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Crapo v. Provident Group-Continuum Properties, L.L.C.

Florida Court of Appeals, First District

February 8, 2018

Edward A. Crapo, as Alachua County Property Appraiser, Appellant,
v.
Provident Group-Continuum Properties, L.L.C., a Florida not-for-profit limited liability company, and Von Fraser, in his capacity as Alachua County Tax Collector, Appellees.

         Not final until disposition of any timely and authorized motion under Fla. R. App. P. 9.330 or 9.331.

         On appeal from the Circuit Court for Alachua County. Monica J. Brasington, Judge.

          John C. Dent, Jr., and Jennifer A. McClain of Dent & McClain, Chartered, Sarasota, for Appellant.

          David K. Miller of Broad and Cassel LLP, Tallahassee, for Appellee Provident Group - Continuum Properties, L.L.C.

          Lewis, J.

         Appellant, Edward A. Crapo, as Alachua County Property Appraiser, appeals a Final Declaratory Judgment in which the trial court determined that property used for student housing that is legally owned by Appellee, Provident Group - Continuum Properties, L.L.C., is equitably owned by the University of Florida ("UF") and is, thus, immune from ad valorem taxation. For the reasons that follow, we affirm.

         Appellee owns legal title to the property at issue known as "The Continuum." The property is located near UF's campus in Gainesville and consists of 350, 000 square feet, most of which is dedicated for graduate and professional student housing. Appellee's sole member is Provident Resources Group, Inc., a nonprofit corporation that, as one of its charitable functions, assists public universities to acquire, develop, and operate student housing. Appellee's Amended and Restated Articles of Organization describes its purpose as follows:

The Company is organized exclusively to further the stated charitable purposes of its Sole Member, a Georgia nonprofit and an organization exempt from Federal Income tax. Specifically, the Company is organized for the purpose of planning, developing, financing, equipping, operating, and maintaining a student housing facility and certain ancillary facilities located in Gainesville, Florida, exclusively for the benefit of [UF] and its students, consistent with the terms of a Student Housing Agreement by and between the University and the Company. The Company may engage in any lawful business activity permitted by the Act in furtherance of the foregoing purposes.

Article V, entitled "Public Benefit, " sets forth:

The Company shall operate exclusively in furtherance of the above stated charitable purposes and shall not engage in any activities that would jeopardize the tax exempt status of the Sole Member. No substantial part of the Company's activities will be carrying on propaganda or otherwise attempting to influence legislation. No part of the real earnings of the Company or any of its operations shall result in private inurement or impermissible benefits to private interests or individuals. The Company shall not be operated for pecuniary profit.

         Pursuant to its Operating Agreement, Appellee is to "undertake the acquisition, financing, equipping, ownership, operation and maintenance of the Student Housing Facility for the benefit of the University and its students, consistent with the terms and provisions of the Student Housing Agreement, which purpose is in furtherance of the stated charitable purposes of the Sole Member. . . ." The Board of Managers is to "utilize any available surplus cash flow of the Company solely and exclusively in furthering the Charitable Activities of the Company, consistent with the stated charitable purposes of the Sole Member." Upon the "winding up of the Company, " the "Company Property (or the proceeds thereof)" must be distributed in the "following order and priority: (a) to creditors . . . (b) to the University . . . (c) to the Sole Member of the Company for distribution in accordance with its charitable purposes . . . ."

         The Student Housing Agreement, which Appellee and UF's Board of Trustees executed on August 9, 2010, explains "that there is a need for additional housing for graduate and professional school students, " that Appellee desired to assist UF in meeting the need for additional housing, and that Appellee would, with the support and direction of UF's Department of Housing and Residence Education, implement housing educational programs and policies to serve the needs of UF's graduate and professional school students. UF "shall market and promote the Facility as a University-affiliated housing option for University Students." Appellee agreed "that all net revenues from operations of the Facility shall be used solely for the purpose of furthering the Charitable Activities." UF acknowledged that it "shall directly and substantially benefit from the development, operation and management of the Facility by Provident and that the Facility will provide a much needed addition to the housing supply . . . ." Upon the repayment in full of the project's financing, "all right, title, and interest in and to the Property shall be conveyed from Provident to the University or to another similarly situated charitable organization . . . ." If all or a portion of the property were to be taken by condemnation or other eminent domain proceedings, "any award or compensation payable in connection with such Taking shall be paid to the following priority: (i) first, to satisfy any remaining repayment obligations under the Continuum Financing . . . (ii) second, to the University . . . ."

         The Declaration of Covenants and Restrictions for the property provides that "Declarant hereby covenants that the Property herein . . . shall be used exclusively as a housing community with related retail and ancillary uses . . . ." UF "shall have the right to enforce . . . all restrictions, covenants and conditions imposed by the provisions of this Declaration."

         In April 2013, Appellee sought declaratory relief for tax immunity from May 28, 2010, to the date of judgment and also sought a refund of taxes for a portion of 2010 and for 2011. After the trial court granted Appellant's motion to dismiss the action for lack of subject matter jurisdiction, Appellee filed an amended complaint as the "Trustee for the use and benefit of the University of Florida." Appellee sought tax immunity for 2010 through 2014 and again sought a refund of taxes for a portion of 2010 and for 2011. The trial court granted Appellant's motion to dismiss the amended complaint, a ruling which Appellee ...


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