CANAVERAL PORT AUTHORITY, Petitioner, v. DEPARTMENT OF REVENUE, et al., Respondents, 690 So. 2d 1226

REVISED OPINION WELLS, Justice. We have for review Florida Department of Revenue v. Canaveral Port Authority, 642 So.2d 1097 (Fla. 5th DCA 1994), which expressly and directly conflicts with the opinion in Sarasota-Manatee Airport Authority v. Mikos, 605 So.2d 132 (Fla. 2d DCA 1992), review denied, 617 So.2d 320 (Fla.1993). We have jurisdiction. Art. V, § 3(b)(3), Fla. Const. Canaveral Port Authority (CPA) filed suit challenging Brevard County’s authority to assess ad valorem taxes pursuant to

section 196.199(4), Florida Statutes (1991), on the fee interest of real property owned by CPA and leased to private entities engaged in nongovernmental activities. Specifically, the leased properties were being used as warehouses, gas stations, deli restaurants, fish markets, charter boat sites, and docks. CPA alleged that it was immune from taxation because it was a political subdivision, or in the alternative, it was exempt from taxation pursuant to

section 315.11, Florida Statutes (1991). After a nonjury trial, the trial court found in accord with Sarasota-Manatee that CPA was a political subdivision of the state and thus was immune from ad valorem taxation. The Fifth District reversed. The court declined to address whether the legislature can create political subdivisions because, unlike the port authority at issue in Sarasota-Manatee, the legislature had not designated CPA a political subdivision. Canaveral, 642 So.2d at 1100.

Instead, the court looked to case law and found that CPA was not a political subdivision because it did not act as a branch of general administration of the policy of the state. Id. at 1100-01. The district court further held that the CPA property at issue was not exempt from taxation because it was not used in direct connection with port business. Id. at 1102. We approve the Fifth District’s decision holding that CPA’s fee-simple interest in property is not immune from ad valorem taxation.

We do so based upon our conclusion that immunity from ad valorem taxation, which this Court has recognized as necessary to the proper functioning of state government, must be kept within narrow bounds. In Dickinson v. City of Tallahassee, 325 So.2d 1 (Fla.1975), this Court acknowledged that the State’s immunity was necessitated by the compelling policy reasons of fiscal management and constitutional homogenization. Id. at 4.

We further stated: [I]t is inconsistent with sound governmental principles to suggest that a State which cannot finance itself on a deficit basis would indirectly authorize an indeterminate amount of revenue to be taken from all its citizens for the benefit of some of its municipal governments. Id. (footnote omitted). The compelling policy reasons specified in Dickinson continue to exist with regard to the State. However, the reasons become less than compelling when what comprises “the state” is expanded beyond the entities collectively referred to as “the State” in Dickinson.

Accordingly, we find that only the State and those entities which are expressly recognized in the Florida Constitution as performing a function of the state comprise “the state” for purposes of immunity from ad valorem taxation. What comprises “the state” is thus limited to counties, entities providing the public system of education, and agencies, departments, or branches of state government that perform the administration of the state government. CPA is not such an entity and therefore is not immune from ad valorem taxation. See Hillsborough County Aviation Authority v. Walden, 210 So.2d 193, 194-95 (Fla.1968).

We reject the Second District’s holding in Sarasota-Manatee that classification as a political subdivision and, consequently, immunity from ad valorem taxation is dependent upon whether an entity is more like a county than a municipality. We recognize the confusion on this issue may have arisen because of cases that have stated that “[t]he state and its political subdivisions, like a county, are immune from taxation since there is no power to tax them.” Dickinson, 325 So.2d at 3 (emphasis added) (quoting Orlando Utilities Comm’n v.

