Can a Florida county use tourist development tax revenue to fund a transit system operated by a private company?

Plain-English summary

Walton County asked whether it could use tourist development tax (TDT) revenues to fund a transit system that would be operated by a private company. The TDT, authorized by § 125.0104, is a county-level tax on short-term rentals; it has a closed list of permissible uses, all of which relate to drawing tourists.

The county was looking at § 125.0104(5)(a)3, which authorizes spending "[t]o promote and advertise tourism in this state and nationally and internationally" and adds that, "if tax revenues are expended for an activity, service, venue, or event, the activity, service, venue, or event must have as one of its main purposes the attraction of tourists as evidenced by the promotion of the activity, service, venue, or event to tourists." That language does open a door to transportation services, but it's a narrow door.

The AG drew the distinction this way: a general public transit system, even one that tourists also use, doesn't qualify because the "main purpose" requirement isn't met. But a transportation service that's actually targeted to tourists, with routes and schedules built around tourist needs (hotel-to-attraction shuttles being the canonical example), can qualify. The Board has to make a case-by-case factual determination that one of the main purposes of any specific service is to attract tourists, and the service has to be promoted to tourists in a way consistent with that purpose.

The opinion also nodded to Article VII, § 10 of the Florida Constitution, which prohibits counties from lending public funds to private parties. State v. Osceola County, 752 So. 2d 530 (Fla. 1999), held that a project operated by a private entity can still qualify if it serves a "paramount public purpose" with only incidental private benefits. But that's a substantive limit any TDT-funded private-operator transit service has to clear.

Currency note

This opinion was issued in 2017. 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: What is the tourist development tax?
A: It is a county-level local-option tax on short-term rentals (hotels, vacation rentals, etc.), authorized by § 125.0104. The Florida Legislature created it to fund tourism-related projects. Counties that elect to impose the tax can levy it at varying rates depending on local-option provisions.

Q: What were the listed uses of TDT revenues?
A: Section 125.0104(5) lists publicly owned and operated convention centers, sports stadiums, sports arenas, coliseums, auditoriums, golf courses, related tourist facilities, certain public-museum projects, beach park facilities, beach renourishment, and "to promote and advertise tourism" along with "an activity, service, venue, or event" with tourist-attraction as a main purpose.

Q: Could TDT revenues fund a public transit system that tourists use?
A: No, not when the system was a general transit system with incidental tourist use. The "main purpose" requirement filtered out general municipal services that happen to also serve tourists.

Q: What would qualify as a tourist-targeted transportation service?
A: A shuttle system specifically designed to move tourists between hotels, attractions, and other tourist-magnet destinations. The routes, schedules, marketing, and operational design all had to be tourist-focused.

Q: Did private operation matter?
A: It added a layer of analysis. Article VII, § 10 of the Florida Constitution generally forbids counties from aiding private parties. State v. Osceola County (1999) lets a privately operated project survive if its paramount purpose is public and the private benefit is incidental. The Board has to make that finding for any private-operator TDT contract.

Q: Did the AG approve any specific service?
A: No. The AG sketched the legal framework and left the case-by-case factual determinations to the Walton County Board of County Commissioners.

Background and statutory framework

The Local Option Tourist Development Act funds tourism investment through a closed-list spending regime. Each authorized use ties back to attracting tourists or improving tourist-destination facilities. The Florida Supreme Court (Alachua County v. Expedia, 175 So. 3d 730) and the Second DCA (Freni v. Collier County, 588 So. 2d 291) have repeatedly reinforced that TDT spending must directly relate to tourism.

The 2003 amendment that added the "main purposes" language in (5)(a)3 was intended to broaden the spending universe beyond traditional advertising while keeping it tourism-focused. AG opinions since then have policed the line: a private sports stadium can't be funded under (5)(a)1 (which requires public ownership), but a particular tourist-attracting event held there might be fundable under (5)(a)3 (AGO 2000-25). The Brevard Cultural Alliance's day-to-day administration was not fundable under (5)(a)3, but its specific tourist-attracting events were (informal opinion to Hon. Scott Ellis, December 16, 2014).

