Opinion ID: 1788426
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Heading: Tax Exemptions for Property Used for Municipal Purposes Under the 1885 Constitution

Text: Before the 1968 revision, tax exemptions for property used for municipal purposes were covered in two different constitutional provisions: The Legislature shall provide for a uniform and equal rate of taxation, ... and shall prescribe such regulations as shall secure a just valuation of all property, both real and personal, excepting such property as may be exempted by law for municipal, educational, literary, scientific, religious, or charitable purposes. Art. IX, § 1, Fla. Const. (1885) (emphasis supplied). 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. Art. XVI, § 16, Fla. Const. (1885) (emphasis supplied). [7] Article IX, section 1 differed from article XVI, section 16 in that the former provision was not limited solely to corporations, and the property did not have to be held exclusively for the listed purposes. See State ex rel. Cragor Co. v. Doss, 150 Fla. 486, 8 So.2d 15, 16 (1942). In its use of the term as may be exempted by law, article IX, section 1 was not self-executing, and therefore a tax exemption under that provision required legislative authorization. See Rast v. Hulvey, 77 Fla. 74, 80 So. 750, 752 (1919). Shortly before these provisions were supplanted by the 1968 Constitution, this Court held that article XVI, section 16 was also not self-executing. See Jasper v. Mease Manor, Inc., 208 So.2d 821, 825 & n. 5 (Fla.1968) (receding from Lummus v. Miami Beach Congregational Church, 142 Fla. 657, 195 So. 607 (1940)). In the few cases in which this Court was expressly called upon to construe the municipal purposes exemptions in the 1885 Constitution, we deferred to the Legislature. In State ex rel. Harper v. McDavid, 145 Fla. 605, 200 So. 100 (1941), a taxpayer challenged an exemption for property owned by a city housing authority and used for a low-rent housing and slum clearance project. The Legislature had authorized municipalities to erect low-rent housing units and exempted them from ad valorem taxation by declaring that they served municipal purposes. See id. at 101. This Court upheld the tax exemption against challenges under both article IX, section 1 and article XVI, section 16 of the 1885 Constitution. See id. at 101-02. The Court noted that it had previously conceded power in the legislature to define a municipal purpose as contemplated by the provisions of the Constitution alluded to. Id. at 102. Responding to the claim that providing low-rent housing did not serve a valid municipal purpose, the Court stated: It is contended that the business of the Housing Authority is in no sense municipal, that it is in direct competition with private enterprise and even though declared by the legislature to be strictly municipal and charitable, its properties should not be exempt from taxation and that any attempt to make them so should be held in violation of the Constitution. What constituted a municipal purpose is a legislative question that should not be interfered with by the courts in the absence of a clear abuse of discretion. A municipal purpose is much broader in its scope than it was a generation ago. Under our system of jurisprudence, constitutional validity may be determined by practical operation and effect. Measured by this test, we cannot say that the legislature exceeded its power in pronouncing the properties of the Housing Authority held for a municipal purpose free from all forms of taxation. They are held not for profit, must be restricted to a low income group, and contribute materially to the health, morals, safety, and general welfare of the people. They aid materially in reducing the cost of fire prevention and police protection and the Housing Authority is authorized to make annual compensation to the City in lieu of taxes and other services furnished. There is no suggestion that the officers charged with the administration of the present scheme have failed in their duty and being so, we must assume that the law has been faithfully observed. The time was when a municipal purpose was restricted to police protection or such enterprises as were strictly governmental but that concept has been very much expanded and a municipal purpose may now comprehend all activities essential to the health, morals, protection, and welfare of the municipality. Id. (emphasis supplied). Five years later, this Court relied on the same definition in holding that electric light poles and other properties held and used by a city to supply electric power to customers in an adjacent county could not be taxed by that county under article IX, section 1 of the 1885 Constitution. See Saunders v. City of Jacksonville, 157 Fla. 240, 25 So.2d 648, 649 (1946). The Legislature had exempted from ad valorem taxation property owned by a municipality's public utility but located in a different county. See id. The Court concluded that furnishing electric current served a municipal purpose. As in McDavid, we explicitly rejected the claim that the exemption was invalid because it might enable the City to compete with private utilities required to pay taxes, again deferring to the Legislature's judgment as the arbiter of this question. Id. at 650. [8] The Court held that [i]t is a controlling factor that the owner of the property has no stockholders, or partners, and any income must necessarily accrue to the general public. Id. at 651. McDavid and Saunders demonstrate that in applying the non-self-executing provisions of the 1885 Constitution, this Court deferred to the Legislature's authorization of municipal functions and clear intention to exempt property used therefor from ad valorem taxation. Further, we held that a municipal purpose could be served even though the activity was one that competed with the private sector, if the Legislature determined that the activity was essential to the welfare of the municipality. The Court accepted the Legislature's determination that providing low-income housing and electrical power to those in need were essential municipal services.