Milligan, 229 So.2d 262, 264 (Fla. 4th DCA 1969), cert. denied, 237 So.2d 539 (Fla.1970)); see also Hillsborough County, 210 So.2d at 194-95; Orange County Fla. v. Florida Dep’t of Revenue, 605 So.2d 1333, 1334 (Fla. 5th DCA 1992), approved, 620 So.2d 991 (Fla.1993). We herein clarify that immunity does not flow from a judicial determination that an entity is “like a county.” We also reject the Second District’s analysis in Sarasota-Manatee recognizing the Sarasota-Manatee Airport Authority as a “political subdivision” in part because the legislature designated it as such. 605 So.2d at 133.

The Florida Constitution does not empower the legislature to designate what entities are immune from ad valorem taxation. See Orange County, 605 So.2d at 1334. Because CPA is not immune from ad valorem taxation, we address CPA’s alternative argument that it is exempt from ad valorem taxation pursuant to

section 315.11, Florida Statutes (1991).

Section 315.11, which was passed in 1959, provides a statutory exemption from various state and local taxes for port authorities including port authority property. This

section has never made the exemption it provides dependent on the use of port authority property. Respondent contends that sections 196.001 and 196.199, Florida Statutes (1991), supersede

section 315.11 and make CPA’s leased property taxable to the extent the property is leased to nongovernmental entities for nongovernmental uses.

Section 196.001 provides that all property is subject to taxation unless expressly exempted.

Section 196.199 establishes the exemptions that apply to property owned by CPA and leased to nongovernmental entities. These statutes were adopted by the legislature in 1971. Ch. 71-133, Laws of Fla. In the same act, the legislature repealed an exemption in CPA’s enabling legislation which was similar to the exemption provided by

section 315.11. M-though the legislature did not expressly repeal the exemption provided by

section 315.11, we find that by passing

chapter 71-133, it imposed a limitation on that exemption. In view of the express language used in sections 196.001, 196.199(2), and 196.199(4), particularly the term “authorities,” we conclude that the legislature intended to provide only a limited exemption for fee interests in port authority property. Together, sections 196.001, 196.199(2), and 196.199(4) require ad valorem taxation of fee interests in property owned by an authority and subject to a lease by a nongovernmental lessee unless the lessee is serving a governmental, municipal, or public purpose or function as defined in

section 196.012(6) or uses the property exclusively for a literary, scientific, religious, or charitable purpose. We therefore construe

section 315.11 in conjunction with sections 196.001, 196.199(2), and 196.199(4), and hold that

section 315.11 provides an exemption only when port authority property is being used for a purpose which is specifically set forth in

section 196.199(2) and (4). If the property is being used for some purpose other than that provided for in

section 196.199(2) and (4), then the fee interest will be subject to taxation. Our construction of these statutes is consistent with this Court’s earlier analysis of sections 196.001(2) and 196.199, Florida Statutes, in Williams v. Jones, 326 So.2d 425 (Fla.1975). There we stated: The practical effect of Sections 196.001(2) and 196.199, Florida Statutes, is to withdraw exemption from certain users of property and to impose an ad valorem real property tax upon them consistent with the tax imposed upon persons who make similar uses of property. Id. at 432.

Furthermore, this construction gives effect to the policy consideration enunciated in Williams: The operation of the commercial establishments represented by appellants’ cases is purely proprietary and for profit. They are not governmental functions. If such a commercial establishment operated for profit in Panama City Beach, Miami Beach, Daytona Beach, or St. Petersburg Beach is not exempt from tax, then why should such an establishment operated for profit on Santa Rosa Island Beach be exempt? No rational basis exists for such a distinction. Id. at 433.

Similarly, no rational basis exists for exempting from ad valorem taxation a commercial establishment operated for profit on CPA property while a similar establishment located near, but not on, CPA property is not exempt. Accordingly, we conclude that the fee interest in the property at issue is not exempt from ad valorem taxation because the property is leased to a nongovernmental entity for a nongovernmental use. We approve the Fifth District’s decision on both the immunity and exemption issues to the extent they are consistent with our opinion.

