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Court shields military housing from taxes

TALLAHASSEE, Fla. – Rejecting arguments of the Monroe County property appraiser, an appeals court ruled Wednesday that privately operated rental housing that serves Naval Air Station Key West is not subject to property taxes.

The ruling, by the 3rd District Court of Appeal, stems from a public-private partnership between the Navy and a private developer.

A for-profit firm, Southeast Housing LLC, was created to lease land from the federal government, take title to improvements on the property and reconstruct and operate rental units, according to the ruling. Southeast Housing received a 50-year ground lease from the Navy for a nominal payment of $10.

In 2012, the property appraiser issued tax liens for the years 2008 to 2011, with the tax issues involving buildings and other improvements on the property.

Southeast Housing filed a lawsuit challenging the attempt to collect property taxes. Noting that since the "early years of the American Republic, it has been recognized that the property of the United States is immune from state taxation,'' a three-judge panel of the appeals court rejected the appraiser's arguments.

"A review … reveals that the Navy retained equitable and beneficial ownership of the properties,'' said the ruling written by Judge Thomas Logue and joined by Chief Judge Frank Shepherd and Judge Kevin Emas. "Because property owned by the United States is immune from state taxation, we hold the properties are immune from Florida ad valorem (property) taxes."