After Florida's Enterprise Zone Program sunset on December 31, 2015, could property still qualify for enterprise-zone ad valorem tax exemptions?

Plain-English summary

The Escambia County Property Appraiser, through attorney Loren E. Levy, asked the Florida Attorney General's office how the December 31, 2015 sunset of the Florida Enterprise Zone Program affected ad valorem tax exemptions tied to that program. The questions were whether improvements in a former enterprise zone could still qualify as a "new business" or "expansion of an existing business" under section 196.012 after the program expired, and what date a property appraiser should use in deciding eligibility under section 196.1995(9)(d).

Senior Assistant Attorney General Gerry Hammond did not give a definitive answer. He explained that the questions touched not only the Property Appraiser's office but also the Escambia County Board of County Commissioners, the City of Pensacola, and the Department of Revenue, and that the tax and development consequences were significant. For those reasons the office recommended that the affected parties seek a binding judicial resolution rather than rely on an advisory opinion.

In setting out the background, the office noted that the Florida Enterprise Zone Act (sections 290.001-290.016) was repealed and sunset on December 31, 2015, with limited extensions preserved for certain businesses that had contracted with the Department of Economic Opportunity between January 1, 2012, and July 1, 2015. It quoted a Department of Revenue Tax Information Publication stating that, even though some incentive statutes would remain on the books, no enterprise zones would exist after the sunset, and no new enterprise-zone property tax exemptions would be approved after December 31, 2015. The office observed that this reasoning appeared to apply equally to other enterprise-zone exemptions, since with the program gone there appeared to be no exemption left to qualify for, but it stopped short of resolving the questions and pointed the parties to the courts.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the Attorney General actually decide whether the exemptions survived the sunset?
A: No. The office expressly declined and recommended a judicial resolution, noting that AG opinions are advisory only and that the issues were better suited to a binding court ruling.

Q: What did the opinion say happened to enterprise-zone exemptions after December 31, 2015?
A: It quoted the Department of Revenue's position that no enterprise zones would exist after the sunset and that no new enterprise-zone property tax exemptions would be approved after that date, even though some incentive statutes would technically remain in the code.

Q: Were any enterprise-zone incentives preserved past the sunset?
A: The bill repealing the act preserved certain incentives, through December 31, 2018, for businesses located in an enterprise zone as of May 1, 2015, that had entered contracts with the Department of Economic Opportunity between January 1, 2012, and July 1, 2015. The Department of Revenue continued to process refund applications for those qualified businesses.

Background and statutory framework

The Florida Enterprise Zone Act, sections 290.001-290.016, Florida Statutes, created geographic zones in which businesses could claim a range of state and local tax incentives, including the economic development ad valorem tax exemption referenced in sections 196.012 and 196.1995. By the terms of section 290.016, the act was repealed and sunset on December 31, 2015. Definitions that depended on the program, including the definition of "enterprise zone" in section 196.012(18), were set to expire on that same date.

The opinion is an informal advisory letter. It leans heavily on a Department of Revenue Tax Information Publication (TIP No. 15ADM-04) that walked through the sunset's effect on specific incentives, such as the section 196.095 exemption for licensed child care facilities and the section 212.08(5) sales tax refund for building materials used to rehabilitate property in a zone. The office's central move was procedural: rather than resolve a momentous tax question by advisory opinion, it invoked the Department of Legal Affairs' stated practice of recommending that particularly difficult questions be submitted to the courts for resolution by declaratory judgment.

