Legal Challenge of Florida’s Discriminatory Property Tax System- An Update

Legal Challenge of Florida’s Discriminatory Property Tax System- An Update
Up to about a year ago, there was no interest by any law firm to launch a legal challenge to the Save-Our-Homes Amendment In fact I remember Winnie Nelon, one of the early leaders of the tax reform groups, being quoted that her organization has approached about 30 Florida law firms and got zero interest in getting involved. I made some legal probes as well, about 6-9 months ago, and got no uptake.
The arrival of last year’s tax bills, may also have been the proverbial straw that broke the camel’s back for many non-homesteaded snowbirds. Snowbirds started to ask the question where is this going to end? Tax reform groups did a tremendous job raising the awareness of the Florida legislators and municipal and county administrators; the result is the “super-exemption” and overrides by various municipalities of the spending caps legislated by the state. The direction in which things are heading indicates that that there is no limit to the tax burden that Florida can and may off-load onto non-homesteaded non-voting second home-owners.
The good news is that from a situation whereby a year ago nothing was happening on the legal front, we are now seeing a head of steam is building on the legal option. I suspect that at this stage we need to shift a significant proportion of the energy invested onto this front. This is not to replace, but complement other current efforts; but may be a better way to win mindshare of Florida legislators, then trying to appeal to their sense of justice or compassion for the suffering snowbirds (which so far failed). So let me recap what’s been happening and what’s new on the legal front.
The ice was broken by the Alabamans’ case that was launched February 2007 by Messrs. Owen(FL), Feiber(FL), Lyons(FL), Slaughter(AL), Gallion(AL) on behalf of Lanning, Lanning, Slaughter and Reese. The judge dismissed the case in August 2007 as reported in the Miami Herald that “Judge dismisses Save-Our-Homes challenge”  , but the plaintiffs and legal team are determined to pursue it to a higher court (more on this later).
In March 2007, Robert Sanchez of the James Madison Institute summarized his analysis of the situation in “Court’s Blown Call Caused Property Tax Woes”  , whereby he compares the rulings of the Florida Supreme Court in two property tax related cases in 1982 and 1992. The Court ruled in contradictory fashion in the two cases and according to Mr. Sanchez, the 1992 ruling, that found SOH constitutional, was wrong.
When Governor Crist announced that property taxes will “drop like a rock”, I became hopeful that perhaps the Florida legislators understand not just the gravity of the impact of the inequities associated with SOH, but also the likely consequences if it is found unconstitutional. My back of the envelope calculation showed excess costs borne by non-homesteaded snowbirds of the order of $3B/year (Florida businesses are also affected, but I have no guesstimate for their excess costs); so if ruled unconstitutional, the damages owed by the state for the last 3-5 years could be in the tens of billions of dollars.
In the last couple of months I approached a NYC legal firm, Emery Celli Brinckerhoff & Abady, with significant constitutional expertise, to get their view as to the constitutionality of SOH and their willingness to get involved to act on behalf of SOH victims. I came away feeling very encouraged about the likely ultimate outcome of a constitutional challenge and their willingness to participate in supporting the case. However, given that there was already the Alabamans’ case under way, the best way to proceed at this time is to support that case via amicus brief(s) to the court; and they would be prepared to do the brief, if we find the right sponsor(s). And sponsor is not just about money.
The two keys to the amicus brief are the quality of the submission and the organizations on behalf of whom the brief is done. The amicus brief could be brought on behalf of: – non-homesteaders as represented by one of the tax protest/reform groups – a government whose residents/citizens are affected (Canadian federal or province, various U.S. states) – various tax reform groups – Florida (or some county) Chamber of Commerce whose members have a stake in free flow of commerce
The next step was to reconnect with the Alabamans’ legal team, to see if they would be in favour of having these briefs and what would be the optimal timing of the brief(s).
On the timeline of the initial appeal, it looks like they will likely be in a position to launch the first appeal in the next few weeks and they are committed, if necessary, to take it to the U.S. Supreme Court. As far as the value and the timing of an amicus brief, they not only welcomed it, but would like to see it early in the escalation process and the more briefs the better; so they were very supportive in us pursuing this. (Apparently, Connecticut’s AG Blumenthal is planning to do an amicus brief as well)

The last legal bit that is worth mentioning is the municipal bond related case before the U.S. Supreme Court reported by Business Week a couple of weeks ago “Shaky times for munis” . If that is declared unconstitutional, then I suspect SOH is also dead in the water (if not, I don’t think it is very damaging to the anti-SOH case, since there are also differences in the cases, but I am not a legal expert)
So where do we go from here? The next step is to identify sponsor(s) for the amicus brief(s).

If you have other inputs or can suggest sponsors let me know. (Contact Peter)
P.S. You may ask what is the value added of an amicus brief? Briefs are a common mechanism of re-enforcing the validity and the criticality of important legal challenges: -legal teams are very enthusiastic from point of building pressure on the opposition as the case proceeds (so they want the briefs early and as many sponsors as possible) -the court would not accept multiple concurrent class action cases- this is a way of telling the court of the interest and interests of many constituencies in society in this case -more expertise is brought to bear by reinforcing the legal opinion of a legal team, and may present to the court other aspects of un-constitutionality -helps the court better understand the validity of the claims – when the Alabamans’ case is taken to the Supreme Court, it must succeed, as there may not get another opportunity for many years A couple of links discussing the “value add” of and approach to amicus briefs, from Supreme Court and a sponsor perspective.
P.P.S. “Judge tosses property tax-cutting amendment” because he finds it “misleading and confusing”. So the super-exemption vote is off the January 29 ballot (for now).
Update October 8, 2007
Further to the (un)constitutionality of discriminatory treatment of in-state vs. out-of-state individuals (as in the two-tier discriminatory Florida property tax system), there is an interesting development in Virginia. Legislators recently introduced abusive driver fees whereby Virginians may be fined from $750 to $3,000 for certain infractions; comparable infraction by out-of-stater would result in fines of $100-200. You can read about the back-and-forth of different rulings in “Arlington judge rules Virginia’s abusive-driver fees unconstitutional” , “Higher-ranking Henrico judge rules bad-driver fees are constitutional” , “Judge: Abusive driver fees unconstitutional” , “Va. Bad driver fees are upheld” and “Virginia district court judge strikes down ticket tax” This law is heading at least to Virginia’s Supreme Court. The law is being challenged on the basis that this is likely a violation of the guarantee of equal protection under the constitution. The ultimate outcome of this case, may have an influence on the Alabamans’ challenge in Florida.

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