HILLSBOROUGH COUNTY AVIATION AUTHORITY

v.

BOB HENRIQUEZ, PROPERTY APPRAISER

LABRIT, Judge. This appeal involves a dispute between two governmental entities: the Hillsborough County Aviation Authority and the Hillsborough County Property Appraiser, Bob Henriquez. At bottom, the parties disagree on whether certain of Aviation Authority's airport properties qualify for a tax exemption under sections 196.199(2) and 196.012(6), Florida Statutes (2019). Although Aviation Authority argues several bases for reversal, we need only address one point. Because the properties serve a governmental purpose as defined in section 196.012(6), we reverse the judgment in Mr. Henriquez's favor and instruct the trial court to enter judgment for Aviation Authority.

I. For several years, Aviation Authority has applied for an ad valorem tax exemption for fifteen different properties that it owns and leases to private entities. The properties are located within regional and international airports in Hillsborough County, and their uses are not materially disputed. The lessees use the properties for fixed-base operations (FBOs)1 and similar activities that include aircraft maintenance and repair, fueling, flight instruction, and air cargo 1 Although the term "fixed-base operations" is not defined in chapter 196, the Florida Administrative Code defines a fixed-base operator as "an individual or firm operating at an airport and providing general aircraft services such as maintenance, storage, ground and flight instruction." Fla. Admin. Code R. 12D-7.016; see also FAA Order No. 5190.6B app. C, Advisory Circular No. 150/5190-6 app. 1 § 1.1(i) (defining a fixed-base operator as "[a] business granted the right by the airport sponsor to operate on an airport and provide aeronautical services such as fueling, hangaring, tie-down and parking, aircraft rental, aircraft maintenance, flight instruction, etc.").

transport.2 In its applications, Aviation Authority claimed that these properties were exempt under sections 196.199(2) and 196.012(6) because their uses meet the statutory definition of "governmental purpose." For many years, the then-elected property appraiser approved these exemptions. But in 2019, Mr. Henriquez changed course and denied Aviation Authority's applications for exemption—in whole or in part—on all fifteen properties. In his denial notice, Mr. Henriquez cursorily explained that these "propert[ies] no longer me[t] the statutory criteria for [g]overnment use" and cited a handful of statutes, cases, and sections of the Florida Constitution. Aviation Authority appealed this decision to the Value Adjustment Board (VAB)—the governmental body charged with handling tax disputes. See generally § 194.032, Fla. Stat. (2021).

The VAB 2 A few of the properties were vacant and held out for lease at the time of the events below. The law presumes that "vacant land held by a municipality is in use exclusively for a public purpose if it is not actually in use for a private purpose on tax assessment day." Sun 'N Lake of Sebring Improvement Dist. v. McIntyre, 800 So. 2d 715, 722 (Fla. 2d DCA 2001) (citing City of Sarasota v. Mikos, 374 So. 2d 458, 460 (Fla. 1979)).

The evidence in the record is insufficient to overcome this presumption. See Page v. City of Fernandina Beach, 714 So. 2d 1070, 1078 (Fla. 1st DCA 1998) (holding that vacant lots the city owned were exempt where "[t]he property appraiser did not prove and the trial court did not find that any of the vacant lots were 'actually in use for a private purpose on tax assessment day' "); cf. Sun 'N Lake of Sebring Improvement Dist., 800 So. 2d at 722 ("[A]ctive marketing of lots to private interests for use as private homesites overcomes the presumption that vacant land is held exclusively for a public purpose.").

Therefore, and because we also conclude that the leased properties were used for an exempt governmental purpose under the applicable statutes, the vacant properties are likewise exempt.

overturned Mr. Henriquez's denial notices, reinstating the exemptions for the 2019 tax year. Mr. Henriquez then filed suit in circuit court, seeking to overturn the VAB's decision and tax the properties. He brought the action under section 194.036(1)(a), which permits a property appraiser to "appeal"3 a VAB decision if he or she "determines and affirmatively asserts in any legal proceeding that there is a specific constitutional or statutory violation" in the decision. Consistent with this provision, Mr. Henriquez's complaint alleged that there was a statutory violation in the VAB's decision. He specifically alleged that the VAB improperly reinstated the exemptions because the properties are not exempt under sections 196.199(2) or 196.012(6).

