CLEARWATER — Pinellas County officials wired more than $59,000 to the Pasco County Tax Collector last week, and they plan to cut a check for an additional $55,000, to pay overdue property taxes on 12,400 acres the county owns in Pasco County.
But the payment marks only a temporary truce in a feud between the neighboring counties that has thrown up a thorny legal problem: Can one government agency tax another?
Pinellas stopped paying property taxes on the Cross Bar and Al Bar ranches in 2012 after determining the land was immune from taxation. Land owned by the state is not taxed, and Florida law classifies counties as subdivisions of the state, meaning county land should not be taxed, either, Pinellas County Attorney Jim Bennett contends.
That’s not a view shared by Pasco County Property Appraiser Mike Wells, who insists that immunity ends at Pinellas’ borders.
“What would Pinellas commission say if Pasco County went and bought the Don CeSar Hotel and insisted it be immune from taxation?” Wells said.
The standoff led to the Pasco County Tax Collector’s office selling delinquent tax certificates on the Pinellas properties, a first step toward selling the land at auction.
But Wells’ interpretation of the law does not have much support from neighboring property appraiser offices.
Pinellas has not paid a penny in taxes for at least 13 years on three vacant parcels it owns in Hillsborough County, tax records show. Will Shepherd, general counsel for the Hillsborough County Property Appraiser, said although there is no clear legal precedent on this issue, Florida Supreme Court case law has established that counties should not pay ad valorem taxes on their land.
“We look at that as county property, which is immune,” Shepherd said. “When the county owns property, it’s not taxable.”
Shepherd’s opinion is shared by Pinellas Property Appraiser Pam Dubov, who looked into the issue when reports of the Pinellas-Pasco dispute surfaced.
“I think counties enjoy an immunity from taxation,” said Dubov, a lawyer. “I don’t see anything that limits that to land within its own border.”
The history of the two ranches offers no clear solution to the dispute.
Pinellas bought Cross Bar in 1976 and Al Bar in 1990 during the “water wars” when local government agencies were scrambling to secure access to drinking water.
Both ranches were initially leased to private parties who paid property taxes, according to a timeline produced by Pinellas.
The properties remained on the Pasco tax roll in 1992 even after the leases ended.
In 1996, Pasco Property Appraiser Ted Williams wrote to Pinellas County Administrator Fred Marquis that the properties were immune from taxation.
Pinellas commissioners decided to make a contribution to Pasco in lieu of property taxes, an acknowledgement that the land benefits from county services such as protection from the sheriff’s office, but that takes the property out of the debt-collection process that can lead to the sale of certificates for unpaid taxes.
The properties were put back on the tax roll later that year, a move that may have been a misunderstanding, Bennett said.
The 17 water wells on Cross Bar Ranch are now owned by Tampa Bay Water, which pays no taxes to Pasco. Pinellas also runs a pine-tree farming operation on the site.
Between 1996 and 2012, the county paid property taxes averaging about $50,000 a year, Bennett said. The amount would have been much higher were it not for an agricultural exemption awarded because of the county’s logging operation.
Pinellas stopped paying the taxes after commissioners in October 2012 directed county staff to investigate the tax status of both properties.
The county’s determination that its property tax bill should be zero was reinforced by an audit of the two properties by the Inspector General of the Pinellas Clerk of the Court, which recommended that the county explore tax immunity.
The audit states that the land is listed in the Florida Forever Priority List. Under state law, land dedicated for conservation is exempt from ad valorem taxation. The county’s logging operation could be regarded as part of the land-management program, the audit states.
The tax dispute coincides with Pinellas commissioners’ decision to turn down a request from their Pasco counterparts to sell the land back to Pasco, which wanted to link the land through a series of trails to other nature preserves to promote ecotourism.
Officials on both sides said the decision by Pinellas to hang on to the land has not added fire to the dispute.
But, concerned about the sale of tax certificates, Pinellas commissioners last week directed new Interim County Administrator Mark Woodard to pay overdue taxes.
“Pay our debts; figure it out; get a final ruling and we’ll go from there,” Pinellas Commissioner Norm Roche said.
Woodard plans to meet with Pasco Tax Collector Mike Fasano as a goodwill gesture and to hand deliver the county’s check. But he said he plans to characterize the payment as “in lieu of taxes,” and that the county will appeal the valuation to Pasco’s Value Adjustment Board if the county continues to tax the land in 2014.
The adjustment board, made up of members of the county commission, the school board and two citizens, is the same board to which homeowners may appeal if they feel their property has been valued incorrectly for tax purposes.
Pinellas’ request seems unlikely to sway Pasco Property Appraiser Wells, who said he has reviewed the county’s legal position with his attorney.
“We think we are on good legal ground with a precedent case that, if not right on the issue, is close to it,” he said. “I’m prepared to defend it.”