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Florida Breach of Contract Dispute: Public Policy Question–can a city impose a real-estate property tax on a non-profit organization?

Uncategorized • Apr 22, 2015
post about Florida Breach of Contract Dispute: Public Policy Question–can a city impose a real-estate property tax on a non-profit organization?

Do you run a non-profit organization in Palm Beach? Does your non-profit organization have real-estate property in Miami? Has your organization ever been order to pay an ad valorem tax on that real-estate property? Well, you may want to read this recent case from Florida’s 2nd District Court of Appeal dealing with breach of contract and ad valorem tax.

What is an “ad valorem tax”?

  • An ad valorem tax is a tax from the local government based on the value of real estate property in Tampa or personal property.
  • Businesses that the IRS classify as non-profit organizations do not have to pay ad valorem taxes for their real-estate property.

What does Florida law say about ad valorem taxes and non-profit organizations?

  • AHF-BAY Fund, LLC. v. City of Largo, a recent case in the 2nd District Court of Appeal, involved an affordable housing community owned by AHF, a non-profit organization.
  • Under Florida law, affordable housing projects owned by a non-profit organization in a city like Miami or Fort Lauderdale are exempt from ad valorem taxation.
  • The original owner of the housing community signed a PILOT contract agreement to make annual payments to the city in exchange for tax-exempt bonds.
  • After AHF bought the housing community from the original owner, AHF refused to pay the City of Largo under the PILOT contract.
  • The city sued based on breach of contract.
  • The Appeal Court sided with AHF, the non-profit organization.
  • The PILOT contract agreement that the City of Largo created was an ad valorem tax, disguised under another name. This type of contract violates public policy.

Does your business in Palm Beach Gardens qualify as a non-profit organization? A company lawyer may be able to help you find the answer to this question.

The Florida Legislature grants tax exemptions when they are deemed to be in the interest of the general welfare of the public. If you run a non-profit organization in Orlando, the organization may be able to get a tax exemption. Before signing a contract with the city, contact a contract lawyer.

To read a free online copy of this case opinion and learn more about ad valorem taxes and non-profit organizations, click here:

http://www.2dca.org/opinions/Opinion_Pages/Opinion_Pages_2015/April/April%2022,%202015/2D14-408.pdf.