Mr. Henriquez also confirmed below that his suit did not allege a constitutional violation, only a statutory one.⁴ Henriquez's complaint and raised four affirmative defenses, one of which asserted that the properties are used for aviation and airport purposes, that certain of the properties are used as FBOs, and that all are exempt under sections 196.199(2) and 196.012(6).

The parties filed competing motions for summary judgment. In its motion, Aviation Authority argued that the lessees' uses of the properties 3 Although the statute refers to this process as an appeal, "actions brought in the circuit court pursuant to . . . section 194.036 . . . are original actions, not appeals." Crossings At Fleming Island Cmty. Dev. Dist. v. Echeverri, 991 So. 2d 793, 801 n.6 (Fla. 2008). 4 In discussing the basis for Mr. Henriquez's suit under section 194.036(1)(a), the trial court asked Mr. Henriquez's counsel: "[Y]ou're not alleging a specific constitutional violation, are you?" Counsel responded: "No, not at all. We [are] not arguing that any of the statutes are unconstitutional." fall squarely within the statutory exemptions and the definition of "governmental purpose" in section 196.012(6).

Mr. Henriquez argued in response, and in support of his own summary judgment motion, that these statutory exemptions "must meet the constitutional test of serving a 'governmental-governmental' purpose," such that the property must be both owned by the government and used for "the administration of some phase of government." Mr. Henriquez maintained that the lessees' uses did not satisfy the second part of this constitutional test, so the properties were not exempt under sections 196.199(2) and 196.012(6).

Agreeing with Mr. Henriquez, the trial court granted Mr. Henriquez's motion for summary judgment and denied Aviation Authority's motion for summary judgment.

The trial court found that "while the activities undertaken by the[] tenants are useful to the public and the users of the airports in particular, the uses are not the administration of some phase of government" so they are not exempt under sections 196.199(2) and 196.012(6). This appeal ensued. "Because the facts were not in dispute and the issue before the trial court was purely legal, we review the court's entry of summary judgment de novo." Baldwin v. Henriquez, 279 So. 3d 328, 332 (Fla. 2d DCA 2019); see also Fla. Dep't of Revenue v. New Sea Escape Cruises, Ltd., 894 So. 2d 954, 957 (Fla. 2005) (explaining that interpretation of a tax statute is "a legal matter subject to a de novo standard of review").

II. A.

Sections 196.199(2) and 196.012(6) Aviation Authority requested—but Mr. Henriquez denied—ad valorem tax exemptions under sections 196.199(2) and 196.012(6). These statutes exempt leasehold and other interests in government property if they meet certain criteria.

Section 196.199(2)(a) states that leasehold interests are exempt "only when the lessee serves or performs a governmental, municipal, or public purpose or function, as defined in [section] 196.012(6)." Section 196.199(2)(a) further provides that "[i]n all such cases, all other interests in the leased property shall also be exempt from ad valorem taxation."5 Section 196.012(6), in turn, defines a "governmental, municipal or public purpose" as follows: Governmental, municipal, or public purpose or function shall be deemed to be served or performed when the lessee under any leasehold interest created in property of the United States, the state or any of its political subdivisions, or any municipality, agency, special district, authority, or other public body corporate of the state is demonstrated to perform a function or serve a governmental purpose which could properly be performed or served by an appropriate governmental unit or which is demonstrated to perform a function or serve a purpose which would otherwise be a valid subject for the allocation of public funds. For purposes of the preceding sentence, an activity undertaken by a lessee which is permitted under the terms of its lease of real property designated as an aviation area on an airport layout plan which has been approved by the Federal Aviation Administration and which real property is used for the administration, operation, business offices and activities related specifically thereto in connection with the conduct of an aircraft full service fixed base operation 5 By its plain language, section 196.199(2)(a) exempts leasehold interests in government-owned property and "all other interests" in that property if the lessee serves or performs a governmental, municipal, or public purpose as defined in section 196.012(6).