The 2017 transit opinion fits cleanly in that tradition. It rejects the broad reading (a general public transit system operated by a private company funded by TDT) and offers a narrow path (specific tourist-targeted services with documented tourist-attraction purpose).

Citations and references

Statutes:
- § 125.0104, Fla. Stat. (Local Option Tourist Development Act)
- Art. VII, § 10, Fla. Const. (Pledging credit)

Cases:
- Alachua County v. Expedia, Inc., 175 So. 3d 730 (Fla. 2015)
- Freni v. Collier County, 588 So. 2d 291 (Fla. 2d DCA 1991)
- State v. Osceola County, 752 So. 2d 530 (Fla. 1999)

Prior AG opinions:
- Op. Att'y Gen. Fla. 83-18 (1983)
- Op. Att'y Gen. Fla. 13-29 (2013)
- Op. Att'y Gen. Fla. 14-02 (2014)
- Op. Att'y Gen. Fla. 15-14 (2015)
- Op. Att'y Gen. Fla. 12-38 (2012)
- Op. Att'y Gen. Fla. 10-26 (2010)
- Op. Att'y Gen. Fla. 10-09 (2010)
- Op. Att'y Gen. Fla. 2000-25
- Informal Opinion to Hon. Scott Ellis (December 16, 2014)

Source

• Landing page: https://www.myfloridalegal.com/ag-opinions/funding-transit-system-with-tourist-development-tax
• Original PDF: https://www.myfloridalegal.com/print/pdf/node/1494

Original opinion text

Mr. Tim Norris

Chairman, Walton County Tourist

Development Council

25777 US Highway 331 South

Santa Rosa Beach, Florida 32459

RE: COUNTIES – TOURIST DEVELOPMENT TAX – TRANSIT SYSTEM OPERATED BY A PRIVATE COMPANY – whether the county may use revenues received from the tourist development tax to fund a transit system to be operated by a private company. § 125.0104(5)(a)3., Fla. Stat.

Dear Mr. Norris:

This office has received your inquiry on behalf of the Board of County Commissioners of Walton County, asking the following question:

Whether the county may use proceeds of the tourist development tax under section 125.0104(5)(a)3., Florida Statutes, to fund, in whole or in part, a transit system operated by a private company.

In sum:

Section 125. 0104(5)(a)3., Florida Statutes, which authorizes use of tourist development tax revenues for "an activity, service, venue, or event" when one of its main purposes is to attract tourism, does not encompass funding to operate a transit system in general, but would support funding for specific transportation services that are clearly intended to attract tourism.

The Local Option Tourist Development Act, section 125.0104, Florida Statutes, authorizes counties to impose a tax on short-term rentals of living quarters or accommodations within the county (with certain exceptions not pertinent here). This office has often stated that "the intent and purpose of the act was to provide for the advancement, generation, growth and promotion of tourism, the enhancement of the tourist industry, and the attraction of conventioneers and tourists from within and without the state to a particular area or county of the state."[1]

The projects that can be funded by the tourist development tax are enumerated in subsection (5) of the statute.[2] Each is related to the attraction of tourists to the county.[3] You suggest that section 125.0104(5)(a)3., Florida Statutes, provides the specific authority to fund the operation of a transit system. That provision states:

"(a) All tax revenues received pursuant to this section by a county imposing the tourist development tax shall be used by that county for the following purposes only:

• • *

3. To promote and advertise tourism in this state and nationally and internationally; however, if tax revenues are expended for an activity, service, venue, or event, the activity, service, venue, or event must have as one of its main purposes the attraction of tourists as evidenced by the promotion of the activity, service, venue, or event to tourists[.]" (e.s.)

This provision is specifically tailored to authorize funding for the promotion[4] and advertisement of various attractions within the county to tourists.

