Case Name: DADE COUNTY, a political subdivision of the State of Florida, et al., Appellants, v. PAN AMERICAN WORLD AIRWAYS, INC., a New York corporation, Appellee
Court: Florida Supreme Court
Jurisdiction: Florida
Decision Date: 1973-02-07
Citations: 275 So. 2d 505
Docket Number: No. 41536
Parties: DADE COUNTY, a political subdivision of the State of Florida, et al., Appellants, v. PAN AMERICAN WORLD AIRWAYS, INC., a New York corporation, Appellee.
Judges: CARLTON, C. J., and ROBERTS, ADKINS and McCAIN, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 275
Pages: 505–518

Head Matter:
DADE COUNTY, a political subdivision of the State of Florida, et al., Appellants, v. PAN AMERICAN WORLD AIRWAYS, INC., a New York corporation, Appellee.
No. 41536.
Supreme Court of Florida.
Feb. 7, 1973.
Rehearing Denied April 5, 1973.
Stuart Simon, Dade County Atty., and Murray A. Greenberg, Asst. County Atty., for appellants.
Richard H. Hunt, Jr., Steven A. Schultz, and Smathers & Thompson, Miami, for ap-pellee.
William G. Bell, Jr., Bradford, Williams, McKay, Kimbrell, Hamann & Jennings, Miami, and Gambrell, Russell, Killorin, Wade & Forbes, Atlanta, Ga., for Eastern Air Lines, Inc. and Delta Air Lines, Inc., amici curiae.
Woodrow M. Melvin, Jr., Karl B. Block, Jr., and Mershon, Sawyer, Johnston, Dun- wody & Cole, Miami, for Marine Exhibition Corporation, amicus curiae.
Darrey A. Davis of McCarthy, Steel, Hector & Davis, Miami, for National Airlines, Inc., amicus curiae.

Opinion:
DEKLE, Justice.
This cause is before us on direct appeal from the Circuit Court, Dade County. The decision sought to be reviewed expressly construes several provisions of the Florida Constitution, thereby vesting jurisdiction of the appeal in this Court under Fla. Const, art. V, § 3(b)(1), F.S.A.
The facts, as stipulated by the parties, are that plaintiff-appellee, a commercial airline, brought suit against defendants-appellants, Dade County and the Board of County Commissioners acting as the Dade County Port Authority, challenging the legality of the 1970 ad valorem tax assessment of its leasehold interests at Miami International Airport. The trial court granted plaintiff's motion for summary judgment, declared the 1970 ad valorem tax assessment against plaintiff's leasehold interests invalid, and enjoined defendants from collecting 1970 ad valorem taxes. We affirm these conclusions.
Appeal was originally filed in the District Court of Appeal and then transferred to this Court since construction of the constitution was involved below. The case is one of first impression.
The Port Authority (County) controls, maintains and operates the Miami International Airport; all of the real property, both improved and unimproved, located within and upon the airport is owned by Dade County. The airline leases from the county certain of the airport property and maintains on the leased premises an operations and aircraft overhaul base, an airline terminal facility, executive reservations and accounting offices and a flight simulator building and warehouses. All of the airline's leasehold interests in the real property involved were placed on the Dade County real property assessment roll and assessed for taxation by the county for the first time in 1970 in the aggregate amount of $14,866,490.00, indicating a tax liability of $299,336.78.
The construction of some, but not all, buildings leased by the airline, and the improvements or additions to certain other leased buildings, were financed through the issuance and sale of revenue bonds. Revenue bond financing of buildings leased by the plaintiff, Pan American World Airways, totalled $7,032,863.71. These "bond revenue properties" (though some had only additions which were bond financed) were assessed at $7,780,537.00 of the above aggregate amount of $14,866,490.00 of both the revenue bond properties and the non-revenue bond properties. As of the relevant taxing date, January 1, 1970, the principal amount of the revenue bonds had been reduced from said $7,032,863.71 to a total balance of $6,485,000.00 by virtue of lease rental payments made by the airline, which payments were directly applied to retire the bonded indebtedness.
