Florida rigged the rules for special interests who squeeze tax breaks out of Tallahassee. That's now causing chaos.

What happens when Florida politicians give away an unconstitutional tax break — but no one is allowed to say anything about it?

Photo credit: LMoore22

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Editor’s note: This piece is adapted from a Seeking Rents podcast.

In the spring of 2006, during Jeb Bush’s final year as Florida governor, he and the state’s Republican-controlled Legislature agreed to give a Christian-themed tourist attraction in Orlando an exemption from property taxes.

This tax break was probably unconstitutional. Florida’s state constitution strictly limits the power of politicians in Tallahassee to exempt property from taxes. And while they are allowed carve out properties used mostly for religious purposes — like churches — the Holy Land Experience was a commercial theme park that charged as much as $50 per person for admission and peddled everything from plush camels to Goliath Burgers.

And yet this tax break endured, unchallenged, for more than 15 years. Holy Land was owned for most of that time by Trinity Broadcasting, a giant evangelical television producer. And tax records show this exemption ultimately saved Trinity about $3 million in property taxes.  

That’s enough money to build two dozen affordable homes. It’s enough money to pay for a month of childcare for nearly 4,000 kids.

This tax break is still alive today…although the Holy Land Experience is not. Trinity sold it in 2021 to a hospital chain that’s since demolished the theme park. It’s building an emergency department on the site instead.

But how is that such a legally dubious tax giveaway proved so durable?

Well, one reason is that the state of Florida — urged on by lobbyists for some of the its biggest businesses — has handcuffed the people who are best positioned to push back whenever the state Legislature decides to hand out an unconstitutional property tax exemption to some lucky special interest.

This is one of the subtle-but-significant ways that the gears of government in Florida get manipulated in favor of large corporations and others who have the access and influence needed to milk tax breaks out of Tallahassee.

It’s a problem that’s about to get much worse, too. Even Amazon — one of the largest corporations on the planet — may soon get a pass on property taxes.

And it’s important remember: These tax breaks are not free. But it’s the rest of us who end up paying for them — either by paying higher property taxes ourselves or by accepting budget cuts and poorer quality services from our cities, counties and schools.  

A Constitutional leash on the Legislature

To really understand how the rules have been rigged on property taxes, we’re going to need to get down in the weeds. And just to be clear, we’re going to be talking about taxes on physical property — like land and buildings.

The first thing to know is that the Florida Constitution gives the Florida Legislature very little wiggle room to play around on property taxes.

Seriously, the constitution flat-out forbids state government from charging a property tax itself. It’s the only tax reserved exclusively for local governments. This is why property taxes are the main funding source for cities, counties and school districts.

The Florida Supreme Court (Source: Bruin79)

But while the state can’t charge a property tax itself, it still gets to set the rules for property taxes.

One big example of this is that the state has the power to exempt some types of property — which means the owners of those properties don’t have to pay any property taxes at all.

We already mentioned one example: Churches. The constitution says, very clearly, that the Legislature can exempt properties that are used predominantly for religious purposes. The Legislature has used this power to pass laws giving tax exemptions to churches.

But even here, the constitution sets some very strict limits. For instance, it only allows the Legislature to exempt properties that fall within a few, narrow categories. And beyond those few carveouts, the constitution says that all property must be taxed.

These guardrails are important. Because we’ve actually got a pretty dangerous situation here.

Think about it: The state has the power to let some people get out of paying a tax that it doesn’t actually rely on itself.

It’s not to imagine a scenario where some big corporation — like, say, Walmart — sends a bunch of lobbyists to Tallahassee to get the Legislature to pass a bill exempting all Walmart stores from property taxes.

That would save Walmart tens of millions of dollars a year. Of course, it would also reduce property tax collections by tens of millions of dollars a year, too.

But that shortfall wouldn’t show up in the state’s budget. It would show up in city, county and school budgets instead.

So lawmakers would get to brag about cutting taxes. And they’d get to pocket a few more campaign checks from Walmart. But they wouldn’t have to deal with any of the consequences themselves.

