Tallahassee City Commission and Leon County Board of County Commissioners Grant Historic Preservation Ad Valorem Property Tax Relief to Historic Property

History of Enabling Legislation.

After voter approval, HJR 969 amended the Florida Constitution to permit counties and municipalities to exempt historic properties from ad valorem taxation. The requirement that the owners of historic properties be engaged in the rehabilitation or renovation of these properties in order to receive historic preservation ad valorem tax exemption was removed. To grant the exemption, counties and municipalities must pass an ordinance. An exemption or classified use assessment of historic property will only apply to property taxes levied by the particular unit of government that has adopted an ordinance. The amount of the county and municipal exemptions, the requirements for eligibility, and the time periods for the exemptions are specified by the Legislature in general law.

The 1997 Legislature enacted Chapter 97-117, Laws of Florida, effective on the date the amendment to the Florida Constitution that authorized this act was approved by the electors in November 1998. This law created section 196.1961, Florida Statutes, effective January 1, 1999, providing procedures and requirements for counties and municipalities to follow in adopting an ordinance exempting up to 50 percent of the assessed value of eligible historic properties from ad valorem taxes. This law also created section 193.503, Florida Statutes, effective January 1, 1999, providing that counties and municipalities may adopt an ordinance providing that eligible historic property, used for commercial and certain nonprofit purposes, may be classified and assessed based on character or use. The new law also amended section 193.011, Florida Statutes, effective May 24, 1997, to clarify that a local “historic preservation ordinance” must be considered as a factor in arriving at the highest and best use of property.

Local Ordinances

An exemption or classified use assessment of historic property will only apply to property taxes levied by the particular unit of government that has adopted an ordinance. A historic property exemption will not apply to taxes levied for the payment of bonds nor to taxes authorized by a vote of the electors pursuant to Article VII, Section 9(b) or Section 12 of the Florida Constitution.

The Tallahassee City Commission adopted Ordinance No. 00-O-0012 on February 23, 2000, which added Section 22-80 to the City of Tallahassee Code and provides for the assessment of historic properties based on their character or use as defined in section 193.503, Florida Statutes. The Tallahassee City Commission adopted Ordinance No. 00-O-0014 on February 23, 2000, which added Section 22-81 to the City of Tallahassee Code and grants an ad valorem tax exemption of fifty percent of the assessed value of property that meets the criteria listed in section 196.1961, Florida Statutes.

The Board of County Commissioners of Leon County adopted Ordinance No. 00-13 on March 14, 2000, which added Chapter 11, Article XIII, Sections 11-330 and 11-331 to the Code of Laws of Leon County. Section 11-330 provides for the assessment of historic property based on its character or use as defined in section 193.503, Florida Statutes. Section 11-331 grants an ad valorem tax exemption of fifty percent of the assessed value of property that meets the criteria listed in section 196.1961, Florida Statutes.

Eligibility

To receive a historic property ad valorem tax exemption or be classified and assessed as historic, property must meet all of the following criteria:

• The property must be used for commercial purposes or used by a nonprofit organization under sections 501(c)(3) or 501(c)(6) of the Internal Revenue Code of 1986;
• The property must be listed in the National Register of Historic Places (see Section 5), a contributing property to a National Register Historic District, or be designated as a historic property or a contributing property to a historic district under a local preservation ordinance;
• The property must be regularly open to the public, meaning open for a minimum of 40 hours per week for 45 weeks of the year or an equivalent of 1800 hours per year. [Note: An additional provision for the exemption is that a fee may be charged if it is comparable to other fees for similar admissions in the same geographic area. If a fee is charged, it may not be exempt from any applicable admissions tax.]
• The property must be maintained in good repair and condition to preserve the historic value and significance of the property; and,
• Application must be made on or before March 1 of each year.

Only that part of the property that is used for the specified qualifying purposes qualifies as historic property. However, incidental use of property does not qualify property for a historic property exemption or impair the exemption of an otherwise exempt property.

Assessment of History Properties

If the historic use classification and assessment are granted, the county property appraiser considers the following use factors:

• Size of the property;
• Condition of the property;
• Present market value of the property as historic property used for commercial or certain nonprofit purposes; and,
• Income from the property.

Tax Relief Subject to Recapture

Any reduction in ad valorem property tax, due to the historic use classification and assessment, is subject to “deferred tax liability.” The property tax assessment will be subject to deferred tax liability if the historic designation status or use of the property changes or the property fails to meet other qualifying criteria at any time after qualifying for and being granted the historic use classification and assessment. The deferred tax liability is equal to the difference between the total amount of taxes that would have been due in March if the property had been assessed at just value under section 193.011, Florida Statutes, without regard to historic character or use, and the total amount of taxes actually paid, plus interest. The governmental taxing unit will determine the time period for which the deferred tax liability is due, up to the past 10 years in which the property received the historic use classification and assessment. The deferred tax liability is payable to the county tax collector within 90 days.

For information contact:

Leon County Property Appraiser
(850) 488-6102

or

Tallahassee Trust for Historic Preservation, Inc.
850-488-7334

Property must be used for commercial
purposes or used by an organization exempt from federal income taxation under §501(c)(3)or § 501(c)(6) of the Internal Revenue Code.

The terms nonprofit and tax-exempt organization are used interchangeably and refer to organizations that are exempt from federal income tax under §501(c) of the Internal Revenue Code of 1986, as amended.

An organization must meet specific requirements in order to be exempt from federal income taxation. Unless an organization has applied for and received a determination letter from the Internal Revenue Service, it is not recognized as a exempt, or not-for-profit, organization. There are several categories of nonprofit organizations, including §501(c)(3) and §501(c)(6). The largest category of nonprofit organizations is §501(c)(3), which includes entities organized for religious, charitable, scientific and educational purposes.

A prerequisite for obtaining and maintaining exemption from federal income tax is that the charity be organized and operated exclusively for exempt purposes and that no part of its net earnings inure to the benefit of any individual.