CAO 98-03
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CITY OF MIAMI BEACH
OFFICE OF THE CITY ATTORNEY
FROM:
Sergio Rodriguez
City Manager
Murray H. Dubbin . .J)
City Attorney ~ ~
Lawrence A. LeVy~
First Assistant City Attorney
C.M.O. # 3-2198
TO:
C.A.O. # 98-3
SUBJECT: Use of Proceeds of Resort Tax Collections
DATE: August 21,1998
QUESTION: By Memorandum dated February 23, 1998, you requested our advice as to the
permitted uses of funds received from the additional one percent (1 %) Resort Tax
(the "Additional One Percent"), which was approved by referendum on November
3, 1992.
ANSWER: Subject to the payment of Resort Tax Bonds and Tax Increment Bonds, to which
the Resort Tax has been previously pledged, the Additional One Percent of the
Resort Tax may be used for the following purposes only: "creating and
maintenance of convention and publicity bureaus, cultural and art centers,
enhancement of tourism, publicity and advertising purposes, and for the future cost,
purchase, building, designing, engineering, planning, repairing, reconditioning,
altering, expanding, maintaining, servicing and otherwise operating auditoriums,
community houses, convention halls, convention buildings or structures, and other
related purposes, including relief from ad valorem taxes heretofore levied for such
purposes." [emphasis added] Chaoter 67-930. Laws of Florida, as amended.
The resolution authorizing any project that is to be funded from the
Additional One Percent of the Resort Tax should contain recitals demonstrating how
the project comports with the above-described purposes, and such recitals should
be incorporated as legislative findings and determinations in the body of the
resolution. Unless the legislative findings and determinations can be shown to have
been arbitrary and capricious, the resolution authorizing the expenditure of the
Additional One Percent of the Resort Tax will be upheld if subjected to a judicial
challenge.
FACTUAL BACKGROUND:
Chapter 67-930, Laws of Florida, authorized the imposition of a two percent (2%) tax (the
"Resort Tax") on the rent for occupancy of certain facilities and for food and beverages sold for
consumption on certain premises, Chapter 67-930 was amended by Chapter 82-142, Laws of
Florida, to provide that a municipality could increase the amount of the Resort Tax to three percent
(3%), upon adoption of a charter amendment prior to January 1, 1983. A year later, Chapter 83-
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363, Laws of Florida, removed the time limit for adoption of the charter amendment and increased
the maximum rate of the Resort Tax to four percent (4%).
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In order to implement the enabling legislation, the City Commission adopted Ordinance No.
1727 (codified as Section 43 1/2 of the Miami Beach City Charter and Chapter 41 , Article V of the
Code, as amended), the provisions of which imposed the two percent (2%) Resort Tax within the
City, In 1992, the City Commission approved the holding of a referendum (pursuant to Resolution
No, 92-20574), in which the voters approved a one percent (1 %) increase in the Resort Tax by a
margin of 13,988 to 8,440. The Additional One Percent was to be expended as follows:
"(A) 50% for public incentives for convention center headquarters
hotel development, and upon retirement of all debt related thereto,
to be used as in (B) below;
(B) 50% for promotion of tourism related activities and facilities, and
developing, improving and maintaining tourism related public
facilities.
The uses listed in (B), above, for one-half of the Additional One Percent were described in
Commission Memorandum No. 619-92 as "quality of life" improvements. A copy of Commission
Memorandum No. 619-92 is attached hereto. The referendum was implemented by Ordinance No.
93-2829, a copy of which is also attached hereto. The so-called "quality of life" funds are divided
into three equal portions which are allocated for projects in South Beach, Mid Beach and North
Beach.
DISCUSSION:
The State of Florida has pre-empted the subject of local taxation, thus municipalities have
no inherent power, and no home rule power, to impose, levy or collect taxes. Fla. Const Art. VII
i1!iU, Fla Const Art. VII. &9, St. Lucie Estates v Ashley, 141 So. 738 (1932), Walter E, Heller
& Co Southeast Inc. v, Williams, 450 So. 2d 521 (3DCA 1984), review den. 462 So. 2d 1108. All
taxation by local units of govemment must be within the parameters established by State
legislation.
