Are loan and mortgage documents securing Florida Chapter 190 community-development-district bonds subject to documentary stamp or nonrecurring intangible tax?

Plain-English summary

The Department ruled that Florida's Chapter 190 exemption covered more than the community development district's revenue bonds. It also covered the loan agreement, mortgage, security agreement, and other instruments that arose from or secured repayment of those bonds.

Accordingly, the described loan agreement and mortgage and security agreement were exempt from documentary stamp tax and nonrecurring intangible tax. The Department also said that enforcing the lender or mortgage holder's remedies was not subject to either tax because enforcement itself is not a document and is not an obligation to pay money.

What this means for you

The ruling applied the Chapter 190 bond exemption to closely connected financing documents, not to unrelated borrowing generally. The relationship between each instrument and repayment of the district-issued bonds was essential.

Common questions

Were the Chapter 190 bonds exempt? Yes.

Did the exemption extend to the loan agreement and mortgage and security agreement? Yes, because they arose from or secured repayment of the bonds.

Was exercise of lender remedies taxable? No. The Department said enforcement is neither a document nor an obligation to pay money.

Citations and references

• Fla. Stat. §§ 190.012(1)(g), 190.021(6), 199.133(1), and 201.08(1)(a), (b), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 09M-001

Original ruling text

SUMMARY
QUESTION: Are Florida’s documentary stamp tax as imposed under paragraphs 201.08(1)(a)
and (b), F.S., and nonrecurring intangible tax as imposed under subsection 199.133(1), F.S., due
on a Loan Agreement and Mortgage and Security Agreement executed in connection with bonds
issued under Chapter 190, F.S.?
ANSWER: It is determined that section 190.021(6), F.S, provides not only an exemption for
the issued bonds, but also an exemption for notes, mortgages, security agreements, or other
instruments that arise out of or are given to secure the repayment of bonds issued under Chapter
190, F.S. It is further determined that the subject Loan Agreement and Mortgage and Security
Agreement arise out of or are given to secure the repayment of bonds issued under Chapter 190,
F.S., and are therefore exempt from documentary stamp taxes due under section 201.08(1)(a) and
(b) and nonrecurring intangible tax due under section 199.133(1), F.S.
October 22, 2009
Re:

Technical Assistance Advisement 09M-001
Documentary Stamp Tax and Nonrecurring Intangible Tax – Bonds, Loan Agreement
and Mortgage
Paragraphs 201.08(1)(a) and (b) and subsections 199.133(1) and 190.021(6), F.S.
XXX (“Taxpayer”)

Dear :
This is in response to your letter dated XXX, requesting a Technical Assistance
Advisement regarding application of Florida’s documentary stamp tax as imposed under sections
201.08(1)(a) and (b), Florida Statutes (F.S.), and nonrecurring intangible tax as imposed under
section 199.133(1), F.S., on certain bonds issued under Chapter 190, F.S., and the loan
agreement, security agreement, and mortgage that arise out of the issuances of the bonds. This
response to your request constitutes a Technical Assistance Advisement under Chapter 12-11,
Florida Administrative Code, and is issued to you under the authority of section 213.22, F.S.
Facts as Presented by Petitioner
Taxpayer plans to build and operate a XXX (the “Project”). The Project will consist of a
XXX, as well as XXX, XXX, XXX, XXX, XXX, and XXX. The XXX conducted at the facility
will focus on the XXX and XXX.
The Project will be located within the boundaries of the XXX (the “District”). The
District is a duly and validly established community development district under Chapter 190 of
the Florida Statutes and is located within the city of XXX (the “City”).
The District has agreed to issue tax-exempt revenue bonds and to loan the bond proceeds
to Taxpayer to finance a portion of the costs to acquire, construct, improve, and equip the
Project. The District is expressly permitted under section 190.012(1)(g), F.S., to finance, fund,

