Which county-park concession rents were exempt as food-and-drink services within publicly owned recreational facilities?

Subject

Lease of Recreational Facilities

Plain-English summary

The snack-bar and food-concession rents were exempt, but four other county-park contracts were taxable. The exempt operators provided food and drink concessionaire services within county-owned parks that qualified as publicly owned recreational facilities.

The fishing-pier, ski-school, tennis-center, and canoe-rental contracts did not provide qualifying food and drink concessionaire services. Vending machines and light refreshments at special events were not enough for the tennis-center contract. Selling sundry beach merchandise alongside food and drink did not disqualify the snack-bar contract.

What this means for you

Public ownership and recreational use were not enough by themselves. The leased or licensed portion also had to be used by a person providing food and drink concessionaire services within the facility.

Common questions

Q: Were all six contracts exempt? No.

Q: Which contracts qualified? The snack bar and the food concession.

Q: Did beach-merchandise sales defeat the snack-bar exemption? No.

Citations and references

• Fla. Stat. § 212.031(1)(a)10. and (c) — real-property rent and concession exemption
• Fla. Stat. § 212.02(10)(i) — license to use real property
• Pederson v. Green, 105 So. 2d 1 (Fla. 1958)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-025

Original ruling text

SUMMARY

QUESTION: Are the lease and license fees received by a
county exempt form tax pursuant to s.
212.031(1)(a)10.,F.S.?

ANSWER - Based on Facts Below: If the facility is owned by
the county, and is determined to be a "recreational
facility", contracts for providing food and concessionaire
services within the facility would be exempt from tax. The
sale of sundry merchandise, in addition to food and drink,
would not render the exemption inapplicable.

May 17, 2001

Re: Technical Assistance Advisement 01A-025
Sales and Use Tax - Lease of Recreational Facilities
Section 212.031(1)(a)10., F.S.
XXX ("County")

Dear :

This is a response to your requests dated February 12, 2001, and
March 12, 2001, for the issuance of a Technical Assistance
Advisement (TAA) concerning the above referenced party and
matter. Your letters and supporting documents have been
carefully examined, and the Department finds your request to be
in compliance with the requisite criteria set forth in Chapter
12-11, F.A.C. This response to your request constitutes a TAA,
and is issued to you under the authority of section 213.22,
Florida Statutes.

Facts

With your request, you have included copies of contracts between
County and various corporations or management companies, for
providing certain concession services within several countyowned parks.

1. (Fishing Pier)

The contract is for operation and management of a fishing
pier. The scope of the contract includes a bait shop
concession, fishing tackle, fishing equipment, and related
equipment. There is no provision for food and drink
concessionaire services. The licensee (Contractor) is
required, by the terms of the contract, to pay to the
County a guaranteed annual payment, divided into monthly
payments, plus applicable sales tax.

2. (Ski School Concession)

The contract is for a ski school concession and includes
operation of a water skiing school program and equipment
rental. There is no provision for food and drink
concessionaire services. The licensee (Contractor) is
required, by the terms of the contract, to pay to the
County a guaranteed minimum monthly payment, plus
applicable sales tax.

3. (Tennis Center)

The contract is for management of a tennis center,
including operation of a pro shop and merchandise/equipment
rental. The pro shop will contain food and drink vending
machines. Light refreshments will be provided at special
events. The licensee (Contractor) is required, by the
terms of the contract, to pay to the County a minimum
annual payment, divided into monthly payments, plus
applicable sales tax, and a percentage of annual gross
sales/fees/rentals of equipment.

4. (Canoe Rental Business)

The contract is a lease and concession agreement for
operation of a canoe rental business at a designated site
within a recreation park operated by the County. The
lessee is required, by the terms of the agreement, to pay
to the County an annual payment, divided into monthly

payments, plus applicable sales tax. There is no provision
for food and drink concessionaire services.

5. (Snack Bar)

The contract is a concession and lease agreement for the
operation of a snack bar located within a county beach
park. The operational scope is limited to the sale of food
items, non-alcoholic beverages, and other items appropriate
to a beach environment. The concessionaire is required, by
the terms of the agreement, to pay to the County a minimum
payment over the term of the lease, divided into monthly
payments, plus applicable sales tax.

6. (Food Concessionaire Services)

The contract is for a food concession at a county beach
park. The contractor (concessionaire) is required, by the
terms of the agreement, to pay to the County a monthly
payment over the term of the lease, plus applicable sales
tax.

Advisement Requested

Whether the lease and license fees received by the County are
exempt from tax pursuant to section 212.031(1)(a)10., F.S.

Applicable Law and Discussion

Section 212.031(1)(a), Florida Statutes (F.S.), provides that it
is the legislative intent that every person is exercising a
taxable privilege who engages in the business of renting,
leasing, letting, or granting a license for the use of any real
property, with certain enumerated exceptions. A "license" to
use real property is defined in section 212.02(10)(i), F.S., as
"... the granting of a privilege to use or occupy a building or
a parcel of real property for any purpose."

