BOOK 49 Page 21007 05/03/01 2:00 P.M. MINUTES OF THE SPECIAL SARASOTA CITY COMMISSION MEETING OF MAY 3, 2001, AT 2:00 P.M. PRESENT: Mayor Albert F. Hogle, Vice Mayor Carolyn J. Mason, Commissioners Richard F. Martin, Lou Ann R. Palmer, and Mary J. Quillin, City Manager David R. Sollenberger, City Auditor and Clerk Billy E. Robinson, and City Attorney Richard J. Taylor ABSENT: None PRESIDING: Mayor Hogle The meeting was called to order in accordance with Article III, Section 9 (b) of the Charter of the City of Sarasota at 2:05 p.m. City Auditor and Clerk Robinson gave the Invocation followed by the Pledge of Allegiance. 1. PRESENTATION RE: : VISITORS FROM BRAZIL #1 (0023) through (0167) Mayor Hogle requested that Burt Bershon of the Rotary Club of Sarasota join him before the Commission to introduce the visitors from Brazil. Mr. Bershon stated that the visitors from Brazil are from the Rotary Group Study Exchange 2001 (Study Exchange Team) i that the Brazilian team is one of 570 teams in association with Rotary International to 147 countries; that the team will be in Florida for four weeks and in Sarasota for one; that the exchange is a mission of goodwill, involving studies of culture, profession, education, vocation, philosophy, and politics among others; and introduced Jayme Baleeiro Neto, a Public Auditor and leader of the Study Exchange Team, to introduce the other members. Mr. Neto stated that the Study Exchange Team from Brazil is honored for the recognition during the Special Commission meeting, and introduced the Study Exchange Team members: Antonio Claudio Macedo Da Silva, a Brazilian Federal Court Judge, Luciano Silva Moraes, a Brazilian State Auditor, Sergio Garrido Cincura, a Civil Engineer, and Vladimir Araujo Ornelas, a Business Administrator Mr. Neto presented a book produced in the municipality of Salvador, Brazil, detailing 500 years of the discovery of Brazil and a compact disk with facts about Brazil to the Commission. Mayor Hogle thanked Mr. Neto for the gifts; introduced the Commission; and stated that the City of Sarasota is honored to have the Study Exchange Team visit; that the time, energy, effort and money spent to travel to Florida is appreciated; that the hope is for a fruitful exchange of ideas and culture; that the compact disk and book presented to the Commission will be shared with the community of Sarasota; and presented the Study Exchange Team with a key to the City of Sarasota. 2. CHANGES TO THE ORDERS OF THE DAY - APPROVED #1 (0177) through (0209) City Attorney Taylor presented the following Change to the Orders of the Day: A. Add Item No. II, Presentation re: Florida Supreme Court ruling regarding the exemption of ad valorem taxation of municipal properties. On motion of Commissioner Quillin and second of Vice Mayor Mason, it was moved to approve the Change to the Orders of the Day. Motion carried unanimously (5 to 0): : Martin, yesi Mason, yes; Palmer, yes; Quillin, yes; Hogle, yes. 2. APPROVAL RE: AUTHORIZE THE MAYOR AND CITY AUDITOR AND CLERK TO EXECUTE THE PROPOSED CITY MANAGER RECRUITMENT CONSULTING AGREEMENT BETWEEN THE CITY OF SARASOTA AND DMG-MAXIMUS, INC., TO PROVIDE RECRUITMENT SERVICES NECESSARY TO FIND A NEW CITY MANAGER TO REPLACE THE RETIRING CITY MANAGER - APPROVED (AGENDA ITEM I) #1 (0210) through (0306) City Attorney Taylor referred to the proposed City Manager Recruitment Consulting Agreement (Consulting Agreement) with DMG- Maximus included in the Agenda backup material which has been reviewed by and is acceptable to the City Auditor and Clerk, the Director of Human Resources, and the City Attorney; that interviews for the position of City Manager are scheduled for July 30, 2001; that the contract can be revised if the Commission wishes to redefine the terms; that the recommendation is to approve the Consulting Agreement and authorize the Mayor and City Auditor and Clerk to execute. BOOK 49 Page 21008 05/03/01 6:00 P.M. BOOK 49. Page 21009 05/03/01 2:00 P.M. On motion of Commissioner Quillin and second of Vice Mayor Mason, it was moved to approve the City Manager Recruitment Consulting Agreement between the City and DMG-Maximus and authorize the Mayor and City Auditor and Clerk to execute. Motion carried unanimously (5 to 0): Martin, yes; Mason, yes; Palmer, yes; Quillin, yes; Hogle, yes. 3. PRESENTATION RE: FLORIDA SUPREME COURT RULING REGARDING THE EXEMPTION OF AD VALOREM TAXATION OF SPORTS STRUCTURES PRESENTATION GIVEN (AGENDA ITEM II) #1 (0307) through (0861) David Cardwell, Esquire, law firm of Holland & Knight, LLP, came before the Commission and stated that an on-going debate regarding ad valorem taxation of sports facilities owned by municipalities has resulted