(Photo by Tyler Teston Photography)

A county property appraiser sued the city of Gulf Breeze, Fla. in 2017 because it was still taking tax exemptions after it had contracted with a management firm for Tiger Point GC’s operation. Lower courts held that the exemption could still apply, but an appeals court has now reversed previous rulings, raising the possibility that the city may owe back taxes dating back to 2016. “The city did more than enter a contract to manage the golf course and related facilities,” the appeals court ruled. ‘[It] converted the property to a private commercial enterprise.” That conversion distinguished the case from others, the court added. “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 ruling clarified.

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

The ruling means the city may owe taxes on the property dating back to 2016, the News Journal reported.

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 the city Gulf Breeze brought on a management firm, IGC – Tiger Point Golf Club LLC, to operate the course in 2015, the News Journal reported.

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

According to court documents, Gulf Breeze acquired the property in 2012 to treat and dispose of wastewater and to provide stormwater protection for surrounding subdivisions, the News Journal reported. The city also used the property for recreational purposes.

The city of Gulf Breeze operated the Tiger Point 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, the News Journal reported. Questions were then raised after the management firm was brought in over whether its agreement with the city constituted a lease that would be subject to property taxation.

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

“Here, the situation is markedly different,” the appellate court decisions reads. “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.

“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,” the appellate court decision continued.

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, the News Journal reported.

“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.”

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

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

Gulf Breeze City Manager Samantha Abell told the News Journal that the city had no comment at this time.

The appellate court’s ruling also touches on the wider implications of a decision like this,” the News Journal reported, 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.

C+RB reported in 2019 on the success that Tiger Breeze GC had experienced under another management firm, Honours Golf, and how that was leading the city of Gulf Breeze to consider its sale to a private developer (https://clubandresortbusiness.com/gulf-breeze-fla-looks-to-cash-in-on-tiger-point-gcs-success/).