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through a proposed arrangement. See Mich. Mut. Liab. Co., 174 So. 2d at 4-6 (evaluating the nature of the proposed relationship and looking to the character of the insurer and the terms of a proposed contract of insurance between the Board of Public Instruction and a mutual insurance company and finding that the proposed agreement did not violate the constitutional prohibition); State v. Dade County, 142 So. 2d 79, 82-83, 88 (Fla. 1962) (holding that the sale of common stock of privately owned transportation systems to a county did not violate the constitutional prohibition where the companies in question would be dissolved at the closing of the transaction and the county would then own the transportation systems and all their physical properties); Brautigam, 64 So. 2d at 782, 784 (finding that a transaction by which a county would acquire title to lands owned by a private club by entering into a purchase agreement with the club's holders of "participating ownership certificates," acquiring the property, dissolving the club, and vesting title to the lands in the county did not violate the constitutional prohibition); State v. City of Key West, 14 So. 2d 707, 708-09 (Fla. 1943) (holding that an ordinance authorizing a city to acquire controlling capital stock of an electric company and the procedure proposed under the ordinance would make the city a stockholder in a corporation in violation of the constitutional prohibition).


Keeping in mind the actual language used in the constitutional prohibition and the purpose of the prohibition as well as the nature of the relationship that will







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arise under the agreement, the question is whether the agreement between the JAA and Majestic violates the constitutional prohibition against joint ownership.


As this Court's holdings in Williams and Bannon reflect, a lease by a public entity to a private entity is not per se invalid under article VII, section 10 of the 1968 Florida Constitution. See Williams, 291 So. 2d at 578; Bannon, 246 So. 2d at 740-41.8 Because such arrangements are not per se invalid, a public entity thus does not become a joint owner with a private entity merely by entering into a lease.


However, Jackson-Shaw argues that unlike the public bodies in Williams and Bannon, the JAA has undertaken financial responsibility and will suffer serious losses. Cf. Williams, 291 So. 2d at 578 (suggesting that public funds were not spent by the municipality in leasing public land to a private corporation); Bannon, 246 So. 2d at 741 (observing that the district's participation was limited to that of a lessor and did not involve responsibility for the financing, promotion, or development of the proposed project and that the district would bear no responsibility to the corporate tenant's creditors and its ownership of the land would not be committed for such if the corporate tenant failed).















8. To the extent that this Court may have suggested in Raney that a lease to a private entity for profit necessarily violates the constitutional prohibition, see Raney, 88 So. 2d at 151, we rejected such a proposition in later cases such as Williams and Bannon.







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Jackson-Shaw cites several aspects of the Option and PGL as demonstrating that the JAA has undertaken financial responsibility and will suffer losses. For example, Jackson-Shaw argues that through entering into the Option the JAA is expending public funds on the road extension and wetlands mitigation credit and is encumbering public lands for no consideration. Jackson-Shaw argues that if and when Majestic exercises the Option, Majestic has up to four years to enter into a lease and has the ability to walk away without penalty. Jackson-Shaw also contends that if and when Majestic exercises the Option, the JAA will have to effectively reimburse Majestic for all its costs and pay additional profits to Majestic for developing and managing the property before the JAA gets to share in the revenue under a PGL. Jackson-Shaw contends that if Majestic defaults on its financing under a PGL, lenders are authorized to foreclose on the leasehold interest and recoup all of their collection costs out of the project's revenue before the JAA gets revenue rent. Jackson-Shaw also notes that if Majestic defaults on a PGL, the JAA's right to recover damages is limited to the fair market value of Majestic's interest in the premises.


In determining whether the agreement violates the constitutional prohibition against joint ownership, we first look to whether the JAA has incurred financial obligations as a result of the agreement so as to make it a joint owner with Majestic. See Williams, 291 So. 2d at 578; Bannon, 246 So. 2d at 741. Under the







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Option, the JAA is obligated to construct a currently planned and budgeted road extension at a cost not to exceed $750,000. Because the road extension had already been planned and budgeted, the JAA is not actually using public funds so as to create a prohibited joint ownership. The Option is merely obligating the JAA to do something it already intended to do. The JAA is also obligated to provide, at no cost to Majestic, up to fifty acres of land for wetlands mitigation that may be required by Majestic's development of Woodwings East. The Option explains that the JAA will provide wetlands mitigation by designating land it owns that can be subject to a conservation easement. Even though the JAA already owns any land that will be used for wetlands mitigation, it could be argued that it is using public resources to assist in a private venture. See Bannon, 246 So. 2d at 741.