We disapprove the Second District’s decision in Sarasotar-Manatee finding immune from ad valorem taxation the authority at issue in that case. We do specifically and' expressly point out that irrespective of the leases, the County cannot tax the property in excess of its total appraised value. It is so ordered. KOGAN, C.J., and GRIMES and HARDING, JJ., concur. OVERTON, J., dissents with an opinion, in which SHAW and ANSTEAD, JJ., concur. .

As the district court noted, the lessees had been required to pay ad valorem taxes on buildings and improvements they had constructed on the property leased from CPA, but CPA had not been assessed ad valorem taxes on the land. . See Dickinson v. City of Tallahassee, 325 So.2d 1 (Fla.1975); State ex rel. Charlotte County v. Alford, 107 So.2d 27 (Fla.1958); Park-N-Shop, Inc. v. Sparkman, 99 So.2d 571 (Fla.1957). . In Dickinson, the Court referred collectively to the State of Florida, its agencies and departments, Leon County, and the Leon County School Board as the state. 325 So.2d at 2. . See Art. VIII, § 1, Fla.

Const. . See Art. IX, § 4, Fla. Const. . We note that our holding differs from that of the Fifth District in that we find that what comprises the state for purposes of ad valorem tax immunity must have a basis in the Florida Constitution. The Fifth District's opinion holds only that what makes an entity a political subdivision entitled to immunity from taxation is its role as a branch of the general administration of the policy of the state. Canaveral, 642 So.2d at 1100-01. We quash the Fifth District’s decision to the extent that it finds an entity may be a part of the state without any constitutional basis. .

Immunity and exemption differ in that immunity connotes an absence of the power to tax while exemption presupposes the existence of that power.

Dickinson, 325 So.2d at 3; Orlando Utilities, 229 So.2d at 264. .Section 315.11, Florida Statutes (1991), specifically provides: As adequate port facilities are essential to the welfare of the inhabitants and the industrial and commercial development of the area within or served by the unit, and as the exercise of the powers conferred by this law to effect such purposes constitutes the performance of proper public and governmental functions, and as such port facilities constitute public property and are used for public purposes, the unit shall not be required to pay any state, county, municipal or other taxes or assessments thereon, whether located within or without the territorial boundaries of the unit, or upon the income therefrom, and any bonds issued under the provisions of this law, their transfer and the income therefrom (including any profit made on the sale thereof) shall at all times be free from taxation within the state.

The exemption granted by this

section shall not be applicable to any tax imposed by

chapter 220 on interest, income, or profits on debt obligations owned by corporations. . Subdivision (1) provides for the taxation of all real and personal property. § -196.001, Fla.Stat. (1991). Subdivision (2) provides for the taxation of all leasehold interests in property owned by the United States, the state, or any political subdivision, municipality, agency, authority, or other public body corporate of the state. § 196.001 Fla.Stat. (1991). .

Chapter 28922,

article XII,

section 1, Laws of Florida (1953), the special act creating CPA, provides: All property, real and personal, tangible and intangible, now owned or hereafter acquired and held by the Canaveral Port Authority, the governing authority of the Canaveral Port District, shall be exempt from all taxation levied and assessed pursuant to the Constitution and Laws of the State of Florida by any taxing unit. In

chapter 71-133,

section 14, Laws of Florida, the legislature provided in part: All special and local acts or general acts of local application granting specific exemption from property taxation are hereby repealed to the extent that such exemption is granted.... Consequently, the exemption granted CPA in its enabling legislation was repealed. See Straughn v. Camp, 293 So.2d 689 (Fla.1974). . The parties agree that the uses of the property in this case were nongovernmental. If a dispute had arisen on this issue, the trial court would be required to resolve it as held by State Department of Revenue v.

Port of Palm Beach District, 650 So.2d 700 (Fla. 4th DCA 1995), review granted, 659 So.2d 1088 (Fla.1995). The determination should be made in accord with our decision in Sebring Airport Authority v. McIntyre, 642 So.2d 1072 (Fla.1994); see also Williams, 326 So.2d at 432-33.