Technical Assistance Advisement 09M-001
Page 2

plan, establish, acquire, construct or reconstruct, enlarge or extend, equip, operate, and maintain
systems, facilities, and basic infrastructures for projects within its boundaries when the project is
the subject of an agreement between the district and a governmental entity and is consistent with
the comprehensive plan of the local governmental entity and is consistent with the
comprehensive plan of the local government within which the project is to be located. In
accordance with this provision, the District and the City have entered into a City/District XXX
Interlocal Agreement dated as of XXX (“the Agreement”), pursuant to which the City has agreed
that the District can finance the acquisition and construction of the Project.
Under the authority granted to the District by the District Act and the Interlocal
Agreement, the District adopted a bond resolution on XXX (the “Bond Resolution”), authorizing
the issuance of Research Facilities Revenue Bonds ([Taxpayer] Project) to be comprised of
Series 2009 bonds and completion Bonds, both to be issued in one or more series in an aggregate
principal amount not exceeding $XXX (collectively referred to as the “Bonds”). The Bond
Resolution also authorizes the loan of the Bond proceeds to Taxpayer to pay, or reimburse the
payment of, the costs of acquiring and constructing the Project, to fund certain reserves
established for the Bonds, to pay capitalized interest on the Bonds, and to pay the issuance costs
of the Bonds.
The Bonds will be issued pursuant to the terms and provisions of a trust indenture (the
“Trust Indenture”) to be entered into between the District and XXX, as trustee (the “Trustee”)
and as supplemented in connection with the issuance of the Completion Bonds. The loans of the
Bond proceeds from the District to Taxpayer will be made pursuant to a loan agreement to be
entered into between the District and the Taxpayer (the “Loan Agreement”), as supplemented in
connection with the issuance of the Completion Bonds. Under the terms of the Loan Agreement,
Taxpayer will covenant and agree to apply the proceeds of the loans to pay, or reimburse the
payment of, the costs of acquiring and constructing the Project, to fund certain reserves
established for the Bonds, to pay capitalized interest on the Bonds, to pay issuance costs of the
Bonds, and to pay the Trustee amounts needed to pay the principal, amortization installments,
redemption premium, if any, and interest on the Bonds when due. The obligations of Taxpayer
under the Loan Agreement will be secured by a Mortgage and Security Agreement entered into
between Taxpayer and the Trustee.
Request for Advisement
You request a determination by the Department of Revenue whether documentary stamp
tax, as imposed under paragraphs 201.08(1)(a) and (b), F.S., and nonrecurring intangible tax, as
imposed under subsection 199.133(1), F.S., are due on the Loan Agreement, and Mortgage and
Security Agreement executed in connection with the Bonds issued under Chapter 190, F.S., and
the enforcement of the lender/mortgage holder’s remedies under the foregoing documents. A
copy of the Bond Resolution and Bond Resolution Amendment (scheduled for adoption on
XXX) were provided for review.

Technical Assistance Advisement 09M-001
Page 3

Law and Discussion
Paragraph 201.08(1)(a), F.S., imposes documentary stamp tax on promissory notes and
other written obligations to pay money, executed, signed, or delivered in Florida. A document
executed, signed, or delivered in Florida is taxable if it contains an unconditional obligation to
pay, or repay, a sum certain in money and is signed by an obligor.
Paragraph 201.08(1)(b), F.S., imposes documentary stamp tax on mortgages or liens filed
or recorded in Florida. The tax is based on the total amount of all obligations secured thereby.
When there is a taxable note or obligation to pay money and a taxable recorded mortgage or lien
given to secure the obligation, tax is due only once and shall be paid on the recorded mortgage or
lien at the time of recordation or directly to the Department of Revenue no later than the 20th day
of the month following the month of the note’s execution, whichever occurs first.
Subsection 199.133(1), F.S., imposes nonrecurring intangible tax on notes and other
written obligations to pay money to the extent secured by a mortgage on Florida real property.
The tax is imposed on the obligation to pay money, not on the mortgage. The tax rate is 2 mills,
and the tax is due at the time the obligation is secured by Florida real property.
Subsection 190.021(6), F.S., provides that the bonds issued under Chapter 190, F.S., and
the interest paid thereon and all fees, charges, and other revenues derived by the District from the
projects provided in Chapter 190, F.S., are exempt from all taxes by the state or by any political
subdivision, agency, or instrumentality thereof. However, any interest, income, or profits on
debt obligations issued thereunder are not exempt from the tax imposed by Chapter 220, F.S.,
and the districts are not exempt from the provisions of Chapter 212, F.S.
Position of the Department
It is determined that section 190.021(6), F.S, provides not only an exemption for the
issued bonds, but also by an exemption for notes, mortgages, security agreements, or other
instruments that arise out of or are given to secure the repayment of bonds issued under Chapter
190, F.S. It is further determined that the subject Loan Agreement, and Mortgage and Security
Agreement arise out of or are given to secure the repayment of bonds issued under Chapter 190,
F.S., and are therefore exempt from documentary stamp taxes due under section 201.08(1)(a) and
(b) and nonrecurring intangible tax due under section 199.133(1), F.S. The enforcement of the
lender/mortgage holder’s remedies under the Loan Agreement, and Mortgage and Security
Agreement is not a document and is not an obligation to pay money and therefore is not subject
to documentary stamp tax or nonrecurring intangible tax.
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.

Technical Assistance Advisement 09M-001
Page 4

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

Charles T. Phillips
Revenue Program Administrator I
Technical Assistance and Dispute Resolution
CTP/
Record ID: 70795