Instead, it would mostly fall on a bunch of city councils and county commissions to figure out how to close the budget gap — which they ultimately have to do in one of two ways: Either by raising property taxes on everyone else or cutting spending on services and infrastructure.

That’s why the Constitution keeps such a tight rein on the Legislature.

Trying to give tax breaks to racetracks

Of course, most state lawmakers simply cannot resist spending somebody else’s money. So the Legislature tries to blow past these Constitutional boundaries on property taxes all the time.

Again, we talked about one example of this already: The Holy Land Experience. Like I said earlier, the Florida Constitution gives the Legislature the power to exempt properties used predominantly for religious purposes. State lawmakers turned that clause into a tax break for religious-themed amusement park.

But an even better example involves a place called the Sebring International Raceway.

The Sebring Raceway is a racetrack in a tiny town about two hours south of Orlando. It’s best known as the home of the “12 Hours of Sebring,” an endurance race in which professional drivers race laps for 12 hours straight.

This race really is a big deal. Mario Andretti, who is probably the most famous racing driver of all time, won the 12 Hours of Sebring three times.

A scene from the 12 Hours of Sebring (Source: Rick Flores)

The Sebring Raceway is also famous for another reason: It was the source of a big property tax clash between the Florida Legislature and the Florida Supreme Court.

The backstory is a bit complicated. But I’ll boil it down.

First, there is a clause in the state constitution that says, basically, that any property owned and used by a local government is automatically exempt from property taxes if that property is being used for a public purpose.

This is why, for instance, a city doesn’t pay property taxes on City Hall.

But — just like it has with religious property — the Florida Legislature has stretched this clause even further.

Specifically, the Legislature has passed laws that say any property owned by a local government but leased to a private company is also exempt from property taxes. But, again, only if the property is being used for a public purpose.

But what exactly is a “public purpose”? Well, it turns out the line is kind of fuzzy.

The Legislature — which, again, loves to spend other people’s money — defines public purpose very broadly.

In fact, under the definition the Legislature has written into state law, almost anything a private company does could qualify as a public purpose.

But because of all those restrictions in the state constitution, the Supreme Court defines has defined purpose much more narrowly.

Essentially, through a series of opinions issued over the past 50 years or so, the court has ruled that a private company leasing property from the government can only get a tax exemption if the company is providing some kind of traditional government service. It can’t just be making money.

So, for instance, a business running a landfill for a city would probably qualify for a tax exemption. But a business operating a restaurant in a city park, or a hotel at an airport, would not.

The point here is that there is a longstanding conflict about what counts as a public purpose and, thus, what kind of business can get a property tax break. The Florida Legislature says one thing. The Constitution, as interpreted by the Florida Supreme Court, says something else entirely.

Back to the Sebring Raceway. The raceway was actually built at a public airport. But about 30 years ago, that airport decided to lease the track to a private company.

The Sebring International Raceway at Sebring Regional Airport (Source: Sebring Regional Airport)

The Sebring Raceway then applied for a tax exemption. It argued that hosting races like the 12 Hours of Sebring qualified as a public purpose under that broad definition set by the Legislature.

The local property appraiser denied the exemption. The raceway sued. The case eventually climbed all the way up to the Florida Supreme Court, which ruled in 1994. And the court said that, no, hosting car races was not a public purpose — at least, not under the stricter definition required by the state constitution.

The Florida Legislature didn’t like that very much. So that very same year, the Legislature passed another law that said, explicitly, that a company operating a racetrack on land leased from the government was, in fact, fulfilling a public purpose — and was therefore eligible for a tax exemption.

Now, just as a side note: Again, this happened in 1994 — about a decade before I first showed up in Tallahassee. So I can’t say for sure who led the lobbying for this tax break for racetracks.

But I would bet that the Legislature didn’t do this just for a racetrack in little ol’ Sebring, Florida. I suspect there was probably a much bigger special interest lurking behind the curtain: NASCAR — which, it just so happens, has had some similar property tax fights over the Daytona International Speedway.

But I digress.

