Volusia County, the City of Ormond Beach and a golf course are tangled in a tax dispute that will likely be settled in court, potentially costing taxpayers much more than the $100,698 the county is attempting to collect in unpaid dues.
At the center of the conflict is River Bend Golf Club at 730 Airport Road, which uses city property through a lease agreement that was established between both parties in 1988. A 1994 court ruling determined that the golf course could operate tax-free.
But when the county property appraiser's office reviewed municipal golf courses in 2012 it was determined that they should be added to the tax roll, including River Bend. While Ormond Beach officials contend that the course should still be exempt, there's disagreement over who should pay those taxes if it's not: the city, which owns the land, or the golf course which uses the 171 acres for profit.
The county, pointing to a 2015 Supreme Court ruling, says the city should pay. The city, pointing to state statute, says the lessee should pay. Golf course owners, pointing to industry challenges over the past decade, say this unforeseen delinquency puts them in a bind.
At a time when golf courses throughout the country are struggling — many closing for good — Wes Norwood, owner of River Bend Golf Club, has felt the squeeze.
"It’s not an easy industry right now," said Norwood, who poured millions into the business when he took over operations in 2005. "Everybody in general has had a decline in business. Every golf course around here is under the same burden. We are not quite breaking even now."
Piling on top of those financial pressures, Norwood said he was "blindsided" by the county's sudden push to collect taxes of about $20,000 per year from his business.
He claims River Bend wasn't notified when the tax exemption status was unexpectedly stripped in 2012, and his business didn't start getting collection notices from the county until three years later in 2015 when the bill amount had already quadrupled. Before then, the county property appraiser's office had been sending delinquent notices to the city, though Ormond Beach officials say they weren't aware of the notices until 2017.
It caught everyone by surprise, said Norwood.
"This is simply something that we weren’t aware of and didn’t anticipate, it shocked everyone," Norwood said. "The county blindsided us and it's hardly fair. ... For our business, it’s not a small chunk of change."
However, Norwood said he has every intention of paying — somehow, someway. "I don't think this will go to court. I think we can find a way to resolve it. It's not like I'm choosing not to pay taxes; I just cannot afford to pay it."
The county feels the golf course doesn't have to pay. Believing Ormond Beach owes more than $100,000 plus interest, the county attempted to block a city grant request because of the outstanding balance.
"The city owes the money. It should be paid," County Attorney Dan Eckert told the council early last week before they voted on how ECHO money should be awarded. "The city refuses to pay the taxes."
Ormond Beach City Attorney Randy Hayes attended that meeting to protest. He pointed to a Florida statute that reads: "When property owned by a governmental unit is leased to a nongovernmental lessee and is not exempt from taxation, the tax must be assessed to the lessee."
Late last week, after the County Council decided to grant the city's ECHO funding request despite the tax squabble, Eckert said the county would accept the money from either the city or the golf course.
City and county feud
The same year that the county decided to revoke tax exempt status from River Bend Golf Club, they also stripped LPGA International of its exemption and the New Smyrna Golf Course became 10 percent taxable due to the onsite restaurant being leased to a for-profit company.
To county officials, public land used by a golf course no longer serves a public purpose.
"Not when (the land) is leased to a for-profit entity," said Deputy Property Appraiser Jan Cornelius. "If the city runs it, then yes, (but) it would give an unfair advantage to the for-profit company that leases a city golf course over other golf courses."
It's not uncommon for government entities to lease land to for-profit businesses. Joe's Crab Shack has a long-term lease with the City of Daytona Beach for use of its pier, and the restaurant pays those taxes. Daytona Lagoon Waterpark leases county land. However, it does not pay property taxes.
That's different, county officials say.
The federal government, the state and counties are exempt from property taxes; municipalities are exempt from taxation if they are using the property for a public purpose, Cornelius said. A better example would be the Outback Steakhouse or Houligan's in Daytona Beach which sit on county-owned land where the tenants built the buildings.
"In this case the land is not taxable, but the buildings are taxable with the tenant is paying the tax bill," Cornelius said, adding, "You can't compare county-owned property with city-owned property."
Tax law disputes centered on city-owned property have worked their way to the Florida Supreme Court before and a 2015 ruling is a reason why Eckert and other county officials believe Ormond Beach owes taxes for the golf course.
In 1975, the city of Miami leased oceanfront property to Grove Key, a private, for-profit entity. In 1995, after a bar and restaurant began operating out of the marina, Miami-Dade County began sending property tax bills to the city, which in turn, handed them over to the business owners. The business owners said no thanks, arguing the city should be responsible.
The Florida Supreme Court in 2015 determined that that the city alone owed the unpaid taxes because the property was not being exclusively utilized for public purpose.
Ormond Beach officials disagree, saying it's unfair to compare the two situations. They also say that since a court ruling in 1994 determined the golf course as exempt, the county can't overrule that decision.
"A city can’t be compelled to pay a tax on exempt government property," Ormond Beach Mayor Bill Partington wrote in an email. "You can’t tax public property for nonpayment. It just defies common sense."
He said it's clear that the county property appraiser's office is getting "poor legal advice" which will ultimately lead to litigation, which will lead to "increased bureaucracy and waste of staff time and more taxpayer dollars," Partington said.
The city has held a lease with the golf course for 171 acres of airport property since 1988. Last year, the city received $93,100 in revenue for the deal.
Dispute takes center stage
Though the dispute between Volusia County and Ormond Beach has spanned years, it has avoided the spotlight of a public meeting. That changed recently.
With the county unsuccessful in collecting taxes for the land over the past six years, officials requested denial of an Ormond Beach ECHO funding request. That brought Hayes, the city attorney and Joyce Shanahan, the city manager, to Tuesday's council meeting to protest. The council has the final say every year on how ECHO funding, generated through a taxpayer-supported initiative, should be used to support environmental, cultural, historic and outdoor projects in the area.
However, rules state that grant recipients can't have outstanding balances with the county. Whether or not a balance is owed, however, is open to interpretation.
"The city doesn't owe the county any taxes," Hayes told the council, adding that this could create a precedent where other Volusia cities are forced to pay taxes to the county. "This is insulting, it's repugnant and it's just plain wrong."
Eckert and County Manager Jim Dinneen disagreed.
"I think taxes are owed," Dinneen said. "I do believe they (the city) are responsible (for the taxes) and I do believe they were contacted and I can prove that. This has to go to court. It's a big issue. I really do believe they are responsible for the taxes."
Neither side were swayed on their opinions at Tuesday's meeting. However, the council went against the county's recommendation regarding the ECHO grant and approved the request, despite the lingering tax dispute.
The ECHO grant for $400,000 to fund lighting improvements at a sports complex in Ormond Beach was approved by a 5-2 vote. County Chair Ed Kelley and council members Billie Wheeler, Heather Post, Deb Denys and Joyce Cusack said the ECHO project, unrelated to the taxing issue, was too valuable to the community to reject. Meanwhile, members Fred Lowry and Pat Patterson sided with the county and voted to deny the request.
The approval of the ECHO grant does little to settle the tax problem though.
"I don't know if this can be resolved without going to court," said Kelley."I can play judge on this one, but that's why we have plaintiffs and defendants. Each side thinks they are right and in this case it will take a court to decide."
However, if it's determined that the golf course owes the taxes, Kelley said he'd like to see the county work out a payment agreement with management so it's easier to handle and doesn't result in the closure of a "beautiful" 18-hole course along the Tomoka River.