Were monthly and percentage rents paid by a café concessionaire inside a city-owned public library exempt from Florida commercial-rent sales tax?

Plain-English summary

The Florida Department of Revenue ruled that the café operator's monthly and percentage rents to the city were exempt from commercial-rent sales tax. The operator was a food-and-drink concessionaire, and the city-owned main library qualified as a publicly owned recreational facility.

The city granted the operator a three-year agreement to run a café inside its new main library. The concession sold coffee, cold and bottled drinks, baked goods, bulk coffee, smoothies, ice cream, desserts, and similar products to library patrons and visitors.

The operator occupied 2,147 square feet inside the library, including a food-preparation area and café seating, plus a 3,143-square-foot exterior terrace. It paid the city a monthly base amount and an additional percentage of gross revenue above a specified threshold.

The operator was a concessionaire

The statute did not define "concessionaire," so the Department used the ordinary meaning: the holder of a privilege granted by a government or company, including the right to sell food at a facility.

The operator fit that description because the city had granted it the right to provide food and beverage service in the library.

A public library was a recreational facility

Libraries were not listed by name in section 212.031(1)(a)10., but publicly owned recreational facilities were. The Department again used ordinary meaning because the statute did not define "recreational facility."

It described recreation as refreshment, relaxation, hobbies, reading, and similar activities. The main library offered reading and audiovisual materials, seminars, book discussions, story times, author visits, internet training, literacy classes, meetings, and social events. The Department concluded that the publicly owned library was designed to provide recreational and mind-refreshing services.

Because both elements were met, the base rent and gross-revenue percentage paid under the concession agreement were exempt.

What this means for you

Food and beverage concessionaires

The exemption can depend on both your status under the agreement and the character of the public facility. A normal tenant selling food is not automatically a concessionaire.

Cities and public institutions

Document the public ownership, facility functions, city-granted concession rights, permitted products, occupied space, and payment formula.

Libraries and cultural facilities

The ruling interpreted recreation broadly enough to include reading, education, relaxation, and community programming—not only sports or physical activity.

Common questions

Q: Was a library expressly named in the statute?
A: No. The Department concluded that the main library fit the broader term "publicly owned recreational facility."

Q: Why was the café operator a concessionaire?
A: The city granted it the privilege to sell food and beverages inside the facility.

Q: Did the exemption cover only fixed monthly rent?
A: No. It covered both the monthly payment and the additional percentage of gross revenue.

Q: What activities supported the library's recreational status?
A: Reading, audiovisual materials, seminars, book groups, children's programs, author events, internet and literacy classes, meetings, and social events.

Q: Did the ruling decide tax on the café's food sales?
A: No. It addressed the commercial-rent tax on payments from the operator to the city.

Citations and references

• Fla. Stat. § 212.031(1)(a)10. — exemption for property used by a food-and-drink concessionaire within specified public and recreational facilities
• Pederson v. Green, 105 So. 2d 1 (Fla. 1958) — ordinary meaning of statutory words

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 05A-019

Original ruling text

SUMMARY
QUESTION: Is the concession agreement between a Florida city and a concessionaire exempt from Florida sales tax
imposed on the renting of commercial real property wherein the concessionaire is providing food and beverage
services inside a library owned by the Florida city?
ANSWER - Based on Facts Below: Under the facts as presented, the Operator is a concessionaire for purposes of
Section 212.031(1)(a)10., F.S., because it is operating a concession under a grant from the City. Further, the Operator
is providing food and drink concessionaire services within the premises of a publicly owned recreational facility (i.e.,
the City’s Main Library Facility). Therefore, the monthly and percentage rents paid by the Operator to the City are
exempt from Florida sales tax under Section 212.031(1)(a)10., F.S.

April 14, 2005

Re: Technical Assistance Advisement 05A-019
Concessionaire Services at a City Owned Library
Sales and Use Tax
Section 212.031, Florida Statutes "F.S."
Dear:
This response is in reply to your letter dated March 11, 2005, requesting the Department’s issuance of a Technical
Assistance Advisement ("TAA") pursuant to Section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the
Department's position on the issue of the exemption found in Section 212.031(1)(a)10., F.S. An examination of your
letter has established that you have complied with the statutory and regulatory requirements for issuance of a TAA.
Therefore, the Department is hereby granting your request for issuance of a TAA.
Along with your letter, you also provided us with a copy of the "Operator Agreement," which has the following exhibits:
an "Overview" of the café premises that are being leased as part of the Operator Agreement with square footage
specifics and floor plans; a price list of the food and beverages to be sold; and the City's library system's "Code of
Conduct."

ISSUE
Is the concession agreement between a Florida city and a concessionaire exempt from Florida sales tax imposed on
the renting of commercial real property wherein the concessionaire is providing food and beverage services inside a
library owned by the Florida city?

FACTS
Your letter provides, in part:

The City ... executed an Operator Agreement ... dated ... with [Operator], for a period of three (3) years ... The
agreement allows the operator to provide food and beverage services within the new Main Library Facility ... in [City]
(real property owned by the City ...). The Main Library Facility is part of the City's public library system that provides
various services under the following mission:
"To meet the informational, educational, recreational, and cultural reading and viewing needs and expectations of all
citizens and population groups in the community using a wide array of library materials and a trained and dedicated
staff."
The facility provides a variety of mind-refreshing and stimulating quality of life services and activities for adults and
youths, including, but not limited to: renting "checking out" visual and auditory materials (reading books, tapes,
compact discs, etc.); reading and researching books, magazines, newspapers, etc.; contemporary and historic[]
informational and interactive seminars and programs; adult book discussion and review groups; weekly preschooler
and toddler story times and other special events for youths and families; hosting a variety of author and illustrator
visits throughout the year; internet training and literacy classes, etc. Conference and meeting rooms are frequently
rented (free of charge) to non-profit and community social service agencies and organizations to hold business
meetings. A roof-top area is also rented to for and non-profit agencies and organizations for a fee to use for social
events (luncheon and dinner events).
The Operator's responsibilities include: selling food, beverage, and other merchandise within the Main Library Facility,
including: coffee, cold drinks, bottled drinks, baked goods, bulk coffee, smoothies, ice cream, desserts, etc. The
Operator provides the food and beverage services to patrons and visitors in a café.
The Operator pays the City a monthly rental payment ... and an additional, annual ... percent ... of gross revenues
exceeding ....

