Largo wins Florida Supreme Court case on low-income housing deal

Published March 9 2017

LARGO — The Florida Supreme Court sided with Largo in a decision that found the city was not violating state law by accepting payments in lieu of taxes from a nonprofit organization.

The lawsuit sprouts from a deal between Largo and RHF-Brittany Bay, the previous owner of the Brittany Bay affordable housing complex at 1201 Seminole Blvd. The agreement said the group would pay an amount equivalent to the cost of property taxes in exchange for tax-exempt bonds with low interest rates from the city to get the project off the ground.

The decision, which awards the city about $700,000 plus attorney's fees that could push the total to more than $1 million, sets an important precedent to give governments around the state a method to facilitate affordable housing projects, said Largo City Attorney Alan Zimmet, adding that he's received inquiries from other cities who have or are considering similar agreements.

"It's going to continue to give cities around the state the opportunity to create affordable housing," he said.

The unanimous decision reverses a judgment by the appellate court that found the payments in the deal were essentially taxes in disguise, which would violate the Florida Constitution. But the highest court disputed those findings, saying the organization voluntarily agreed on the payments.

"While the 2nd District correctly noted the public policy favoring affordable housing for low-income families," the judgment says, "we find that this contract supported that public policy by enabling RHF to procure the funding necessary for the building of the apartment complex. But for the tax-exempt bonds ... the affordable housing complex might never have been built."

RHF, a limited liability company owned by Davie-based Reliance Housing Foundation, bought the property in December 2000, according to the judgment. The parties then signed a public memorandum of agreement acknowledging the deal, which specified the annual payments would be determined by multiplying the property's assessed tax value by the city's property tax rate.

The payments stopped in 2006 after Dallas-based AHF-Bay Fund bought the property. The company denied knowledge of the agreement, the judgment says. The city filed the lawsuit in 2010.

Lawyers representing AHF-Bay Fund did not return requests for comment.

The money awarded in the lawsuit covers payments from 2006 through 2012. Zimmet said AHF-Bay Fund will also be responsible for interest in the amount of about $105,000, attorney's fees for work in the circuit court that comes out to about $114,000 and potentially attorney's fees for work in the appellate court if a motion filed by the city with the state Supreme Court is granted. That amount would be in the ballpark of about $120,000, Zimmet said.

The city will also be entitled to payments between 2013 and last year, he said. His firm, Bryant Miller Olive, is still in the process of calculating that total.

City Manager Henry Schubert said the money from the lawsuit and the annual payments will go into the city's general fund, which covers the city's operating expenses.

Contact Kathryn Varn at (727) 893-8913 or Follow @kathrynvarn.

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