Citations and references

Statutes:

• Sections 290.001 - 290.016, Florida Statutes (Florida Enterprise Zone Act)
• Section 290.016, Florida Statutes (sunset of the Enterprise Zone Act)
• Section 196.012, Florida Statutes (definitions, including "enterprise zone")
• Section 196.1995, Florida Statutes (economic development ad valorem tax exemption)
• Section 196.095, Florida Statutes (exemption for licensed child care facilities)
• Section 212.08(5), Florida Statutes (sales tax refund for building materials)
• Section 100.371(5)(a), Florida Statutes (financial impact statement)

Agency guidance referenced:

• Florida Department of Revenue TIP No. 15ADM-04 (issued September 8, 2015)

Prior Attorney General opinion referenced:

• Op. Att'y Gen. Fla. 15-07 (2015) (timing of improvements for the economic development ad valorem tax exemption)

Source

• Landing page: https://www.myfloridalegal.com/ag-opinions/enterprize-zone-program-ad-valorem-tax-exemption
• Original PDF: https://www.myfloridalegal.com/print/pdf/node/8067

Original opinion text

Mr. Loren E. Levy
The Levy Law Firm
1828 Riggins Lane
Tallahassee, Florida 32308

Dear Mr. Levy:

On behalf of the Honorable Chris Jones, Escambia County Property Appraiser, you have asked for my opinion on several questions involving Florida's Enterprise Zone Program and the sunset of that program pursuant to Chapter 2015-221, Laws of Florida.

Specifically, you have asked whether the expiration of the Enterprise Zone Program on December 31, 2015, precludes an economic development exemption for improvements to real property that are located in an enterprise zone from qualifying as a "new business" or the "expansion of an existing business," under section 196.012(14)(b) and (15)(b), Florida Statutes (2015), subsequent to that date. In addition, you question what date the property appraiser must use in making the determination of whether an applicant qualifies under section 196.1995(9)(d), Florida Statutes (2015), which also refers to "new business" or "expansion of an existing business" in an "enterprise zone" as those terms are defined in section 196.012, Florida Statutes.[1]

The Florida Enterprise Zone Act, sections 290.001 - 290.016, Florida Statutes, was repealed by the terms of section 290.016, Florida Statutes (2015), and sunsets on December 31, 2015. The bill repealing the act preserves state incentives for certain businesses with incentive agreements with the state that are currently located within enterprise zones. Included within the bill is a definition of an "eligible business" which is defined to mean a business that entered into a contract with the Department of Economic Opportunity between January 1, 2012, and July 1, 2015, for a project that is located in an enterprise zone.[2] As stated in a recent Florida Department of Revenue Tax Information Publication (TIP):

"Except for certain extensions provided for in Chapter 2015-221, Laws of Florida, the Florida Enterprise Zone Program expires on December 31, 2015. For businesses that do not qualify for the extension program, enterprise zone credits or refunds will be approved after December 31, 2015, only if the business applying for the credit or refund meets the statutory requirements to be eligible for the incentive(s) on or before December 31, 2015."[3]

As the Department commented with regard to a property tax exemption for a licensed child care facility operating in an Enterprise Zone under section 196.095, Florida Statutes[4]:

"Calendar year 2015 (property tax assessment based on value as of January 1, 2015) is the last year that the exemption for licensed child care facilities operating in an enterprise zone is available. Even though the statute will remain in existence after December 31, 2015, no enterprise zones will exist. The application filing deadline for 2015 was March 1, 2015. No new enterprise zone property tax exemptions will be approved after December 31, 2015."

This reasoning would appear to apply equally to tax exemptions for other types of uses involving the Florida Enterprise Zone Act, sections 290.001 - 290.016, Florida Statutes.[5] I note that not only have the provisions of the Florida Enterprise Zone Act been repealed, but references to "enterprise zone[s]" contained elsewhere in the statutes will expire "on the date specified in s. 290.016 for the expiration of the Florida Enterprise Zone Act."[6] Thus, as stated in the Department of Revenue TIP cited above "[e]ven though the statute will remain in existence after December 31, 2015, no enterprise zones will exist."

