Which parts of a marine cargo terminal's port-authority lease qualified for Florida's commercial-rent exemption?

Plain-English summary

The terminal operator divided its port-authority lease into nine functional areas. It treated the container-handling and storage area, labor office supporting cargo movement, and gate complex as exempt, while treating the remaining repair, parking, management, and shop areas as taxable.

The advisement's opening summary says the Department affirmed those submitted designations. Its response paragraph also clearly places Areas A and I in the exempt list and Areas B, C, D, and H in the taxable list.

The response paragraph is internally inconsistent beyond those classifications: it places Area E in both lists and does not list Areas F or G. The ruling therefore does not provide a clean final-area list that can be restated without qualification. It also limits the exemption when port charges exceed amounts based on tonnage imported or exported, except where the separate exclusive-use language applies.

What this means for you

Port property is not exempt merely because it lies inside a terminal lease. Each area's actual, exclusive connection to vessel docking, loading, unloading, or fueling must be analyzed, and internally inconsistent agency guidance should be clarified before reliance.

Common questions

Which areas were unambiguously exempt in the final response? The container-handling and storage area (A) and gate complex (I).

Which were unambiguously taxable? The two empty-container repair areas (B and C), heavy-equipment parking (D), and shop area (H).

What did the ruling say about Area E? Its final paragraph lists the labor office as both taxable and exempt, while the opening summary says the taxpayer's classifications were affirmed.

Citations and references

• Fla. Stat. §§ 212.031(1)(a)8 and 315.02(2) and Fla. Admin. Code r. 12A-1.070(1)(a)7, as cited or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09A-030

Original ruling text

SUMMARY
TAX: Sales and Use Tax
TAA NUMBER: 09A-030
ISSUE: Real Property Rental - Port Authority Exemption
STATUTE CITE(S): Section 212.031(1)(a)8.a., Florida Statutes (F.S.)
RULE CITE(S): Rule 12A-1.070(1)(a)7., Florida Administrative Code
Question: Are certain areas leased from a port authority subject to the exemption found in Section
212.031(1)(a)8.a., F.S.?
Answer: The answer affirms taxpayer’s submitted designations, concerning taxability, under the
applicable exemption statute.

June 30, 2009
XXX
Re:

Technical Assistance Advisement 09A-030
Taxability of a Lease with XXX XXX
Sales and Use Tax
Section 212.031(1)(a)8.a., Florida Statutes (F.S.)
XXX (“the Taxpayer”)
FEI #: XXX

Dear XXX:
This is in response to your letter dated March 4, 2009, received by this office on March
11, 2009, requesting this Department’s issuance of a Technical Assistance Advisement
(“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 12-11, Florida
Administrative Code (F.A.C.), regarding the taxability of a real property lease with the
Metropolitan XXX XXX County Seaport Department (the XXX XXX). An examination
of your letter has established that you have complied with the statutory and regulatory
requirements for issuance of a TAA. Therefore, the Department is hereby granting your
request of a TAA.
ISSUE
The issue is whether certain areas leased, pursuant to an agreement between the Taxpayer
and the XXX XXX, are exempt from the tax imposed on commercial real property leases.

Technical Assistance Advisement
Page 2 of 5

FACTS
The Taxpayer, a Florida partnership, operates a XXX XXX for the purpose of importing
and exporting containerized cargo, automobiles, other wheeled equipment, boats and
industrial equipment. The Taxpayer entered into an agreement with the XXX XXX,
which provides that “. . . XXX County 1 hereby grants to [the Taxpayer] the exclusive use
of approximately XXX acres . . . .” It was provided in your request, and indicated in an
attached letter from the XXX XXX, that the current acreage under contract is 117.09
acres. You indicated telephonically that this agreed reduction in acreage leased is not
pursuant to a separate written amended agreement. You provide descriptions of portions
of the leased acreage for the purpose of determining the taxable status of the certain
areas.
You provide the descriptions, in part, as follows:
Area A – Container Handling and Storage XXX acres
The container handling and storage area comprises the major portion of the leased
facilities. This area is comprised of a lined, paved asphalt area, containing spaces
for the holding, processing, sorting and otherwise serving as a temporary storage
area for containerized customer cargo while waiting to be loaded aboard a vessel
or claimed by the customer. . . .
Area B – MT Repairs (Empty Repairs) XXX acres
This portion of the facility is used to store and repair damaged containers. The
damaged containers are repaired by outside vendors. After the repairs have been
made the units are then placed back into the container handling and storage area. .
..
Area C – MT Repairs (Empty Repairs) XXX acres
This portion of the facility is used to store and repair damaged containers. The
damaged containers are repaired by outside vendors. After the repairs have been
made the units are then placed back into the container handling and storage area. .
..
Area D – Parking XXX acres
This portion of the facility is used for parking of heavy lift equipment used [to]
move cargo in the various areas of the facility. The heavy lift equipment is used
throughout the facility. . . .
Area E – ILA Office XXX acres
This portion of the facility is used to house the XXX XXX XXX (XXX)
employees who are employed by [the Taxpayer] to facilitate the movement of
1