The airline's leasehold interests in the revenue bond properties were created by leases (leases # 4 and # 5), containing the following provision:
"No rentals, fees, licenses, excise or operating taxes, tolls or other charges except those expressly provided in this Supplemental Agreement, and charges for utilities mentioned in the Lease Agreement, shall be charges by the Authority against or collected from, directly or indirectly, Pan American for any of the facilities, rights, licenses and privileges granted by this Supplemental Agreement. It is expressly understood and agreed that the Authority shall, if not prohibited by law, assume and pay any and all taxes or improvement charges of any nature whatsoever which may be levied or assessed against the New Facilities, or the leasehold interest of Pan American therein." (emphasis ours)
Leases on the other properties contain the following provision:
"The Authority agrees that no rents, fees, charges or tolls, other than those expressly provided in this Lease, shall be charged or collected by it from Lessee or from Lessee's employees, suppliers of materials or furnishers of service for the use of any of the premises, facilities, licenses and privileges expressed in or reasonably inferred from these presents or for any of the services required to be performed hereunder by the Authority, the rents, fees, and charges expressly provided herein being full and complete consideration and compensation to Lessor for the use of said' premises, facilities, licenses and privileges and the performance of said services." (emphasis ours)
The airline contends that by virtue of the foregoing provisions in its various leases, the leasehold interests owned by it may not be taxed, either by the County or by any State agencies such as the Board of Public Instruction, Central and Southern Flood Control District, or by the Florida Inland Navigation District. Alternatively, the airline contends that if any ad valorem taxes are assessed against its leasehold interests, the county has agreed to pay, and is liable for, all such taxes.
In one sense, the leases in question are really ones in which the county obligated itself in effect to a "net rental" contract which apparently took into consideration the non-payment of taxes. In this manner if viewed in a posture of the leaseholds "having" to be taxed (under appellant's contention), any "tax" is in effect included in the net rental payments.
The county argues that all of the leasehold interests in question are subject to ad valorem taxation for the 1970 tax year by virtue of Article VII, § 10(c), of the Florida Constitution, which became effective January 7, 1969. Article VII, § 10, provides in pertinent part as follows :
"Neither the state nor any county, school district, municipality, special district, or agency of any of them, shall become a joint owner with, or stockholder of, or give, lend or use its taxing power or credit to aid any corporation, association, partnership or person; but this shall not prohibit laws authorizing:
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"(c) the issuance and sale by any county, municipality, special district or other local governmental body of (1) revenue bonds to finance or refinance the cost of capital projects for airports or port facilities, or (2) revenue bonds to finance or refinance the cost of capital projects for industrial or manufacturing plants to the extent that the interest thereon is exempt from income taxes under the then existing laws of the United States, when, in either case, the revenue bonds are payable solely from revenue derived from the sale, operation or leasing of the projects. If any project so financed, or any part thereof, is occupied or operated by any private corporation, association, partnership or person pursuant to contract or lease with the issuing body, the property interest created by such contract or lease shall be subject to taxation to the same extent as other privately owned property." (emphasis ours)
The airline contends, and the trial court held, that the foregoing provision of the constitution requires implementation by the Legislature before it can become effective. It well may so require, and there may, as the county contends, already exist appropriate implementing statutes to fulfill such requirement. In either instance, however, art. VII, § 10(c), does not apply here. The leases here involving revenue bond properties were created prior to the effective date of this constitutional provi sion, and in this respect we affirm the able trial judge's conclusion that the leaseholds are not taxable under Article VII, § 10(c), because it is patently prospective in its application; and this prospective application only is spelled out in the schedule following this constitutional provision in Article XII, § 7(a) and (b), which states:
"(a) All actions, rights of action, claims, contracts and obligations of . , corporations and public bodies existing on the date this revision becomes effective shall continue to be valid as if this revision had not been adopted. .
"(b) This revision shall not be retroactive so as to create any right or liability which did not exist under the Constitution of 1885, as amended, based upon matters occurring prior to the adoption of this revision."
In this connection we recognize that Lease No. 2 pertaining to non-revenue bond properties is dated subsequent to the effective date of Article VII, § 10(c). Nevertheless, this new constitutional provision applies to properties financed by revenue bonds only and accordingly Article VII, § 10(c) does not affect Lease No. 2.