Section 212.031(1)(c), F.S., provides in part:

For the exercise of such privilege, a tax is levied in an

amount equal to 6 percent of and on the total rent or
license fee charged for such real property by the person
charging or collecting the rental or license fee. The
total rent or license fee charged for such real property
shall include payments for the granting of a privilege to
use or occupy real property for any purpose and shall
include base rent, percentage rents, or similar charges....

An exemption from the tax is provided under section
212.031(1)(a)10., F.S., for property:

Leased, subleased, licensed, or rented to a person
providing food and drink concessionaire services within the
premises of a convention hall, exhibition hall, auditorium,
stadium, theater, arena, civic center, performing arts
center, publicly owned recreational facility, or any
business operated under a permit issued pursuant to chapter
550.... (Emphasis supplied)

Since it has been established by the contracts that the leases
or licenses at issue are for providing services within "publicly
owned" parks, the next question that must answered is whether
each park is a "recreational facility" as that term is used in
section 212.031(1)(a)10., F.S. No definition of "recreational
facility" is provided by statute. Thus, it is necessary to look
to principles of statutory construction.

Words of common usage, when used in a statute, should be
construed in their plain and ordinary sense. Pederson v. Green,
105 So.2d 1 (Fla. 1958). The word "recreation" is defined in
Webster's New Twentieth Century Dictionary, Unabridged, Second
Edition, 1968, as follows:

refreshment in body or mind, as after work, by some form of
play, amusement, or relaxation.

Any form of play, amusement or relaxation used for this
purpose, as games, sports, hobbies, reading, walking, etc.

The word "facility" is defined in The Random House Dictionary of
the English Language, The Unabridged Edition, as "something

designed, built, installed, etc., to serve a specific function
affording a convenience or service...."

It is specifically stated in section 212.031(1)(a)10., F.S.,
that the exemption applies to property leased or licensed "to a
person providing food and concessionaire services within the
premises of a.... publicly owned recreational facility...."
That language presupposes the existence of a publicly owned
recreational facility and exempts only that portion of the
premises within such facility that is leased or licensed to a
person providing food and drink concessionaire services.

Although the Legislature did not specifically define
"concessionaire services" for purposes of the exemption, the
term "concessionaire" generally refers to one holding a
concession, and the term "concession" is defined in Webster's
New International Dictionary as:

5. A grant or lease of a portion of premises for some
   specific use, or of a right to enter upon premises for some
   specific purpose; as, a concession at a fair for a lunch
   counter.

Determination

1. Fishing Pier

The contract does not fall within the exemption provided
under section 212.031(1)(a)10., F.S., since the contract
does not provide for food and drink concessionaire
services. Tax would be due on all payments received under
the terms of the lease or license agreement.

2. Ski School Concession

The contract does not fall within the exemption provided
under section 212.031(1)(a)10., F.S., since the contract
does not provide for food and drink concessionaire
services. Tax would be due on all payments received under
the terms of the lease or license agreement.

3. Tennis Center

Although the contract provides for food and drink vending
machines, and light refreshment at special events, these
activities would not constitute "concessionaire services."
The total rent or license fee charged on such real
property, including the base rent, percentage rents, or
similar charges, is taxable.

Canoe Rental Business

The contract does not fall within the exemption provided
under section 212.031(1)(a)10., F.S., since the contract
does not provide for food and drink concessionaire
services. Tax would be due on all payments received under
the terms of the lease or license agreement.

Snack Bar

The contract provides for food and drink concessionaire
services. The County's park, containing a little league
baseball field, multi-purpose athletic field, tennis
courts, play areas, exercise course, hiking trails,
reserved picnic stables and shelter, and concessions
complex with restrooms, would be considered to be a
"publicly owned recreational facility," as that term is
used in section 212.031(1)(a)10., F.S. Accordingly, the
contract for operation of the snack bar concession would,
therefore, be exempt. The statute does not require, in
order for the exemption to apply, that the food and drink
concessionaire services be the only services provided, and
therefore, the fact that the licensee sells sundry beach
merchandise does not render the exemption inapplicable.

Food Concessionaire Services

The contract is for food and drink concessionaire services.
The County's park, containing rental boat slips, picnic
facilities, fishing, snack bar, and children's play area,
would be considered to be a "publicly owned recreational
facility," as that term is used in section

212.031(1)(a)10., F.S. Accordingly, the contract for food
concessionaire services would be exempt.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment from that
which is expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Dee Overcash
Senior Tax Specialist

Ctrl #44675

NOTICE UNDER THE AMERICANS WITH DISABILITIES ACT

Persons needing an accommodation to participate in any
proceeding before the Department of Revenue, should contact the
Department at (850) 488-6374 (voice), or 1-800-DOR-8331 (TDD),
at least five working days before such proceeding. You may also
call via the Florida Relay System at 1-800-955-8770.