by Melissa Nelson Gabriel, PNJ.com, 5/12/16

A Florida appeals court Wednesday rejected Escambia County's request to rehear a case prohibiting the county from collecting property taxes on 12 acres of Pensacola Beach land where two Portofino resort towers are proposed.

Escambia County Property Appraiser Chris Jones said the county will ask the Florida Supreme Court to review the case.

"We are disappointed that the court has decided not to allow a rehearing on this important issue for Escambia County and for beach residents. We knew it was going to be a long shot, but we were hoping they would reconsider," Jones said.

Jones said county attorneys are continuing to review the case and are working to determine what it means for other beach property owners.

The ruling is the latest development in years of litigation over the complicated lease system Escambia County has used for decades to allow residential and commercial development on Santa Rosa Island. The barrier island was deeded by the federal government to the county in the aftermath of World War II. Under the deed agreement, the county is restricted from selling the land outright.

Edward Fleming, an attorney for developer Island Resorts, called Wednesday's decision a win for all Pensacola Beach property owners.

"It has set a precedent for the entire beach," he said.

Island Resorts has proposed two towers that would become part of the Portofino development.

At issue in the appeals case is whether the county can collect property taxes on land that is leased.

In overturning an earlier decision by Escambia County Circuit Judge Edward Nickinson, Florida's 1st District Court of Appeal said in March that Island Resorts should not be required to pay property taxes because it does not own the land.

"The appellant is not the equitable owner of the leased land," the ruling stated. "The appellant bears all the burdens during the term of the lease, at the end which all rights revert to the lessor."

Jones said a complicating factor is that various county attorneys have used different language in beach lease agreements over the last 70 years. Jones said subtle differences in the lease language about the terms of renewal could create differences in how a court looks at whether the land is subject to property taxes.

"What could be created is two different classes of leaseholders. You might have language that is almost identical to your neighbors, but the result could be different because of a very subtle difference in the renewal language on the lease," he said.

Jones said the county hopes the state Supreme Court will provide clarity on the issue.

According to the appellate court ruling, finite leases, which are not perpetually renewed, are not subject to property taxes. Previous rulings have stated that perpetually renewable leases are subject to the taxes.

If the ruling is not overturned by the Supreme Court, Escambia County would have to repay more than $450,000 in property taxes paid by the developer since 2011. Other litigation could be affected if the Supreme Court upholds the decision. Fleming has filed similar appeals involving $8.3 million in property taxes paid by Portofino and $2.1 million paid by Beach Club Resort.

Levin Rinke Realty recently sponsored an educational meeting for beach property owners about the complicated issue. Fleming and attorney Todd Harris answered questions from dozens of property owners during the event. Fleming said additional educational meetings are planned.

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