The Resort Tax falls within the purview of the above-stated rule. Thus, the use of the
receipts of the Resort Tax may never be broader than that which is permitted in the enabling
legislation, Chapter 67-930, Laws of Florida, as amended. The expressly authorized uses of the
proceeds of the Resort Tax are clearly defined with the exception of "enhancement of tourism."
Nothing has been found in the case law which defines "enhancement of tourism" as the expression
is used in Chapter 67-930, Laws of Florida, as amended. However, some guidance may be found
in an Opinion of the Attorney General that was rendered under S125.0104, F.S., which section
authorizes the Tourist Development Tax, In AGO 83-18, the Attorney General opined, with respect
to the Tourist Development Tax that:
......the intent and purpose of the act was to provide for the advancement,
generation, growth and promotion of tourism, the enhancement of the tourist
industry, and the attraction of conventioneers and tourists from within and without
the state to a particular area or county of the state. I am accordingly of the opinion
that the acquisition, construction, maintenance, operation, or promotion and
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financing of the several publicly owned and operated facilities enumerated in
~125.0104(5)(a), supra, must be primarily for the purpose of and related to the
advancement, furtherance, improvement or promotion of tourism. The
determination whether a particular facility or project, tourist development plan or
program is tourist related and furthers such primary purpose is a factual
determination which must be made by the legislative and governing body of the
county founded upon appropriate legislative findings and due consideration of the
peculiar and prevailing local conditions and needs; it is not a determination which
this office can make for a county."
Thus, it is clear that the expenditure of receipts of the Resort Tax must be functionally and
logically related to the advancement, furtherance, improvement or promotion of tourism. For
example, in AGO 83-18, the facilities that were being questioned were (1) a multi-purpose building
for use as a convention center and exhibition hall, (2) a horse show arena and stables, (3) a softball
tournament center, (4) a tennis and aquatic center, (5) a multi-purpose stadium, and (6) a
park/picnic area. The Attorney General opined that all of the foregoing facilities, except the
park/picnic area, were authorized under the Tourist Development Tax enabling legislation, provided
that the primary purpose of the expenditure was the advancement, furtherance, improvement or
promotion of tourism. The Attomey General stated that the park/picnic area was outside the scope
of the authorized facilities.
It is axiomatic in the law that the findings and determinations of a legislative body (such as
the City Commission) will not be disturbed by the courts unless they are found to be arbitrary and
capricious. As long as such findings are fairly debatable, the courts must uphold them. For
example in the area of special assessments, the courts have followed the rule that the
determination of special benefit to a property is a legislative determination and it will be upheld
unless it is capricious or arbitrary. The Supreme Court of Florida recently declared that, "... the
legislative determination as to the existence of special benefits and as to the apportionment of the
costs of those benefits should be upheld unless the determination is arbitrary," Sarasota County
v. Sarasota Church of Christ, 667 So.2d 180, 183 (1995). This follows the ''fairly debatable"
standard of review applicable to most legislative acts, and it is a highly deferential standard
requiring a court to uphold legislative action if reasonable persons could differ as to its propriety.
See, for example, Martin County v. Yusem, 690 So.2d 1288 (1997).
One case on point is whether the proceeds of the Mid Beach portion of the Additional One
Percent could be used for the beautification of 41 st Street. The rationale for an affirmative answer
would be that 41 st Street is the main entrance thoroughfare for tourists who are arriving from the
airport on their way to the hotels on the northern portion of Collins Avenue, as well as a major
tourist shopping and restaurant destination, and that it ought to reflect the ambiance of a beautiful,
well-planned, tourist-oriented city. Appropriate findings and determinations would include language
that the area should be well lit at night and should contain amenities such as streetscape and
landscape features, Assuming that findings and determinations based on fact can be crafted in the
legislation authorizing the expenditure of funds for such purpose, those findings and determinations
should be upheld in a court of competent jurisdiction if the action of the City Commission is
challenged.
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