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continuing to "substantially complete" building area, Majestic can extend the Option up to a maximum of 15 years, including the initial five. In practice, if Majestic builds 100,000 square feet of building per year for ten years, it would have used fifteen years and would have constructed a million square feet. A separate PGL is contemplated for each development parcel with a project development plan.


Majestic is not obligated under the Option to enter into a PGL until the Authority approves the project development plan for the designated parcel, and Majestic completes several "performance benchmarks." The performance benchmarks provide the timetable for Majestic's performance in preparing a parcel for construction, including obtaining a wetlands survey, applying for wetlands permits, submission of a project development plan to the City of Jacksonville for review, and applying for a building permit. If Majestic fails to comply with the performance benchmarks, the JAA's sole and exclusive remedy is to terminate the Option as to the particular parcel.


The initial five-year Option term, and Majestic's obligations under the performance benchmarks, are further tolled while this lawsuit is pending through trial and appeal, though notwithstanding the tolling period, the option term may not exceed 15 years from the date of the Agreement.


Jackson-Shaw expert C. Allen Watts testified without contradiction that these benchmarks, if all exercised to the maximum amount of time allowable, conceivably could delay the closing on a PGL, and thus the recovery by the JAA of any rent, for the development parcel for an additional four years or a total of nine years from the exercise of the Option (plus an additional one-year grace period provided by the incorporated PGL agreement, for a total of 10 years out), all without Majestic breaching or forfeiting the Option. If, after the nine years, Majestic fails to close on the PGL, it withdraws the exercise of the Option as to that development parcel, and may walk away from the deal, without liability for breach or damages to the Authority. The benchmark timetable was not provided to the Board in December 2005, but was in the September 2006 draft of the Option approved by the Board.


The JAA's obligations under the Option include constructing the currently planned and budgeted north-south extension of Alvarez Road through the Woodwings East parcel at a cost "not to exceed" $750,000. [n.15] Further, the JAA agreed to provide, at no cost to







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Majestic, up to 50 acres of wetlands mitigation that may be required by Majestic's development of Woodwings East (in addition to wetlands mitigation required for the Alvarez Road extension). Any additional wetlands mitigation required by Majestic will be treated as an "advance" and reimbursed to Majestic out of gross revenues.



[N.15.] The first phase of Majestic's development, involving the construction of three buildings, requires JAA to extend Alvarez Road, a public road, into the interior of the Woodwings East parcel.




"Advances" means costs incurred by Majestic, including all "pre-development costs," approved infrastructure costs; and other enumerated costs incurred in modification of the PUD; relocation of an electric utility easement; signs; obtaining required government approvals and permits for development; land platting; and wetlands mitigation expenses.


If the Option is terminated or expires (other than because of breach by the Authority) Majestic may recoup all unreimbursed pre- development costs and approved infrastructure costs through the then- existing PGLs. If JAA materially breaches the Option or any PGLs, then JAA must reimburse all outstanding pre-development and infrastructure costs paid by Majestic.


Each project development budget will include a 4% Development Fee to be paid to Majestic. All costs incurred by the JAA to comply with its obligations under the Option, however, shall not be treated or reimbursed to JAA as an "advance."


JAA agreed in the Option that Majestic can use its affiliate, Commerce Construction Co., for construction of the commercial buildings on the designated development parcels.









3. Participating Ground Lease (Ex. 214.)



The terms of the 65-year PGL, which is incorporated as Exhibit "C" to the Option, describe the rent and revenue structure of the transaction between JAA and Majestic. "Rent" is the greater of 1) $1,380 per acre per year per year, subject to periodic increases based upon the Consumer Price Index, ("Fixed Rent") or 2) 50 percent of the net revenue during each whole or partial calendar year ("revenue rent"). "Net revenue" is defined as







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cash remaining after deduction from total revenue of Majestic's 1) debt service; 2) project costs (all costs incurred and paid by Majestic in designing, development, financing, constructing, owning, operating, maintaining, leasing and managing the premises and commercial facilities); 3) a "reasonable reserve" for future project costs or as required by any lender to Majestic; and 4) repayment of advances [n.16] with interest set at 250 points over prime.



[N.16.] The term "equity contribution" was used in the December 19, 2005 and September 6, 2006 submissions for Board approval, The term "advances" was later substituted.




Rent does not commence until one month past the first anniversary following the effective date of the PGL. Thus, once Majestic enters into a PGL with the Authority, it receives one year rent-free. Further,


Once Revenue Rent is payable to [JAA] by [Majestic], the amount of all Fixed Rent previously paid by [Majestic] at any time during the Term of this Agreement shall be credited, dollar for dollar, against the Revenue Rent otherwise payable by [Majestic], thereby reducing the amount of Revenue Rent actually payable, provided the total Rent paid to [JAA] by [Majestic] shall not be less than the Fixed Rent payable under this Lease.


Such crediting of previously paid Fixed Rent shall continue throughout the Term of this Agreement.



As in the Option, "development fees," which are reimbursed to Majestic from gross revenues prior to determination of "net revenue," means the fee paid to Majestic in the amount of four percent of the construction and improvement costs in the development budget. "Management fees" paid to Majestic for the administration of the commercial facilities in Woodwings East range from three to five percent of the total revenue received by Majestic from sublessees.


The PGL requires construction to commence on the development parcel within two years of the execution of the PGL, and for construction to be substantially complete two years later, otherwise, Majestic will be in breach of the PGL. Thus, if Majestic







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uses all time provided under the PGL, revenues from sublessees may not be generated for four years or more after a PGL is signed.