At this point we turn to the remaining questions of whether the leasehold interests are taxable without regard to Article VII, § 10(c). Leasehold interests in private property with certain exceptions are not subject to ad valorem taxation under Florida law. However, the Legislature in 1961 decided to impose ad valorem taxes upon public property which was exempt or immune from taxation but being vised by private interests in connection with a profitmaking venture. The leaseholds here in question were generally made in 1962 and subsequent years; thus they were subject to such law and its exemptions. The 1961 statute (§ 192.62) was not expressly directed toward leaseholds by name but imposed a tax "whether such use . . . is by lease, loan, contract of sale . . . ." The statute then set forth certain exemptions and in § 192.62(2) (c) provided that when the property is owned (which is the case here) by the state, county or municipality and leased or otherwise made available to private interests by such public body "for a consideration in the performance by the public body of a public function or public purpose authorized by law . . . ." it is exempt. The phrase which followed this quote attempted to apply the statute to leases whose effective dates were prior to the Act. This was held unconstitutional in Hillsborough County Aviation Authority v. Walden, 210 So.2d 193, 197 (Fla.1968) (Ervin, J.). Walden held Bartkes' Restaurant at the old Tampa Airport to be exempt under the statute on the basis that it was leased and to be used for a "predominantly" public purpose and only incidentally for a "private" purpose, holding that if the opposite were true then such properties would not be exempt, which was the holding as to the motel there involved.
We have also held that incidental benefit to private interests does not invalidate bonds and certificates issued for a predominantly public purpose. The construction, operation and maintenance of airports has been recognized as a valid public purpose justifying the issuance of bonds.
In our judgment the airline provides a recognized public purpose which justifies leases such as those in the instant case between the county and the airline and the use of public financing for the facilities used by airlines. The scholarly opinion by Chief Judge Pearson in City of Opa-Locka v. Metro Dade County, 247 So.2d 755 (Fla.App.3d 1971), cert. den. 252 So.2d 802 (Fla.1971), supports our position in saying: (pp. 758-759)
"The operation of airports by counties is clearly for a public purpose, as is the operation of airport facilities and projects. Chapter 22963, Laws of Florida, 1945, as amended, granting the Boards of County Commissioners of certain counties (including Dade County) additional powers to acquire and operate airports and airport facilities, states, in pertinent part, in Section 8:
" 'All powers, acts and deeds hereby conferred or authorized are hereby found to be and made a county purpose.'
"Chapter 22846, Laws of Florida, 1945, Chapter 332, Fla.Stat., authorizing counties and municipalities to acquire, operate, maintain and lease airports and airport facilities, also provides, in relevant part, in Section 3:
" 'The acquisition of any lands for the purpose of establishing airports or other air navigation facilities, the acquisition, establishment, construction, enlargement, improvement, maintenance, equipment, and operation of airports and other air navigation facilities, and the exercise of any other powers herein granted to municipalities [defined in the Act to include counties], are hereby declared to be public, government and municipal functions, exercised for a public purpose. '
"It is thus clear that the Legislature has declared the operation of airports and airport facilities to be municipal functions for a public purpose."
(Brackets by the 3d DCA.)
The present airport began as "Pan American Airport" or "36th Street Airport". It was when the federal government conveyed to Dade County two additional contiguous airports that the facilities were consolidated in 1946. To make this airport the great facility which it was to become, the Dade County Port Authority found it necessary to issue $3 million in revenue certificates to finance the additional facility and to meet federal requirements.
The present petitioner at that time came before this Court in Seaboard Air Line R. Co. v. Peters, 43 So.2d 448 (Fla.1949), seeking our sanction of those revenue certificates without a vote of the freeholders of Dade County for such financing, urging that "Miami International Airport" was of extreme importance and referred to Pan American Airways as "one of the largest if not the largest airline in the world [which] maintains on said airport its overhaul base in which all of the airplane motors and other equipment of every airplane used in its worldwide system is overhauled; Eastern Airlines, which is one of the largest of the airlines in America, maintains its system overhaul base on said airport; in addition to these, many other airlines overhaul their motors and airplanes at said base . . . . " (p. 452)
The assertions in that cause referred to the millions of dollars involved and the millions of passengers passing through this important international air facility and left no doubt whatever of its important public purpose and cited Ch. 22963, Acts of 1945, Laws of Florida, authorizing Florida counties in the category of Dade County to operate such airports and other facilities as "county purposes". State v. Brevard County, 99 Fla. 226, 126 So. 353 (1930), confirmed the Legislature's power to declare county purposes with which the courts would not interfere.
