I am one member of a five person board. The opinions I express on this forum are mine only, and do not necessarily reflect the views or opinions of the Escambia County Staff, Administrators, Employees, or anyone else associated with Escambia County Florida. I am interested in establishing this blog as a means of additional transparency to the public, outreach to the community, and information dissemination to all who choose to look. Feedback is welcome, but because public participation is equally encouraged, appropriate language and decorum is mandatory.

Sunday, December 16, 2018

Unpacking the Beach Lease Mess Part I: Who Owns the Beach?

The subject of Pensacola Beach leases draws lots of heated opinions and positions.  I only care about insuring we don't ever again get taken to the cleaners via pennies on the dollar lease arrangements with the owners of million-dollar condos on the Gulf...

Last week the BCC had a good discussion on the various problems with the leases on Pensacola Beach.  For those that are interested, the video of that discussion is here.

The problem with any discussion about leases, lease fees, and taxes--is that other issues get brought into the discussion to conflate the underlying topic....then the discussion devolves among those various "camps" of folks that have differing agendas.  Beach Lease Holders that pay full ad valorem taxes on improvements and land+ Lease fees, Condo Owners that pay ad valorem taxes just on the improvements and not the land + Lease fees,  The property appraiser, The SRIA, the Escambia Board of County Commissioners, Activists that want to prevent fee-simple title from ever being granted to private parties for any part of this land, and last but not least, the Lawyers on both sides of the issue who make lots of money fighting over valuations of appraisals and other aspects of the leases and taxation.

For my part--I simply want equity by and between lease holders going forward.  I do not want to re-litigate the past, nor do I want to discuss the distinctions between fee-simple title and leases.
Should million dollar condos on the Gulf at Pensacola Beach pay about half the amount of taxes and fees of what million dollar condos on the Gulf in Perdido Key pay?

In short, I simply want to insure that a "Beach Club" type lease renewal NEVER again happens to the taxpayers.

So let's just boil it down and start with the basics, and work our way down to what matters, and to do this we will ask some rhetorical questions.  (then I'll provide answers that are my opinions and what I believe to be true with supporting facts, however I am open to any dissenting opinions)

1.  Who is the lawful OWNER of ALL the property that was deeded to Escambia County via the 1946 Public Act of Congress and subsequent 1947 Conveyance granted to Escambia County---including those portions that currently lie in Santa Rosa County?

Answer: The Citizens of Escambia County and NOBODY ELSE! (But multiple, subsequent sub- leases of various portions of this land have been made by Escambia to Santa Rosa County, and to private parties in Escambia County.  And multiple leases have been made between Santa Rosa County and private parties on the portions of properties leased to Santa Rosa County that lie in Santa Rosa County)

2.  Was it, and is it, legal for Escambia County to enter into leases, including leases that are perpetually renewing, for portions of this one large property that was given to Escambia County by the Federal Government in 1947?

Answer:  Yes--(otherwise someone would have challenged the underlying legality of the granting of these initial and subsequent leases  in court at some point--or the courts would have at some point weighed-in on this question and invalidated these leases at some point over the course of one of  the court's multiple "cracks" at this question during litigation over the last 5 decades on various aspects of beach leases.....)

3.  Is there a distinction to be made between Ownership of Beach Land under Land Title Law and Equitable Ownership of  the same Beach Land for Tax Purposes under the Law?

Answer:  YES--1000% yes  (More than half of the leases made by Escambia County to various 

parties are ALREADY subject to full ad valorem taxation under the well established doctrine of equitable ownership)  So----- to those that want to take issue with this underlying, foundational, and frankly-settled question--I would ask such persons to start out by reading this portion of the appellate court's ruling on the case  Accardo v. Brown.  from that decision:

"A lessee is deemed to be the leased property's equitable owner if the lessee holds "`virtually all the benefits and burdens of ownership'" of the leased property. Robbins v. Mt. Sinai Med. Ctr., Inc.,748 So.2d 349, 351 (Fla. 3d DCA 1999) (citation omitted). Valid burdens and benefits that have been considered by Florida courts include a lessee's obligation to insure, maintain, and pay taxes on the leased property along with the lessee's option to purchase the leased property at the end of the lease term. Id.As the trial court found in this case, Appellants enjoy the capital appreciation and rental income derived from their interests, they have the right to convey their interests without restraint, and they have the right to encumber their properties with mortgages. In addition to these benefits of ownership, Appellants bear the responsibility for insurance, maintenance and repair, and they are typically responsible by their lease terms for taxes imposed upon their interests. These factors, which the majority relied upon in Ward, apply to the taxation of the underlying property as much as they do to the property improvements. Although Appellants are correct that their leases contain no option to purchase, Escambia County is, as Appellants argue on appeal, prohibited through the Deed of Conveyance from selling the property. Thus, instead of having an option to purchase at the end of their lease terms, the majority of Appellants have the option to renew their leases for additional ninety-nine-year terms. All of these factors lead us to the conclusion that the trial court properly determined that Appellants are the equitable owners of the real property" 


The last sane person on Earth said...

As a long time Escambia County resident, I’m pleased that you are pursuing this issue, Commissioner. Escambia County is losing out on millions in tax dollars due to the unwieldy lease system.

I’m confident that you will ultimately discover that the only solution is fee simple. Fee simple will result in annual tax windfalls for our county while being transparent to our citizens— afterall, title or a 99 year renewing lease are virtually indistinguishable. And obviously, conversion to fee simple would obviate the incredibly inequitable leases negotiated with Beach Club and Portofino.

Unfortunately, the longer we delay resolving this issue, the more tax dollars Escambia County will forfeit.

Anonymous said...

For now this is still confusing but will say one of the hallmarks of genius is creativity and your blogs complete with deep links are amazing. I lean toward fee simple being a solution but that is not a complete assessment. As a mainlander I do want money in the funds also. Your courage to tackle this is noted however time marches on and one of the frustrations I have seen is things don't happen quickly enough. You know the can kicking..reelection problem. Many note your courage.

Anonymous said...

Prove the dredged sand on Perdido makes it public to the dune line with private ownership and that the public can indeed walk along and fish from that shore and the public may be more willing to understand the issue.

The last sane person on Earth said...

On a related subject, I’m somewhat mystified at the deference that some of us give to the 1947 legislative action that granted SRI to Escambia County. Some profess to revere the act as though that legislation had been brought down from Mount Sinai with the Ten Commandments. Meanwhile, many of those same people mock and revlle our own modern day government officials. There is an incongruency that is difficult to reconcile. I can’t help but wonder if some only respect government actions that suit their personal agendas.

While I respect my fore fathers, I don’t believe that they were omniscient or infallible. Wasn’t the late 1940s the time of McCarthyism and the red scare? Weren’t Jim Crow laws in effect? The people of that era were likely much like ourselves: sometimes heroic and sometimes very flawed, and with limited understanding of how the events of the future might unfold.

From my understanding, in 1947 SRI was something of a “white elephant” that the federal government sought to be rid of. Escambia County did not have much interest and Santa Rosa County turned the gift down flat. I don’t believe that modifying the 1947 legislation would disturb the slumber of those that crafted it seventy year ago.