"Nothing in section 125.0104(5), Florida Statutes, suggests that the tourist development tax is a broad funding source. Rather, the tax revenues are a targeted funding source to directly and primarily promote tourism."[5] Thus, such revenues cannot be used to fund a public transit system for the citizens of Walton County that would incidentally benefit tourists. Instead, to warrant use of tourist development tax revenues for transportation services under subsection (5)(a)3., there must be a clear and direct relationship between the promotion of tourism and the particular transportation service being offered.[6] Such transportation services should involve routes and schedules addressing the specific needs of tourists, and might include, for example, a shuttle connecting hotels and motels with county tourist attractions.

Although subsection (5)(a)3. does not restrict services eligible for funding to those which are publicly provided,[7] each qualifying service must clearly enhance the County's ability to attract tourists, and each must be promoted to tourists in a manner demonstrating that tourism is one of its central purposes. Therefore, before allocating revenues to any transportation service for which funding is sought, the Walton County Board of County Commissioners must make a case-by-case factual determination, based on a consideration of these factors, regarding whether a main purpose of the service is to attract tourists.

These principles are reflected in prior opinions discussing the use of tourist development funds. In Attorney General Opinion 2000-25, this office was asked about a county's use of tourist development funds (1) to cosponsor with a private corporation a bass fishing tournament at a county facility, and (2) to sponsor a two-day event at a private racetrack. This office concluded that tourist development funds could not be used to operate or promote a private sports facility, because subsection (5)(a)1. requires that sports facilities be publicly owned to receive tourist development tax dollars. Revenues could be used, however, pursuant to what is now subsection (5)(a)3., for the particular attraction or event being held, so long as the governing body made the legislative determination that one of the main purposes of the event was to attract tourists.

In an informal opinion provided to Circuit Court Clerk Scott Ellis of Titusville, this office was asked about using tourist development revenues for the day-to-day operations of a "county contracted arts and culture-focused nonprofit entity," the Brevard Cultural Alliance.[8] Such operations would include salaries of agency personnel, costs of marketing and printing, and insurance and employee benefits. This office concluded that under section 125.0104(5)(a)3., Florida Statutes, tourist development tax revenues could be used for particular events and activities put on by the organization to promote tourism, but not for its daily administrative expenses.

Therefore, it is my opinion that revenues from a tourist development tax may be used for specific tourist-oriented transportation services based upon a showing that one of the main purposes of each individual service provided is to attract tourists to Walton County.

Sincerely,

Pam Bondi

Attorney General

PB/tebg

[1] Op. Att'y Gen. Fla. 83-18 (1983). See also Ops. Att'y Gen. Fla. 14-02 (2014) and 13-29 (2013).

[2] See, e.g., Alachua County v. Expedia, Inc., 175 So. 3d 730, 736 (Fla. 2015); Freni v. Collier County, 588 So. 2d 291, 293 (Fla. 2d DCA 1991).

[3] "Tourist" means "a person who participates in trade or recreation activities outside the county of his or her permanent residence or who rents or leases transient accommodations as described in paragraph (3)(a)." §125.0104(2)(b)2., Fla. Stat.

[4] "Promotion" means "marketing or advertising designed to increase tourist-related business activities." § 125.0104(2)(b)1., Fla. Stat.

[5] Informal Opinion to Hon. Scott Ellis, December 16, 2014.

[6] See Ops. Att'y Gen. Fla. 15-14 (2015), 14-02 (2014), 12-38 (2012), 10-26 (2010), and 10-09 (2010).

[7] You have indicated that the transit system in question will be operated by a private company. Because Art. VII, § 10 of the Fla. Const. prohibits a county from using its taxing power to aid a private entity, even those projects authorized by § 125.0104, Fla. Stat., must be shown to "serve a paramount public purpose," with only "incidental benefits" accruing to a private party, to be eligible for funding. State v. Osceola County, 752 So. 2d 530, 539 (Fla. 1999) (affirming the validation of bonds issued to acquire a convention center from a private entity that would operate the facility, using revenues from a tourist development tax to pay the debt service, finding that "[t]he fact that the proposed project will be operated by a private entity does not negate the public character of the project").

[8] See supra, n.5.