Nevertheless, we do not find that this provision renders the JAA and Majestic joint owners.


In determining whether the agreement violates the constitutional prohibition against joint ownership, we also look to the nature of the relationship that will arise under the agreement. See Mich. Mut. Liab. Co., 174 So. 2d at 4-5. While Jackson-Shaw cites several other aspects of the Option and PGL as establishing the JAA and Majestic as joint owners, the other aspects are not problematic under our case law. Moreover, Jackson-Shaw never truly explains why certain aspects of the agreement make the JAA a prohibited joint owner with Majestic. For example, if







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Majestic exercises the Option and closes on a PGL, the JAA will receive rent, which is the greater of $1,380 per acre per year, subject to periodic increases based upon the Consumer Price Index (fixed rent), or fifty percent of the net revenue during the whole or partial calendar year (revenue rent). Because the JAA will receive a fixed rent if the revenue rent is less than the fixed rent, it is immaterial to the joint ownership analysis that Majestic's costs and fees are reimbursed from gross revenues prior to a determination of net revenue. Moreover, the fact that the JAA may receive rent by receiving fifty percent of the net revenue does not necessarily make the JAA a joint owner with Majestic. The Attorney General's opinion suggesting that the sharing of net revenues is problematic fails to explain why this fact violates the constitutional prohibition, and moreover, the agreement presented for the advisory opinion may be distinguishable from the instant case because no fixed rent alternative was discussed in the opinion. See Op. Att'y Gen.


Fla. 2002-07 (2002). Furthermore, with the possible exceptions of the road construction and wetlands mitigation, the JAA does not have any financial responsibility under the agreement, and it has no responsibility for the financing, promotion, or development of the proposed project. See Bannon, 246 So. 2d at




741. The JAA's fee simple title to the land is not encumbered by any loans to Majestic, and the JAA is not obligated to Majestic's creditors. See id. On the







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whole, the agreement does not enable the JAA to become a joint owner with Majestic.


In addition, although we decline to rely exclusively on the test for establishing a joint venture in order to determine whether the agreement violates the joint ownership prohibition, we agree with the district court that the agreement fails the test for establishing a joint venture. While the agreement may meet one or even several of the elements of the test, it clearly does not meet all of them. 9 As explained by the district court:


The relationship between the JAA and Majestic is not that of a joint venture because more than one of the necessary indicia of joint venture are missing. First, Jackson-Shaw fails to note that Majestic will be contributing all capital costs toward infrastructure and improvements construction. With the exception of the previously budgeted $750,000 road extension to build a public road, and up to 50 acres of wetlands mitigation which would likely be required for any development on the property, JAA expends no additional money for capital costs. Majestic, as the capital investor, stands to lose all of its investment should the project be unprofitable and bears that risk alone. Additionally, while the parties did agree to share in the net profits, JAA never agreed to share in the losses (which would be the lost capital contributions made and debt incurred by Majestic) should the project prove unprofitable. (PGL at 30, ¶ 2.15.1.) In addition to not assuming any liability to Majestic's creditors or for Majestic's potential financial losses incurred in constructing the commercial development, the JAA will not be liable, under the terms of the Option and PGL, for any tort that occurs to third parties in connection with Majestic's development. (See Option at 11, ¶ 6.3; PGL at 6, ¶












9. The PGL also explicitly states that "in no event shall this Agreement or the Parties' relationship hereunder be deemed to constitute a partnership or joint venture."








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1.1.29.2; 22-24, ¶ 2.9.) See Advanced Protection Technologies, Inc.



v. Square D Co., 390 F. Supp. 2d 1155, 1161 (M.D. Fla. 2005) (no agreement to share in the losses). The JAA has no "control" over the actual development of Woodwings East, other than the specific requirements set forth in the Option and PGL, such as requiring Majestic to adhere to the project's master plan. Further, there is no evidence whatsoever that JAA is somehow "delegating" any "right of control" to Majestic, as Jackson-Shaw suggests. See Sasportes v. M/V Sol de Copacabana, 581 F.2d 1204, 1208 (5th Cir. 1978).