In our language in that case we said inter alia:
"Our modern airports render a public service similar to other governmental functions which promote the health, comfort and safety of the people and the general welfare of our State and Nation." (emphasis added)
Justice Terrell's, as always elucidating, language in this holding stated that we approved petitioner's request "solely on the ground that the development and acquisition of Miami International Airport under successive acts of the Legislature, including Ch. 25166, Acts of 1949, have made it an essential function of local government and being so the duty of Dade County under the law to support and maintain it is as pressing as it is to maintain any other governmental function or necessity" (Fla.Stat. § 135.01 and § 135.02, F.S.A.). (emphasis added)
We cannot recede from this clear governmental purpose which was determined in 1946 and has continued in the same manner and at the same location by the same governmental entity for over a quarter of a century. It cannot be a "public purpose" in order to provide the initial financing and then, having become affluent, reject its basic public purpose in order to create an additional basis for taxation.
Therefore, the property at the Miami International Airport leased to the airline is clearly leased and used for the public purpose of providing indispensable air transportation and an air terminal to that great metropolitan area as an essential public service, certainly as clearly a public purpose as the operation of a restaurant at the Tampa Airport in Walden. Accordingly, the airline, under the test established in Walden, meets the requirement of a public purpose in order to come within the statutory exemption of § 196.25 (1969) (formerly § 192.62), under which all leasehold interests in this proceeding are exempt under that statutory section from ad valorem taxes.
Appellant contends in regard to this requirement of the use of the facility for a "public purpose" (to which it has expressly stipulated) that the property is not used "exclusively for a public or municipal purpose" in accordance with the 1968 Fla. Const, art. VII, § 3(a). In analyzing this argument, we recognize at the outset that Article VII, § 3(a) (1968), is a completely new treatment of municipal tax exemptions. Nevertheless, Article XVI, § 16, in the 1885 Constitution is quite similar to Article VII, § 3(a) (1968) in many respects. Article VII, § 3(a) (1968) provides :
"All property owned by a municipality and used exclusively by it for municipal or public purposes shall be exempt from taxation." (emphasis ours)
Article XVI, § 16 (1885) stated that:
"The property of all corporations . shall be subject to taxation unless such property be held and used exclusively for religious, scientific, municipal, educational, literary or charitable purposes." (emphasis ours)
As mentioned earlier in this opinion, all of the airline's leases, but one, are dated prior to the effective date of the 1968 Constitution. Even so, the old and new constitutional sections quoted above are comparable insofar as relevant here, and our rulings concerning these constitutional provisions apply equally to leases dated before and after the day the 1968 Constitution became effective.
We return now to the main thrust of appellant's argument, which urges us to hold that the leased property does not satisfy the constitutional tax exemption for "municipalities" in Article VII, § 3(a), or Article XVI, § 16, on the theory that the property is not used exclusively for public purposes inasmuch as the airline has a private purpose of engaging in a profitmak-ing venture. We cannot accept this contention and for good reason. The word "exclusively" in these constitutional provisions modifies the preceding verb "used" and its object "public purposes." ("used exclusively for public purposes") The USE is a public one. So, in order to determine whether the property is used exclusively for a public purpose we must ask ourselves the following two questions:
(1) Whether the facility is a "public purpose" and, if so,
(2) Whether the property is used exclusively for that "public purpose."
In answering the first question, we must necessarily define "public purposes." Under our decisions "public purposes" are projects primarily and predominantly for the public benefit even though there may be some incidental private purpose, too. In this connection, it must be kept in mind that upon concluding that the project meets the test of a "public purpose", such an incidental private purpose as here necessarily loses its identity as a private matter and is merged within the term "public purpose." In other words, "public purposes" is a legal concept encompassing inconsequential private purposes. Thus the private character of a "public purpose" is not material to the second question concerning "exclusive use". Precisely stated, the second question is whether the property is used exclusively for purposes defined as "public purposes." In this context, the property can be used exclusively for public purposes if the private purpose has merged into the term "public purposes" and if the property is used solely for such "public purposes".
