A judge has rejected the city of Miami's bid to block a lawsuit challenging its 15% parking surcharge - a tax that has generated tens of millions of dollars in recent years.
Circuit Judge Michael Hanzman's decision on Friday paves the way for the suit's class members to be certified later this year and possibly collect about $55 million in refunds - if they prevail on their claim that the city's parking tax is "unconstitutional" under state law.
The proposed class, representing potentially tens of thousands of workers, residents and visitors, filed suit in October and urged the judge to order Miami officials to reimburse them. Class members want him to stop the city's parking tax altogether, citing a strict requirement of the law that prohibits Miami from imposing the parking surcharge because of its declining level of tax-exempt real estate.
Large Florida cities such as Miami can only impose the parking tax to supplement revenue as long as more than 20% of their real property is tax exempt, such as schools, churches and homesteaded residences, the suit says. But the city fell below that threshold in 2017 amid a booming real estate market.
However, in their dismissal motion, city attorneys argued that the state law allowing Miami to impose and collect the parking surcharge is based on the square footage of tax-exempt real property - not the value of the city's tax-exempt property. They argued that, based on the square footage calculation, more than 20 percent of the city's property is tax exempt and therefore its parking surcharge is constitutional.
But Hanzman countered that while the state law is "ambiguous" on the definition of "real property," he found that its "purpose" is to allow cities such as Miami to collect the parking surcharge based on the "value" of its tax-exempt real estate - not the square footage.
In his circuit court order, the judge wrote that "value" is the only logical metric to use in determining whether the 20% threshold is met."
Attorneys for the class-action representatives called the judge's decision on the tax-exempt issue and other dismissal claims a "significant step forward."
"We now have a very clear path to presenting the evidence that we need to win this case," attorney Rachel Furst, who is working on the class action with lawyers Alex Arteaga-Gomez and Stuart Grossman, told the Miami Herald on Monday.
Attorneys representing the city did not immediately respond to an email seeking comment.
For years, the city has been allowed to levy the parking surcharge on all transactions at garages, lots and other facilities to boost its finances, thanks to Florida law and a city referendum dating to 2003 when Miami was rising from a financial crisis. (The city doesn't impose the tax on street parking meters.)
The proposed class-action case, citing public records filed with the state Department of Revenue, claims Miami officials began violating that critical 20% tax-exempt provision in 2017 when the city's share of property fell below that threshold. Due to exploding construction, new taxable properties and rising real estate values, Miami's tax-exempt property status has dropped further.
While the city's financial health is robust today, the parking tax lawsuit could put a big dent in the city's bottom line if it prevails.
The class-action case was filed by three representatives - Richard Klugh, Sara Wolfe and Josh Kaiser - who work regularly in Miami and have paid the parking surcharge at various locations, from Brickell Avenue to Coconut Grove to Wynwood. They claim the city of Miami, using a private contractor, has "illegally imposed and collected" the parking tax for years.
The suit also notes that Miami is the only eligible large city in the state to levy it. Under Florida law, the parking surcharge can be used to lower a property tax rate as well as for street, sidewalk and other roadway improvements.
Furst said the class-action case seeks to recover parking surcharges collected by public and private facility operators and turned over to the city from October 2019 to October 2022, the allowable claw-back period under the statute of limitations. According to the suit's estimates, the city of Miami has collected about $55 million in parking taxes over the three-year period, but the amount is expected to be higher when complete records are available.
If the class is certified and prevails, the vast majority of people who incurred the parking tax would be able to qualify for a refund by showing they paid it with statements of their credit or debit card transactions or possibly receipts. The parking facility operators also keep records showing proof of payment. The minority of people who did pay cash could also qualify for a refund under some plan, including providing a sworn statement, Furst said.
For more than a decade, the city has run the parking tax program through a contract with a private business, Complete Consulting Services Group, which receives $700,000 annually, the suit says. It also notes that the city has adopted "coercive" penalties such as stiff fines to compel facility operators to impose and collect the parking surcharge.