While the PGL contemplates no incumbrance or liens on JAA's fee simple title to the land, [n.17] loans to Majestic in connection with its development of commercial facilities and improvements on the land "may be secured by a mortgage or deed of trust encumbering the leasehold estate" created by the PGL. If the leasehold interest is foreclosed upon by a Majestic lender, revenue rent may be abated.


Thus, Majestic's lenders may foreclose on its leasehold interest, and the foreclosing lenders will step into Majestic's shoes, assuming a preferred position, with its debt being repaid prior to maintenance expenses, and prior to the determination of net revenue to be shared with the Authority.



[N.17.] The cost to Majestic of bonding against or discharging a lien on the fee is treated as a "project cost" and reimbursed out of gross revenues before the split distribution of net revenues, or "revenue rent" to the Authority.




All improvements and buildings constructed on the premises by Majestic are owned by Majestic until the expiration or termination of the PGL. At termination of the PGL, Majestic will leave the premises and title and ownership in the buildings and other improvements to the property will pass to JAA.


If Majestic defaults on the PGL by failing to pay rent, or abandoning the premises or failing to fulfill other terms and conditions set forth in the agreement, JAA may pursue all rights in law and equity. Any money judgment in favor of JAA resulting from default by Majestic "shall not exceed an amount equal to the fair market value of [Majestic's] interest in the Premises," subject to several exceptions, including when Majestic "intentionally commits waste on the Premises."



Id. at 707-11 (citations and footnote omitted).







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In its suit for declaratory and injunctive relief, Jackson-Shaw contested the lawfulness of this agreement on several grounds. Id. at 695-96.3 Among other arguments, Jackson-Shaw contended that the transaction violated the prohibition in article VII, section 10 of the Florida Constitution, against a government entity becoming a joint owner with, or giving, lending, or using its credit to aid, a corporation. Id. at 695. After a bench trial, the district court entered judgment in favor of the JAA. Id. at 696, 739. The district court determined that the agreement did not violate the prohibition against joint ownership because the relationship between the JAA and Majestic was not a joint venture as defined under Florida law. Id. at 727-31. The district court also determined that the JAA was not pledging its credit through the transaction and that the transaction served a public purpose. Id. at 731-35.


On appeal to the Eleventh Circuit, Jackson-Shaw again raised the claims that the agreement violated article VII, section 10 of the Florida Constitution. Jackson- Shaw Co. v. Jacksonville Aviation Auth. (Jackson-Shaw II), 508 F.3d 653, 654 (11th Cir. 2007). The Eleventh Circuit determined that resolution of the issues depended on unsettled state law and noted that this Court had only considered the












3. After initiating the lawsuit, Jackson-Shaw made an offer to lease twenty- five acres of Woodwings East and proposed a rolling option for future leases. Id. at 707. The JAA, through counsel, wrote that it was unable to respond to the proposal because of the instant litigation. Id.







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question of whether the lease of public lands to a private developer was unconstitutional in two prior cases, neither of which dealt with a lease similar to the one in this case. Id. at 654, 657-58. Accordingly, the Eleventh Circuit certified the following questions to this Court:








1. Is the JAA a "joint owner" prohibited by article VII, section 10 of the Florida Constitution by virtue of its obligations under the Agreement?








2. Is the JAA impermissibly pledging its "credit" under article VII, section 10 of the Florida Constitution by virtue of its obligations under the Agreement?



Id. at 658.


ANALYSIS




The parties agree that the certified questions arise from undisputed facts.


These questions also require this Court to interpret the Florida Constitution. The interpretation of the Florida Constitution is a question of law. See Crist v. Fla.


Ass'n of Criminal Def. Lawyers, Inc., 978 So. 2d 134, 139 (Fla. 2008). Because the certified questions involve pure questions of law that arise from undisputed facts, they are subject to de novo review. Macola v. Gov't Employees Ins. Co., 953 So. 2d 451, 454 (Fla. 2006).




First, we set out the relevant constitutional provision and its history. Then we discuss similar cases interpreting this provision and the provision which immediately preceded it. Next, we address whether the JAA has become a joint







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owner with Majestic. Finally, we address whether the JAA has given, lent, or used its credit to aid Majestic.


Article VII, Section 10 of the Florida Constitution






Article VII, section 10 of the Florida Constitution, which is entitled "Pledging credit," provides in pertinent part:


Neither the state nor any county, school district, municipality, special district, or agency of any of them, shall become a joint owner with, or stockholder of, or give, lend or use its taxing power or credit to aid any corporation, association, partnership or person . . . .


Art. VII, § 10, Fla. Const. (1968).4


Article IX, section 10 of the 1885 Florida Constitution preceded Florida's current prohibition. This predecessor provision provided:



The credit of the State shall not be pledged or loaned to any individual, company, corporation or association; nor shall the State become a joint owner or stockholder in any company, association or corporation. The Legislature shall not authorize any county, city, borough, township or incorporated district to become a stock holder in any company, association or corporation, or to obtain or appropriate money for, or to loan its credit to, any corporation, association, institution or individual.


Art. IX, § 10, Fla. Const. (1885).


Before the predecessor provision was adopted, the Florida Constitution contained a prohibition against the State using public money for private business;











4. The subsections contained in the remainder of this provision are inapplicable to this case.
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