By this analysis we have not changed the ordinary meaning of "exclusive" from its dictionary definition of "single," "sole" and "entirely." Instead, we have pointed out that the requirement for "exclusive use" is not affected by a private purpose incorporated into the meaning of "public purpose." Stated in another way, the property must be used exclusively for purposes designated as "public purposes" which may include such an incidental private purpose as here.
Applying these principles to the situation before us, we conclude that the property leased to the airline is used exclusively for public purposes. The parties have stipulated that the airport facility is used for a public purpose; the incidental private purpose of a profitmaking venture by the airline has merged into the meaning of the stipulated "public purpose"; and there is no evidence in the record whatever to indicate that the property is not being used solely for the stated "public purpose."
In arriving at this conclusion, we recognize another argument presented by appellant that the leaseholds are owned by the airline, not by a municipality as required by Article VII, § 3(a) (1968). This argument is equally without merit. There is no requirement in Article VII, § 3(a) (1968), or old Article XVI, § 16 (1885), that the municipality own the leaseholds; the municipality must only own the property as it does here.
Upon such suggested premise the County says that it is not really taxing the property but the airline's "leasehold advantage" in what it has measured as the difference in fair market rent of such "property" and what the airline is actually paying as rent under its leases. The county calls this "a private commercial advantage". We are not aware of any statutory basis for assessing a tax upon a taxpayer's bargain, certainly not an ad valorem tax. This argument is advanced by the county for the proposition that even though the property involved may be immune or exempt as outlined above, nevertheless, the leasehold interests of private corporations in such properties represent separate and distinct property interests subject to taxation. The only authority cited for this resourceful and novel approach is Walden but that holding involved taxation of the leaseholds themselves (not the difference in market value thereof to the lessee). The mere use of the words in that opinion of "leasehold interests" does not support the taxation of some bargain advantage in the use of the lease.
By virtue of our holdings, there is no need to reach the other contentions raised by the parties.
Accordingly, the final judgment is
Affirmed.
It is so ordered.
CARLTON, C. J., and ROBERTS, ADKINS and McCAIN, JJ., concur.
ERVIN, J., dissents with opinion.
. Fla.Const. art. XVII, § 4 (1885).
. Fla.Stat. § 193.481, F.S.A. (oil', mineral & other subsurface rights) ; Fla.Stat. § 711.08, F.S.A., and Fla.Stat. § 711.19, F.S.A. (condominiums) ; and others.
. Fla.Stat. § 192.62 subsequently reenacted verbatim in Fla.Stat. § 196.25, F.S.A. The statute followed our holding that absent some law, such leaseholds were not taxable. Park-N-Shop, Inc. v. Sparkman, 99 So.2d 571 (Fla.1957).
. Bancroft Inv. Corp. v. City of Jacksonville, 157 Fla. 546, 27 So.2d 162 (1946); See also, City of Naples v. Conboy, 182 So.2d 412 (Fla.1965).
. State v. Board of Control, 66 So.2d 209 (Fla.1953),; State v. Daytona Beach Racing & Recreational Facilities District, 89 So.2d 34 (Fla.1956); Panama City v. State, 93 So.2d 608 (Fla.1957).
. State v. Dade County, 157 Fla. 859, 27 So.2d 283 (1946).
. This legislative declaration has been judicially approved by this Court. State v. Okaloosa County Airport and Industrial Authority, 168 So.2d 745 (Fla.1964). Also see Fla.Stat. § 196.012(5) for definition of "public purpose," effective December 31, 1971.
. Section 196.25 was repealed in 1971 and covered in a completely new Chapter 71 — 133, with exemptions being expressly included in present § 196.199, eff. 12-31-71. Subsection (2) (c) provides an express exemption from tax where there has been a covenant not to tax, as sub judice.
. A careful review of these constitutional provisions discloses that the 1968 provision refers to "municipal or public purposes" and that the 1885 provision mentions "municipal purposes" only. For purposes of this litigation, we hold, as we have on many similar occasions that "public purposes" and "municipal purposes" are synonymous. Daytona Beach Racing & Recreational Fac. Dist. v. Paul, 179 So.2d 349 (Fla.1965) ; Gwin v. City of Tallahassee, 132 So.2d 273 (Fla.1961).
. See Daytona Beach Racing & Rec. Fac. Dist. v. Paul, 179 So.2d 349 (Fla.1965); and relevant cases cited therein.