A Florida court overturns a decision on tax exemption for a municipal golf course. Will there be ramifications?

PENSACOLA, Florida — Almost five years after former Santa Rosa County property appraiser Gregory Brown sued the city of Gulf Breeze over a tax exemption for Tiger Point Golf Club, the state’s First District Court of Appeal has reversed the original ruling.

The ruling means the city may owe taxes on the property dating back to 2016.

The recent decision sides in favor of the former property appraiser, ultimately ruling that the golf course’s property was not ad valorem tax-exempt after Gulf Breeze brought on the company IGC – Tiger Point Golf Club LLC to operate the course in 2015.

“The city did more than enter a contract for Tiger Point to manage the golf course and related facilities. The city converted the property to a private commercial enterprise,” the ruling reads.

According to court documents, Gulf Breeze acquired the property – a former host site of the PGA Tour’s now-defunct Pensacola Open – in 2012 to treat and dispose of wastewater and to provide stormwater protection for surrounding subdivisions. The city also used the property for recreational purposes.

Gulf Breeze operated the golf course and clubhouse until late 2015 and the county’s former property appraiser approved the city’s applications for tax exemptions from 2012 to 2015. Once Tiger Point came onto the scene, questions were raised over whether the agreement was a lease, which was part of the original argument in nullifying the property’s tax-exempt status.

Initially, a special magistrate brought on by the Value Adjustment Board found the agreement was not a lease, siding with the city.

In 2017, the former property appraiser filed a complaint in trial court challenging the special magistrate’s decision. While the action was pending, the former property appraiser denied the city’s 2017 application for a tax exemption.

The trial court found that the agreement was not a lease, but on appeal, the court found that because the property was not used exclusively for a public purpose, it did not need to decide whether the agreement could be defined as a lease.

“Here, the situation is markedly different. Tiger Point is entitled to the profits generated by its operation of the property. And, importantly here, Tiger Point bore the risk of any financial losses; losses which had been significant when the city managed the golf course and related facilities,” the appellate court decision reads. “A municipal-owned golf course, even if open to the public, is not used exclusively for a municipal or public purpose when it is operated by a private company that retains the profits generated from its use of the property.”

In part because of the potential of private profits and private risk incurred, the appellate court ruled in favor of the county’s former property appraiser.

“Because the city allowed Tiger Point to retain profits generated by the city’s golf course and related facilities, the city did not use those properties exclusively for a municipal or public purpose,” the decision reads. “Thus, the city was not entitled to ad valorem tax exemptions for the golf course and related facilities.”

Gregory Brown II, the current county property appraiser and son of the property appraiser who filed the lawsuit, told the News Journal the next course of action will come from Gulf Breeze.

“So, the decision now will be on the city of Gulf Breeze and how they would like to proceed — if they would like to petition … to the (Florida) Supreme Court on this ruling,” Brown II said. “So, the ball is really in their court. We feel like the opinion that was written is clear.”

Brown II added that Gulf Breeze will now have to make up payments on that property dating back to 2016. He said the tax collector’s office is still calculating exactly how much is owed.

“And then we’ll move forward. Those taxes have been outstanding — had been there since they were originally authored,” Brown II said.

Gulf Breeze City Manager Samantha Abell said the city had no comment at this time.

The appellate court’s ruling also touches on the wider implications of a decision like this, making the distinction that not all for-profit ventures involving public entities are the same, and that the property here had been converted to a private commercial enterprise.

“Nothing about this court’s holding suggests that municipal-owned properties always risk losing their ad valorem tax-exempt status whenever municipalities contract with private, for-profit property management companies,” the decision reads.