Regardless of who was behind it, after this new law passed, there was a second lawsuit over the Sebring Raceway. And the issue wound up back before the Florida Supreme Court again, which issued a second ruling in April 2001.

In that decision, the court declared that the Florida Legislature’s new law was unconstitutional, too. The state Constitution simply did not allow racetracks to get out of paying property taxes. It didn’t matter what the Legislature said, or how the Legislature said it.

The cases were an important reminder of just how much the Constitution limits the Legislature’s power to pass property tax breaks.

Rigging the rules

Now, a court can’t just decide on its own to declare something unconstitutional. Someone has to make the case to the court first.

In the Sebring Raceway cases, this constitutional argument was made by the local property appraiser.

We haven’t talked about property appraisers yet, but we should. Because they play an important role in this system

Property appraisers are independently elected in each county. And one of their jobs is to decide whether individual properties actually qualify for a tax exemption. They balance what the Legislature says with what  the Supreme Court says.

And, as the Sebring cases show, property appraisers have historically served as a check on the Legislature’s power — by pointing out to the courts when the Legislature may have gone beyond the bounds of the constitution.

Property appraisers essentially tee these issues up for judges to rule on them.

But what would happen if the property appraiser wasn’t allowed to tee these issues up for a judge? What if they weren’t allowed to make any kind of constitutional argument in court?

You can probably guess where this is going next.

Well, it turns out about that, right around the time the Sebring Raceway case was finally being resolved once and for all, another property tax lawsuit was filed.

This suit was in northeast Florida, near Jacksonville. It involved a kind of development district that had been set up by the developer of a big housing subdivision on the St. Johns River.

The backstory here is even more convoluted than the Sebring Raceway stuff. But the details aren’t even important, really.

All you have to know is that this development district also applied for a property tax exemption under a different tax break that the Legislature had passed for real-estate developers.

Just like had happened with the Sebring Raceway, the local property appraiser denied the tax exemption. The development district sued. And then as part of his defense, the property appraiser argued that this tax exemption conflicted with prior Supreme Court rulings and was unconstitutional.

But then the lawyers for this development district added a new wrinkle: They argued that the local property appraiser shouldn’t be allowed to make a constitutional argument. That, they said, amounted to challenging the Florida Legislature — and local public officials aren’t allowed to do that.

To be fair, it’s not like these lawyers just invented this claim out of thin air. Courts have long held that public officials in Florida can’t refuse to carry out a state law just because they think it’s unconstitutional.

And, generally speaking, this makes sense. We can’t have a system of selective enforcement, where someone like a small-town mayor or county sheriff can essentially jam up any law they don’t like just by challenging it in court.

But this principle is really for when public officials are just supposed to be following basic instructions. When they’re performing a “ministerial” duty, to use the legal term.

That’s not what property appraisers are doing when they decide whether someone qualifies for a tax exemption. No two situations are exactly alike — especially when you get into more complicated questions like whether a company leasing property from a government is serving a public purpose.

And then there’s the fact that the Florida Legislature and the Florida Supreme Court are in open conflict with each other on this stuff.

Property appraisers aren’t following orders. They’re making judgement calls.

But here’s the biggest problem: Property appraisers are, for the most part, the only people equipped to push back against the Florida Legislature when it tries to give away some unconstitutional property tax break.

It’s almost impossible to find anyone else who has the expertise, the interest, the legal standing, and the resources to wage years-long legal battles over this stuff.

The reality is, if local property appraisers don’t stand up to Tallahassee politicians here, no one will.  

And you know who knows that? Florida’s biggest businesses. Companies like Disney, Publix and Florida Power & Light. Companies that spend millions of dollars every year on campaign contributions — and on free meals and hotel rooms and private-jet flights for lawmakers. Companies that are always lobbying for more tax breaks.

And sure enough, after this northeast Florida lawsuit was filed, one of the state’s main business-lobbying groups — the Florida Chamber of Commerce — rushed in to tilt the scales.

