with the primary motivation of using it as a place to dispose of treated wastewater effluent coming from its sewage treatment facility.
It was run as a municipal course until late 2015 and enjoyed government tax-exempt status unchallenged for three years.
But after the city brought on a private for-profit company called IGC to manage the golf course and its amenities − which included a restaurant − questions arose over whether the agreement amounted to a lease, and in 2016 the Property Appraiser sent a tax bill.
The city questioned the action and took its case to a Value Adjustment Board, which reversed the exemption denial, finding the agreement between Gulf Breeze and IGC was a “management contract” as opposed to a lease. The Property Appraiser’s Office sought review by bringing an action in Circuit Court.
The Property Appraiser also denied the city’s application for exemption for the golf course in 2017. In doing so, it expanded its arguments for denial in part by arguing the property was being used as a “governmental proprietary function” rather than a “governmental-governmental function,” the Supreme Court’s summary of court events said.
In the consolidated cases, the Circuit Court granted final summary judgment in favor of the city, and agreed in its findings with the VAB, holding the agreement with IGC was a management agreement and not a lease. It ruled the 2016 and 2017 exemptions were valid.
The Property Appraiser appealed the Circuit Court’s decision and in 2022, the First District Court of Appeal sided with his office. It also posed a certified question for the Supreme Court to answer.
“Is a city’s public golf course still being ‘used exclusively by it for municipal or public purposes,’ so that it remains tax exempt … if the city turns the course and its appurtenant facilities over to a private business to operate and manage for the business’s own profit or loss in return for an annual fee that the business pays to the city for that privilege,” the question read.
The question was certified as “one of great public importance,” meaning the high court’s answer could have legal ramifications for the entire state.
Before providing their answer, the Supreme Court justices decided to rhetorically rephrase the Appeals Court question.
“Based on this line of analysis, we rephrase the certified question as follows,” its ruling read, “Is a municipally owned golf course property over which the municipality exercises extensive control disqualified from exemption (based on statute) because a management company used by the municipality in the operation of the property is compensated not by a fixed fee but based on a formula tied to the difference between revenue and expenses?” the court inquired.
“We answer this question in the negative,” justices said in response to their own inquiry.
The court ruled that Tiger Point Golf Course has historically been used exclusively by the city, and therefore its ad valorem tax exemption under the Florida Constitution for certain municipally owned property stood even after the city entered the management agreement with IGC.
It did so because Gulf Breeze “retained and exercised extensive control over the golf course property and the management company’s operation of the property” and the formula-based compensation by which the city collects some of the annual revenues of Tiger Point Golf Course did not defeat the city’s ad valorem exemption, the Supreme Court said.