In the proceedings below, the trial court found that the property interests in dispute, and the interests that Mr. Henriquez taxed, were the government-owned fee simple interests in the leased properties and not the lessees' leasehold interests. Because section 196.199(2)(a) treats these interests the same where the lessee uses the property for an exempt purpose, we need not consider or decide the precise nature of the property interests involved.

which provides goods and services to the general aviation public in the promotion of air commerce shall be deemed an activity which serves a governmental, municipal, or public purpose or function. Any activity undertaken by a lessee which is permitted under the terms of its lease of real property designated as a public airport as defined in [section] 332.004(1) by municipalities, agencies, special districts, authorities, or other public bodies corporate and public bodies politic of the state, a spaceport as defined in [section] 331.303, or which is located in a deepwater port identified in [section] 403.021(9)(b) and owned by one of the foregoing governmental units, subject to a leasehold or other possessory interest of a nongovernmental lessee that is deemed to perform an aviation, airport, aerospace, maritime, or port purpose or operation shall be deemed an activity that serves a governmental, municipal, or public purpose. (Emphasis added.) This definition goes on, but its remainder is not applicable here. The legislature first adopted sections 196.199 and 196.012 as part of a 1971 tax reform act through which the legislature sought to tighten exemption requirements. See ch. 71–133, Laws of Fla.; Canaveral Port Auth. v. Dep't of Revenue, 690 So. 2d 1226, 1229 (Fla. 1996).

At the time, the legislature's definition of "governmental, municipal or public purpose" was much shorter, and it appeared in subsection (5) of section 196.012.6

See ch. 88–102, § 1, Laws of Fla. performed or served by an appropriate governmental unit, or which is demonstrated to perform a function or serve a purpose which would otherwise be a valid subject for the allocation of public funds. The term "governmental purpose" shall include a direct use of property on federal lands in connection with the federal government's space exploration program. Real property and tangible personal property owned by the federal government and used for defense and space exploration purposes or which is put to a use in support thereof shall be deemed to perform an essential national governmental purpose and shall be exempt. Ch. 71–133, § 1, Laws of Fla. In 1993, the legislature amended this provision to "expand[] the definition of governmental, municipal or public purpose to include certain aviation activities." Ch. 93–233, Laws of Fla. This 1993 amendment added the second sentence of the applicable version of section 196.012(6) that now deems "an activity undertaken by a lessee . . . in connection with the conduct of an aircraft full service [FBO]" to serve a governmental purpose. Id. Then, in 1997, the legislature amended section 196.012(6) again to "specify[] additional activities that are deemed to serve [governmental, municipal or public] purposes." Ch. 97–255, Laws of Fla. The 1997 amendment specified that "[a]ny activity undertaken by a lessee . . . that is deemed to perform an aviation or airport . . . purpose" is deemed to serve a governmental purpose. Id. at § 25. This language, modified only slightly since then,7 now appears as the third sentence of section 196.012(6).

The trial court found that the properties do not serve a "governmental purpose" under these statutory definitions because their 7 In 1999, the legislature added language pertaining to spaceports and aerospace activities. See ch. 99–256, § 11, Laws of Fla. uses do not satisfy the judge-made governmental-governmental test. Because this test underpins the trial court's findings, we review it below.

B. The Governmental-Governmental Test Shortly after the legislature passed its tax reform act in 1971, our supreme court considered these legislative reforms in Williams v. Jones, 326 So. 2d 425 (Fla. 1975), and Volusia County v. Daytona Beach Racing & Recreational Facilities District, 341 So. 2d 498 (Fla. 1976).

The supreme court first determined in Williams that "[t]he exemptions contemplated under [s]ections 196.012(5) and 196.199(2)(a) . . . relate to 'governmental-governmental' functions as opposed to 'governmental-proprietary' functions." 326 So. 2d at 433. The following year, it applied this governmental-governmental standard in Volusia County to hold that leased municipal property used as a for-profit racetrack was not exempt from ad valorem taxation under article VII, section 3(a), of the Florida Constitution.8 341 So. 2d at 502; see also Fla. Dep't of Revenue v. City of Gainesville, 918 So. 2d 250, 260 (Fla. 2005).

Through a series of cases that followed, our supreme court developed the governmental-governmental test. City of Gainesville, 918 So. 2d at 260. Now, "for private leaseholds of municipal property, the 'governmental-governmental' test governs eligibility for the constitutional tax exemption in article VII, section 3(a)." Id. And this test mirrors the definition of "governmental, municipal or public purpose" that the legislature adopted in 1971. Compare ch. 71–133, § 1, Laws of Fla., with City of Gainesville, 918 So. 2d at 260. That is, under the governmental-8 Article VII, section 3(a) provides that "[a]ll property owned by a municipality and used exclusively by it for municipal or public purposes shall be exempt from taxation."