The Operator Agreement provides that the City will allow the Operator to occupy and operate a food and beverage
concession within and upon the Main Library Facility as follows:
The northwest corner of the first floor of the new Main Library, containing 2,147 square feet of interior floor space,
which includes 432 square feet constituting the food preparation area ("Back of the House") and a 1,715 square foot
café seating area, along with an exterior area containing a 3,143 square foot terrace seating area. ...
According to the Library's website, the Main Library Facility totals 90,000 square feet of space.
REQUESTED ADVISEMENT

Your letter also provides, in part:

The transaction in question surrounds the applicability of the State sales tax to the monthly and annual percentage (in
excess of a revenue amount) payments made by the Operator to the City. The statute states that every person is
exercising a taxable privilege who engages in the business of renting, leasing, letting, or granting a license for the use
of any real property unless such property is leased, subleased, licensed, or rented to a person providing food and
drink concessionaire services within the premises of a convention hall, exhibition hall, auditorium, stadium, theater,
arena, civic center, performing arts center, publicly owned recreational facility, or any business operated under a
permit issued pursuant to chapter 550. Based on the stated statute, the City requests a determination on the following
issue:

1. Is the Operator considered to be providing food and drink concessionaire services, within the premises of a publicly
   owned recreational facility (or civic center or similar type facility), and thus qualify to be exempt from sales tax on the
   monthly (base fee) payment and the annual ... percent ... of gross revenues ... ?

In the City's request for a determination of the tax status, we make no reference direct or indirect as to the applicability
of sales tax. The City is only desirous of complying with any and all State statutes and administrative rulings. We only
seek a ruling that will adequately support the Department of Revenue's position and ensure that both the City and
Operator are in compliance.

APPLICABLE STATUTES AND RULES
Section 212.031, F.S., provides in part:
(1)(a) It is declared to be the legislative intent that every person is exercising a taxable privilege who engages in the
business of renting, leasing, letting, or granting a license for the use of any real property unless such property is:

10. Leased, subleased, licensed, or rented to a person providing food and drink concessionaire services within the
    premises of a convention hall, exhibition hall, auditorium, stadium, theater, arena, civic center, performing arts center,
    publicly owned recreational facility, or any business operated under a permit issued pursuant to chapter 550...

DISCUSSION
The issue presented focuses on the exemption found in Section 212.031(1)(a)10., F.S., and whether it applies to a
city owned library. While "libraries" are not one of the enumerated exempt facilities found within that paragraph,
"publicly owned recreation facilit[ies]" are listed.

No definition of "recreational facility" is provided by statute. Thus, it is necessary to look to principles of statutory
construction. Words of common usage, when used in a statute, should be construed in their plain and ordinary sense.
Pederson v. Green, 105 So.2d 1 (Fla. 1958).
The word "recreation" is defined in Webster's New Twentieth Century Dictionary, Unabridged, Second Edition, 1968,
as follows:

1. refreshment in body or mind, as after work, by some form of play, amusement, or relaxation.
2. any form of play, amusement or relaxation used for this purpose, as games, sports, hobbies, reading, walking, etc.
   The word "facility" is defined in The Random House Dictionary of the English Language, The Unabridged Edition, as
   "something designed, built, installed, etc., to serve a specific function affording a convenience or service...."
   The Main Library Facility is a "recreational facility" under any plain meaning of that phrase. A publicly owned library is
   a place designed for the refreshment of the body or mind, relaxation, hobbies, reading, etc.
   We also note that no definition of the word "concessionaire" is provided by statute. Webster's New Twentieth Century
   Dictionary, Unabridged, Second Edition, 1968 defines the term as:
   [T]he holder of a concession granted by a government, company, etc.
   Webster's New Twentieth Century Dictionary, Unabridged, Second Edition, 1968, defines the word "concession," in
   pertinent part as:
3. a privilege granted by a government, company, etc.; especially ... (b) the right to sell food, check hats and coats,
   etc., as at a park, theater, etc.
   CONCLUSION
   Under the facts as presented, the Operator is a concessionaire for purposes of Section 212.031(1)(a)10., F.S.,
   because it is operating a concession under a grant from the City. Further, the Operator is providing food and drink
   concessionaire services within the premises of a publicly owned recreational facility (i.e., the City’s Main Library
   Facility). Therefore, the monthly and percentage rents paid by the Operator to the City are exempt from Florida sales
   tax under Section 212.031(1)(a)10., F.S.
   This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding on the
   Department only under the facts and circumstances described in the request for this advice as specified in Section
   213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised
   that subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which
   this advice is based, may subject similar future transactions to a different treatment than expressed in this response.
   You are further advised that this response, your request and related backup documents are public records under

Chapter 119, F.S., and are subject to disclosure to the public under the conditions of Section 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this
response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of the date of this letter.
Sincerely,
Eric R. Peate
Senior Attorney
Technical Assistance and Dispute Resolution
(850) 922-4714
Ctrl # 13308