The Department of Revenue publication reviews the sales tax incentive for building materials used in the rehabilitation of real property located in an Enterprise Zone, under section 212.08(5), Florida Statutes. If a business is eligible for the incentive on or before December 31, 2015, the publication states:

"Section 212.08(5)(g), F.S., provides a refund of tax paid on building materials used to rehabilitate property located in an enterprise zone. To be entitled to this refund after December 31, 2015, the materials must have been purchased and used in the rehabilitation and the rehabilitation must have been deemed to be substantially complete no later than December 31, 2015. Applications for refund must be submitted to the Department within 6 months after the rehabilitation has been deemed to be substantially complete by the local building code inspector."[7]

With regard to programs extended under the act, that is, those businesses applying for the credit or refund and meeting the statutory requirements to be eligible for the incentive on or before December 31, 2015, the Department of Revenue states:

"The extensions approved through December 31, 2018, are for the businesses located in an enterprise zone as of May 1, 2015, and that entered into contracts between January 1, 2012 and July 1, 2015, with the Florida Department of Economic Opportunity (DEO) for [certain enumerated programs]. . .

• • *

These qualified businesses will be eligible for the exemptions and credits noted above through December 31, 2018. Effective January 1, 2016, DEO will process and certify Florida enterprise zone tax incentive applications in place of local enterprise zone coordinators. The Department of Revenue will continue to receive and process refund applications for these qualified businesses."[8]

Comment on the questions you have posed and the facts involved in this matter directly affects not only the Escambia County Property Appraiser's Office, but the Escambia County Board of County Commissioners and the City of Pensacola. Further, duties and responsibilities of the Florida Department of Revenue appear to be implicated. Under these circumstances, this office recommends that the property appraiser and affected local governmental entities seek a definitive judicial resolution in this matter. In light of the significant tax implications and real property and development consequences related to resolution of this matter, the Florida Attorney General's Office recommends the courts be consulted.[9]

I regret that this office could not be of more substantive assistance to you in this matter, but trust that you will understand that Attorney General Opinions are advisory only and the momentous nature of these issues and their tax implications would be better served by a binding judicial resolution.

Sincerely,

Gerry Hammond
Senior Assistant Attorney General

GH/tsh

[1] Section 196.012, Fla. Stat., is a definitional section and subsection (18) defining "[e]nterprise zone" expires "on the date specified in s. 290.016 for the expiration of the Florida Enterprise Zone Act."

[2] An enterprise zone as designated (defined) pursuant to s. 290.0065, Fla. Stat. (2014), on Dec. 31, 2015.

[3] Florida Department of Revenue TIP No. 15ADM-04, issued Sept. 8, 2015.

[4] Section 196.095, Fla. Stat., provides a specific exemption for licensed child care facilities operating in an enterprise zone. The child care facilities covered by the exemption are those operating in an enterprise zone pursuant to Ch. 290, Fla. Stat.

[5] Cf. Op. Att'y Gen. Fla. 15-07 (2015), concluding that "[t]o qualify for the economic development ad valorem tax exemption in section 196.1995(5), Florida Statutes, improvements to real property must be [made] after the date the ordinance authorizing the exemption is adopted." However, in the absence of an enterprise zone program and the expiration of the term "enterprise zone" from s. 196.012, Fla. Stat., there appears to be no exemption for which to qualify.

[6] See s. 196.012(18), Fla. Stat., and see also s. 196.012(14)(b) and (15)(b), Fla. Stat., which refer to "enterprise zone" and s. 196.1995, Fla. Stat., which provides the economic development ad valorem tax exemption for businesses located in an "enterprise zone."

[7] Florida Department of Revenue TIP No. 15ADM-04, issued Sept. 8, 2015; see also the discussion of other incentives relating to Florida's Enterprise Zone Program for, among others, sales taxes and corporate income taxes.

[8] Ibid.

[9] See Department of Legal Affairs Statement Concerning Attorney General Opinions stating that "[p]articularly difficult or momentous questions of law should be submitted to the courts for resolution by declaratory judgment. When deemed appropriate, this office will recommend this course of action."