from a dispute between the Sebring Airport Authority (SAA) and the Property Appraiser of Highlands County, Florida; that past litigation resulted in taxation of SAA property used by The Sebring International Raceway, Inc., a for-profit company, which leases SAA property for racing; that the SAA was required to pay the ad valorem tax as no provision was in the lease for a pass-through of the ad valorem tax; that as a result of the State Supreme Court's decision from the past litigation, legislation was enacted amending the ad valorem taxation statute to redefine municipal and public purpose to include sports and recreational facilities; that the Highlands County, Florida, Property Appraiser was of the opinion the statute was unconstitutional and placed the SAA property on the tax roll again; that the case subsequently resurfaced in court. Attorney Cardwell continued that Holland & Knight participated in the appeal to the State Supreme Court on behalf of several cities owning sports facilities, a case which is referenced as the Sebring Case; that the State Supreme Court ruled the ad valorem taxation statute was unconstitutional as the statute went beyond the Constitutional provisions for exempting municipal property; that county-owned property is immune from taxation as counties are considered political subdivisions of the State; that all State property is immune from taxation as part of the sovereign; that a city is a municipal corporation created by and operating through the will of the Legislature; that property owned by a municipal corporation is exempt from ad valorem property taxation to the extent remaining within the limits of the Constitution; that the State Supreme Court ruling indicates municipal property is exempt for certain limited purposes only; that if municipal property enters the for-profit realm, the municipal property is no longer within the public or municipal purpose as defined by the constraints of the Constitution; that the State Supreme Court ruled the Legislature overstepped its bounds in passing the statute. Attorney Cardwell further stated that nine sports facilities in nine cities have been identified as municipal property which will be subject to ad valorem property taxation, including Tropicana Field owned by the City of St. Petersburg, Florida, the Orlando Arena, owned by the City of Orlando, Florida, and the Alltel Stadium, owned by the City of Jacksonville, Florida; that the State Supreme Court ruling has been examined; that the personal belief is nothing can be done except to amend the Constitution; that a Constitutional amendment has been drafted and attached to a bill currently pending in the Legislature; that the nine cities, including Sarasota, are being asked to collect information concerning the various facilities each city owns, the financial impact of ad valorem taxation, and if individual leases allow a pass-through for teams utilizing the facilities; that nothing can be attempted until 2002; however, the information is being brought before the Commission due to the City's ownership of the Ed Smith Sports Complex. City Manager Sollenberger stated that the lease agreement for the Ed Smith Sports Complex with the Chicago White Sox, Ltd., which was assumed by the Red Sox of Florida, Inc., does not contain a pass-through provision for taxes; that the major provision with the White Sox provided that a replacement team would be identified by the White Sox to the satisfaction of the City; that an impact will be experienced for the fiscal year (FY) 2001/02 budget; that the major concern is if an effort will be made to collect ad valorem taxes on the facilities retrospectively; that the Property Appraiser for Sarasota County has indicated an interest in applying the provisions prospectively rather than retrospectively. Attorney Cardwell stated that a personal reading of the State Supreme Court decision in the SAA case is for prospective application sO ad valorem property taxes would not be collected for prior years; however, others believe if the provision was unconstitutional, the ad valorem property taxes should be collected retrospectively, that a uniform approach to collecting the taxes has not yet been determined; that the Florida Department of Revenue is expecting sports facilities will be on the ad valorem tax rolls for the upcoming year and will reject tax rolls which do not contain municipal properties. BOOK 49 Page 21010 05/03/01 6:00 P.M. BOOK 49 Page 21011 05/03/01 2:00 P.M. Commissioner Palmer asked if the State Supreme Court ruling impacts the Bobby Jones Golf Complex? Attorney Cardwell stated that the operations of the Bobby Jones Golf Complex is not known; that ad valorem taxation