Lawyers for the Chamber of Commerce submitted a brief to the Supreme Court urging the court to slap new legal handcuffs on property appraisers — to stop them from making constitutional arguments in court and from challenging the Florida Legislature in any way. Local property appraisers, the chamber of commerce said, were causing too much “confusion” for business.

The argument worked. In July 2008 — just seven years after Supreme Court justices had smacked down state lawmakers for passing an unconstitutional tax break for racetracks — they ruled that property appraisers could no longer make constitutional arguments in court.  

Tax breaks begin to multiply

And that’s how the Holy Land tax break was able to stay on the books without ever being subjected to any scrutiny in state court. Even if the local property appraiser thought it was unconstitutional, they’re not allowed to say so in court.

But this problem goes way beyond that one tax break.

A few years ago, for instance, I wrote a story for Florida Trend magazine about how Space Florida, an economic-development agency for the aerospace industry, was helping companies get out of property taxes by buying buildings and equipment on their behalf and then leasing it all back to them.

From the September 2019 issue of Florida Trend.

Remember: Companies that lease property from governments can get tax exemptions if they’re performing a public purpose. But while the Florida Legislature says pretty much anything count as a public purpose, the Florida Supreme Court says only a few things do.

Space Florida’s ploy started with the giant defense contractor Northrop Grumman, which leases property that it uses to work on stealth bombers for the U.S. Air Force.

Which…fine. A company working on national defense for the federal government is probably fulfilling a public purpose — even if it is making a fortune for its investors in the process.

(Although just as a quick aside, Space Florida is also skating on incredibly thin on ice on the legal question of whether it really does own these buildings and equipment — or whether it’s just a straw owner fronting for Northrop.)

But no sooner had it done the deal with Northrop Grumman, Space Florida did the same thing for Embraer, the Brazilian jet manufacturer.

And Embraer is working on private jets — the kind of luxury planes bought by big corporations and billionaire families. There is no way that’s a public purpose, certainly not under the Florida Supreme Court’s strict definition.

But this has never been challenged in court. And even if the local property appraiser wanted to try, they couldn’t make a straightforward constitutional case against it.

Space Florida keeps doing more and more of these deals, too.

The floodgates are about to open

But this doesn’t stop at a few tax-avoidance schemes set up by Space Florida, either. In fact, the floodgates could be about to open.

Why? Well, it involves yet another property tax lawsuit — two of them, actually.

These cases come out of Tampa. They began when a private shipyard that leases land from the port of Tampa applied for a property tax exemption.

The property appraiser in Hillsborough County denied the exemption, so the shipyard sued. One of the shipyard’s early arguments was that similar businesses were leasing property at Tampa’s airport and they weren’t paying property taxes.

Dry docks at the port of Tampa. (Source: Roger W.)

So the property appraiser went back and reviewed some of those exemptions, some of which had been approved many years ago. And he ended up revoking a few of them, too.

So the airport and the companies who lost their tax breaks over there launched their own lawsuit.

So now you had two different cases — one involving a company leasing property at the Tampa seaport, and the other involving companies leasing property the Tampa airport.

But the two cases were both about the same issue: Whether these companies were fulfilling a public purpose and were therefore allowed to skip out on paying property taxes.

Both cases wound up in front of the Second District Court of Appeal — an appellate court one rung below the Supreme Court.

Now, I’ve mentioned a few times that the Florida Legislature defines public purpose very broadly. I wasn’t kidding.

Among other things, the Legislature says that any kind of aviation activity at an airport counts as a public purpose. So does any kind of maritime activity at a seaport.

If all you had to go on was what the Legislature said, you’d probably decide that all these companies in Tampa should get tax breaks.

But as we’ve talked about a lot now, the Florida Supreme Court sets a much narrower definition of public purpose. The court says a company only gets a tax exemption if it is performing some traditional government function.

And if you go by the court’s narrower definition, you might conclude that some — maybe even all — of these companies should have to pay property taxes. Just like most other businesses do.  

Of course, these are the exact same questions that were at the heart of those Sebring Raceway cases.  

But back then, the local property appraiser was able to make a straightforward argument about whether the Constitution and Supreme Court precedent allowed for tax exemptions for racetracks.

