State: Stadiums not exempt from taxes

Stadiums, arenas and racetracks owned by governments but leased to sports teams and other businesses are not exempt from property taxes, the Florida Supreme Court unanimously ruled Thursday.

The ruling, two years in the making, will have repercussions around the state for governments, and ultimately taxpayers, who stand to pay millions of dollars a year.

The case focused on whether Sebring International Raceway, which leases its land from a public airport, is subject to property tax. The court struck down as unconstitutional a 1994 state law that gave tax-exempt status to facilities owned by cities and government agencies but leased out to others.

Among those affected:

St. Petersburg taxpayers will have to pay an estimated $1.45-million in annual property taxes on Tropicana Field, which is appraised at $126-million. Anticipating the decision, the city has set aside $3.4-million.
Hillsborough County could face a $1.9-million tax liability for Raymond James Stadium, home to the Tampa Bay Buccaneers and owned by the Tampa Sports Authority, for the 2001 fiscal year. The city of Tampa may be liable for an additional, undetermined amount. In the case of the Ice Palace, a lease makes the Tampa Bay Lightning, not the government, liable for the estimated $3.2-million tax bill.
Clearwater is analyzing how liability for property taxes might affect its plan to build a new spring training home for the Philadelphia Phillies baseball team, while Dunedin must negotiate whether it or the Toronto Blue Jays will pay the taxes on Grant Field, that team's spring training home.

The court made a legal distinction between whether stadiums serve a "public purpose" or a governmental function.

A public purpose, such as entertainment and economic development, lets the arenas be financed with public bonds. But a governmental function "which could properly be performed or served by an appropriate governmental unit," is the standard that would exempt them from property taxes. A library or a college might qualify, but for-profit pro sports do not.

The uses of Sebring International Raceway "include the operation of a racetrack by the lessee for profit and attendant functions, such as food stands, drink stands, souvenirs, all of which are per se, proprietary (private) activities," the court ruled.

"As long as the people of Florida maintain the Constitution in the form we are required to apply today, neither we nor the Legislature may expand the permissible exemptions based on this type of argument," Justice R. Fred Lewis wrote for the court.

Chief Justice Charles T. Wells and justices Leander Shaw, Major B. Harding and Harry Lee Anstead concurred with the opinion, and Justice Barbara J. Pariente concurred "in result only." Justice Peggy A. Quince recused herself.

The ruling is bad news for governmental bodies that own stadiums but good news for other public bodies with a slot on the tax bill, such as school districts, transit authorities and the like.

In the case of Tropicana Field, for instance, Pinellas County schools stand to receive some $1.05-million per year in new tax revenue as their share of the tax on the stadium. The Pinellas Suncoast Transit Authority will get about $81,000. The city obviously gets back the city tax, so that share is not included in the $1.45-million estimate.

St. Petersburg's government must either cut spending by $1.45-million per year in the long run or raise property taxes or fees for other owners to cover the bill. To cover her share, the owner of a $125,000 house with a homestead exemption would pay about $20 more per year.

Hillsborough County's estimated $1.9-million Raymond James liability also does not include the county tax it would pay to it Hillsborough County Property Appraiser Rob Turner applauded the court's decision Thursday as a victory for the average taxpayer.

"I think it's a fair ruling that the stadium and other arenas should pay their fair share of taxes just as the average homeowner and business owner," he said.

But whether he is right depends on how governments negotiated their leases with sports organizations. St. Petersburg agreed in its Tropicana Field lease with the Tampa Bay Devil Rays to pay any future tax, City Attorney John Wolfe said.

"They refused to pay them," he said of the Devil Rays. "It was explained in detail to the City Council (in 1995) that there was some doubt about the constitutionality of the statute and that in the event taxes were levied, the city would have to pay them."

The Devil Rays do have to pay taxes on "ancillary" facilities at Tropicana Field, such as restaurants, but that annual bill should be tiny by comparison, $30,000 to $40,000 per year.

Devil Rays general counsel John Higgins said that he had not read the Sebring decision Thursday but that the baseball team still has other ways to argue against paying those taxes.

The Devil Rays must pay all the property taxes on the Rays' spring training stadium, Florida Power Park, under that lease with the city, Wolfe said.

In Dunedin, officials said they do not know how high the tax bill would be for Grant Field.

Clearwater estimates the total annual tax bill for Phillies facilities at $184,000 once a new $22.7-million spring training stadium is built over the next three years.

Wolfe said it is unclear to him when the tax clock starts. He said city officials will call Pinellas County Property Appraiser Jim Smith to find out, but, "We would hope that it would only apply prospectively, meaning next year."

State voters could amend the Constitution to let the Legislature grant legal tax exemptions for stadiums, but they rejected the idea in 1998, when 52 percent voted against it.

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Lucy Morgan

From the Times state desk