Not only are JAA's and Majestic's "loss exposures" different, see USA Independence Mobilehome Sales, Inc., 908 So. 2d at 1158, but JAA's risk that its land will not return a profit, is not a "sharing of the losses" required of a joint venturer. See S & W Air Vac Systems, Inc., 697 So. 2d at 1316 (property owner's "disadvantageous position relative to its competitors" should commercial enterprise of licensee prove unprofitable "fails to meet the loss requirement" for joint venture); Greiner v. General Electric Credit Corp., 215 So. 2d 61, 63 (Fla. 4th DCA 1968) (foregoing rent for period of lease term not an agreement to share losses). Finally, neither JAA nor Majestic has the authority to bind the other in any way in connection with the transaction. See Kislak, 95 So. 2d at 516. While the JAA and Majestic may have a " `community of interest in the performance of a common purpose' "--the success of Majestic's Woodwings East commercial development--they do not have a "joint proprietary interest in the subject matter" such that they have "joint control or right of control" in the development. See USA Independence Mobilehome Sales, Inc., 908 So. 2d at 1158, 93 Fla. Op. Att'y Gen. 44, 1993 WL 369420, at *3 (1993) (though parties have common interest in producing a profit from operation of the transferred property to ensure purchase price will be paid from future profits, transaction is not a joint venture in violation of Article VII, Section 10, because seller does not have any right of control over the property).


Jackson-Shaw I, 510 F. Supp. 2d at 730-31.




In sum, we hold that the JAA is not a joint owner with Majestic in violation







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of article VII, section 10 of the 1968 Florida Constitution by virtue of its obligations under the agreement.


Pledge of Credit


The second question certified by the Eleventh Circuit asks whether the JAA is impermissibly pledging its credit to aid Majestic, thereby violating article VII, section 10 of the Florida Constitution. Jackson-Shaw II, 508 F.3d at 658. Jackson- Shaw contends that the agreement violates the constitutional prohibition because both aspects of the transaction, the Option and PGL, constitute the use of public credit and funds for the benefit of Majestic without serving a predominantly public purpose. In contrast, the JAA argues that it has not lent its credit to Majestic by entering into a long-term ground lease without a guaranteed income, building a public road, and not charging for some mitigation lands within the leased property.


The JAA also argues that the paramount public purpose test is inapplicable.




As used in article VII, section 10 of the Florida Constitution, the term credit "implies the imposition of some new financial liability upon the State or a political subdivision which in effect results in the creation of a State or political subdivision debt for the benefit of private enterprises." Nohrr v. Brevard County Educ.


Facilities Auth., 247 So. 2d 304, 309 (Fla. 1971). This Court has also defined the lending of credit as follows:




[T]he assumption by the public body of some degree of direct or indirect obligation to pay a debt of the third party. Where there is no







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direct or indirect undertaking by the public body to pay the obligation from public funds, and no public property is placed in jeopardy by a default of the third party, there is no lending of public credit.


State v. Hous. Fin. Auth. of Polk County, 376 So. 2d 1158, 1160 (Fla. 1979) (citing Nohrr, 247 So. 2d 304). This Court has also explained that "[i]n order to have a gift, loan or use of public credit, the public must be either directly or contingently liable to pay something to somebody." Nohrr, 247 So. 2d at 309.




If the State or a political subdivision has not given, lent, or used its credit, a project must merely serve a public purpose. See State v. Osceola County, 752 So. 2d 530, 536 (Fla. 1999). This Court has explained that under the public purpose test "it is immaterial that the primary beneficiary of a project be a private party, if the public interest, even though indirect, is present and sufficiently strong." Hous.


Fin. Auth. of Polk County, 376 So. 2d at 1160 (citing State v. Putnam County Dev.


Auth., 249 So. 2d 6 (Fla. 1971)). However, this Court has also cautioned that "public bodies cannot appropriate public funds indiscriminately, or for the benefit of private parties, where there is not a reasonable and adequate public interest." Id.

Even where there is no proposed public indebtedness, neither the State nor a political subdivision "may expend public funds for or participate at all in a project that is not of some substantial benefit to the public." State v. Miami Beach Redevelopment Agency, 392 So. 2d 875, 886 (Fla. 1980).
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