Now, however, the property appraiser is pretty much forbidden from talking about the Constitution and whether it would permit a tax exemption for something like a ship-repair yard or an air-cargo warehouse.

This is an absurd situation. The Legislature can’t pass unconstitutional tax breaks. But when it does, property appraisers can’t say anything about it.

This forced the property appraiser in Hillsborough County to try walking a legal tight rope in these cases. It was, admittedly, a bit messy.

And it led to a messy outcome.

Now, the way appellate courts work in Florida is that cases are assigned to a panel of three judges. And these two Tampa cases were each assigned to separate panels.

Those two panels just issued their decisions in July. And they came to completely opposite conclusions.

The three judges who heard the airport case said all the businesses leasing property at the airport should get tax exemptions. Why? Because the Legislature said so.

Sure, the constitution and the Florida Supreme Court might say something else. But the property appraiser wasn’t allowed to make a constitutional argument — so the judges said they weren’t allowed to consider a constitutional argument, either.  

It’s worth noting: This is exactly what the Florida Chamber of Commerce wanted back when it pushed to silence what property appraisers could say in court.

The big businesses that run the Florida Chamber of Commerce pretty much have the Florida Legislature under their thumbs. Of course, they want the Legislature to have the last word on tax breaks.

But the three judges who heard the seaport case all ruled that the shipyard should pay property taxes. Those judges ruled that they couldn’t just ignore the state constitution and all the Supreme Court’s earlier rulings.

Think about what happened here: The very same appellate court, after hearing cases that involve the very same legal issues, issued two opinions, on the very same day, that completely contradict each other.

And all because Florida has made it so damn hard for property appraisers to stand up to the Florida Legislature.

Like I said, it’s a mess. And it’s a mess with consequences, too.

Because here’s what’ll happen next.

First, these cases will probably head to the Supreme Court — a Supreme Court that is now much more conservative, much more friendly to big business, and much more deferential to the Florida Legislature, thanks to a series of appointments made by The Federalist Society through Florida Gov. Ron DeSantis.

But business lobbyists are pushing the Legislature to step in itself even sooner.

A little while back, I obtained emails through a public-records request that showed that a lobbyist representing one of the companies involved in these Tampa lawsuits had written a bill for the Legislature.

The bill was designed to make sure these companies all won their cases.

But that’s not all. The bill written by this lobbyist would also have gone further than ever in stripping property appraisers of the power to fight these kind of cases in court.

Not only would property appraisers be forbidden from making basic constitutional arguments. In some cases, they would be forbidden from making any arguments at all.

The legislation didn’t get very far at the time, partly because everyone decided to see how the appellate court would rule in these Tampa cases first.

But now the court has ruled. And it has done so in the most unhelpful way imaginable: By issuing a pair of decisions that totally conflict with each other.

That is basically an invitation for Tallahassee to get involved.  

And here’s the thing: If the Florida Legislature passes a bill like the one these business lobbyists have written, the impact will reverberate far beyond Tampa.

I’ll give you just one example. It involves Amazon.

A few years ago, Amazon built an air-cargo hub on land it leases at a city-owned airport in Lakeland, about halfway between Orlando and Tampa.

Amazon wasn’t planning to pay property taxes on that site. I know that because I got a copy of their lease and it included a clause about this.

But then something happened that Amazon apparently didn’t expect: The property appraiser in Polk County made it clear that she was unlikely to approve a tax exemption for Amazon, because Amazon — a for-profit retailer that was using the property to sort and ship its own packages — was not performing a public purpose. At least not under the Florida Supreme Court’s definition.

Amazon could have tried forcing the issue in court — where it obviously would have had the upper hand, given the way the state already handcuffs property appraisers. But it’s chosen not to — at least not yet.

So now Amazon is paying more than $1 million a year in property taxes on the site — enough money to hire two dozen teachers.

But that will almost certainly change if the Florida Legislature does what these businesses lobbyists want it to do. It would be a million-dollar gift to Amazon.