The XXX XXX Act Ch. 22963 Laws 1945 as Amended Through 1957 Session, indicates that “. . .the
words ‘XXX XXX’ shall apply wherever the words ‘county’ or ‘board of county commissioners’ are used .
. . .” for qualifying counties such as XXX XXX.

Technical Assistance Advisement
Page 3 of 5

cargo into and out of the facility, plan the storage and effect the movement of
containerized cargo in the container handling and storage area. . . .
Area F – Management Office XXX acres
This portion of the facility is used to house the management of [the Taxpayer] to
facilitate the movement of the cargo and other administrative functions related to
the entire operation of the facility. . . .
Area G – Parking XXX acres
This portion of the facility is used for parking for XXX, administrative and
security personnel and visitors to the facility. . . .
Area H – Shop Area XXX acres
This portion of the facility is used for repair and maintenance of the mechanical
equipment used to facilitate the movement of the cargo in the facility. The shop
area is separate and distinct from the main facility. . . .
Area I – Gate Complex XXX acres
This portion of the facility includes the terminal access gate either into or out of
the facility. Cargo must pass through the gate complex in order to exit the cargo
holding area or enter to eventually be loaded onto an oceangoing vessel. . . .
TAXPAYER POSITION
You indicate, in your request, that “[b]ased on [your] understanding of prior technical
assistance advisements . . .,” Areas A, E and I are exempt because they meet the
“exclusivity test” found in Section 212.031(1)(a)8.a., F.S. You indicate that the other
areas are subject to tax because they do not meet this test.
APPLICABLE STATUTES AND RULES
Sections 212.031(1)(a)8., F.S., provides:
a. Property used at a XXX XXX, as defined in s. 315.02(2), exclusively for the
purpose of oceangoing vessels or tugs docking, or such vessels mooring on
property used by a XXX XXX for the purpose of loading or unloading passengers
or cargo onto or from such a vessel, or property used at a XXX XXX for fueling
such vessels, or to the extent that the amount paid for the use of any property at
the port is based on the charge for the amount of tonnage actually imported or
exported through the port by a tenant.
b. The amount charged for the use of any property at the port in excess of the
amount charged for tonnage actually imported or exported shall remain subject to
tax except as provided in sub-subparagraph a.

Technical Assistance Advisement
Page 4 of 5

Rule 12A-1.070(1)(a)7., F.A.C., provides:
a. Property used at a XXX XXX exclusively for the purpose of oceangoing
vessels or tugs docking, or such vessels mooring on property used by a XXX
XXX for the purpose of loading or unloading passengers or cargo onto or from
such vessels, or property used at a XXX XXX for fueling such vessels. See
subsection (2).

b. The term "XXX XXX" means any XXX XXX created by or pursuant to the
provisions of any general or special law or any district or board of county
commissioners acting as a XXX XXX under or pursuant to the provisions of any
general or special law.
RESPONSE
The Department finds that the Agreement is between the Taxpayer and a XXX XXX as
defined in Section 315.02(2), F.S. Accordingly; areas leased, which meet the statutory
definition, qualify for the exemption found in Section 212.031(1)(a)8., F.S. The
Department finds, based on the information provided, that your determinations regarding
the areas delineated as Areas A – I are correct. Accordingly, areas B, C, D, E and H are
subject to tax and areas A, E and I are not. You are alerted to the limitation in Section
212.031(1)(a)8., F.S., which indicates that the exemption only applies to the amount
charged for the use of any property at the port not in excess of the amount charged for
tonnage actually imported or exported. Any amounts in excess shall remain subject to
tax except as provided in sub-subparagraph a.
This response constitutes a Technical Assistance Advisement under Section 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 Section 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 than 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 Section 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

Technical Assistance Advisement
Page 5 of 5

lead to identification of the taxpayer. Your response should be received by the
Department within 15 days of the date of this letter.
Sincerely,

R. Clay Brower
Revenue Program Administrator
Technical Assistance and Dispute Resolution
(850) 922-4837
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