In a major victory for the City of Largo with implications for municipalities around the state, the Florida Supreme Court in a 6-0 decision upheld Largo’s right to accept payments in lieu of taxes from a nonprofit organization that owns an affordable housing community in the City.
Bryant Miller Olive’s Alan Zimmet, who serves as the City Attorney for the City of Largo, was the lead attorney for the City in the case, City of Largo, Florida vs. AHF-Bay Fund LLC, with the assistance of Bryant Miller Olive attorneys Nikki Nate and Ellie Neiberger. The Florida Supreme Court ruled on the case on March 2.
PILOT (payment in lieu of taxes) agreements are common for nonprofits or government entities that want to retain the ability to secure tax-exempt bonds for projects, such as affordable housing, arts or educational facilities, while satisfying financial obligations of the local municipality. This case has been closely watched by other municipalities and affordable housing developers around the state, many of which have such PILOT agreements in place.
“We are very pleased with the Florida Supreme Court’s decision in the case; one that has far-reaching implications for municipalities around the state and validates Largo’s efforts to facilitate affordable housing,” Zimmet said.
The payments in question date back to a PILOT agreement reached between the City of Largo and a nonprofit entity called RHF, when RHF converted the Brittany Bay apartment complex to affordable housing. After another nonprofit entity, AHF-Bay Fund, LLC, acquired the project, it argued that it should not have to make the payments in lieu of taxes stipulated in the agreement, saying such payments are not legal.
In 2010, the City of Largo went to court seeking a summary judgment that would require full payment, and was awarded $695,158.23 in damages and prejudgment interest. But the 2nd District Court of Appeal reversed the decision, leading the City of Largo to take the case to the Florida Supreme Court.
As the case progressed, Zimmet has been in correspondence with a number of other municipalities around the state that were watching the case closely.
“The ability to use tax-exempt bonds and also meet a municipality’s tax obligations can be a key driver in making affordable housing and other types of projects work financially,” Zimmet said. “This decision is important because it allows a key financing mechanism to remain in place going forward.”