would apply only to facilities leasing space to a for-profit organization. City Manager Sollenberger stated that the Bobby Jones Golf Complex does not lease to a for-profit organization, except for the restaurant facility. Commissioner Quillin stated that the Cincinnati Reds do not occupy the Ed Smith Sports Complex for 12 months of the year; that other sports groups utilize the Ed Smith Sports Complex; and asked the manner in which the Property Appraiser will develop a tax figure? City Attorney Taylor stated that the Property Appraiser has determinedt a figure based on past usage. Attorney Cardwell stated that the Property Appraiser will review the City's lease of the Ed Smith Sports Complex; that if the lease indicates the sports team controls the stadium 12 months of the year and the City only has access during specified timeframes, the stadium would appear in the control of a private party all 12 months of the year and taxed accordingly; that if the lease indicates the sports team may only use the facility during specified times of the year and at the pleasure of the City, the Property Appraiser may apportion the tax. Commissioner Palmer asked if the ad valorem taxes can be returned to the entities for operations? Attorney Cardwell stated that no restrictions exist; however, only the portion of ad valorem tax allocated to the City millage will be returned to the City unless a different agreement is developed for a sharing of revenues or expenses. Commissioner Palmer asked if the ad valorem tax assessed can be returned as the tax is in addition to the current payment? Attorney Cardwell stated that nothing prohibits the return of the tax dollars. City Attorney Taylor stated that Attorney Cardwell's presentation and time are appreciated and valued; that the City Attorney's Office will be sending a report by May 11, 2001, to the Commission concerning the ad valorem taxation statute. Commissioner Quillin stated that many City parks have been leased to for-profit organizations; that the implication of ad valorem property taxation for municipal property is great; that the repercussions should be examined. Commissioner Palmer asked the extent of the decision's impact concerning ad valorem taxation on the City's municipal property? Attorney Cardwell stated that the statute struck by the State Supreme Court ruling includes a lengthy list of types of municipal properties which would be exempt from ad valorem property taxation, including recreational facilities; that an effort to include a list of certain types of municipal properties which would be exempt from ad valorem taxation was considered but rejected by the most recent Constitution Revision Commission; that any facility leased to a for-profit organization not included in the Constitution's list of exemptions, i.e., religious, scientific, charitable, and literary, could be subject to ad valorem taxation. Commissioner Quillin stated that Mote Marine Laboratories, Inc., and The Pelican Man could qualify for an exemption from ad valorem taxation; however, Gulf Wind Marine would not. City Manager Sollenberger stated that most municipal property leases are structured with a pass-through provision for taxes; that the Ed Smith Stadium does not have a pass-through provision; that the lease for the Marina Jack facility (Marina Jack) includes a provision providing the City will refund to Marina Jack any municipal tax paid; that the lease with the Florida West Coast Symphony (Symphony) requires any tax be paid by the Symphony. City Auditor and Clerk Robinson stated that the Property Appraiser previously declared that privatized operations such as O'Leary's and Gulf Wind Marine are taxable; that a tax bill is received by the Office of the City Auditor and Clerk and sent to the appropriate entity, which must provide the City proof of payment; that Marina Jack's currently does not receive a tax bill. City Attorney Taylor stated that a court order was obtained which granted grandfather status to Marina Jack, which is therefore exempt currently; that the impact of the State Supreme Court ruling on Marina Jack is not currently known. BOOK 49 Page 21012 05/03/01 6:00 P.M. BOOK 49 Page 21013 05/03/01 2:00 P.M. Commissioner Quillin stated that the personal interpretation of the State Supreme Court ruling is the filing was too late to tax Marina Jack; that the State Supreme Court ruling should be reexamined to determine if the ruling is a detriment to the City. 4. ADJOURN (AGENDA ITEM III) #4 (0862) There being no further business, Mayor Hogle adjourned the Special meeting of May 3, 2001, at 2:34 p.m. OAL ALBERT F. HOGLE, MAYOR ATTESR: 4 BllyE Rubensan BILIY--E. CROBINSON, CITY AUDITOR AND CLERK