Miami motorists could collect a share of millions in parking refunds after ruling

Thousands of people who paid a 15% parking tax imposed by the city of Miami over the past five years could qualify for a share of what potentially could add up to millions of dollars in refunds.

And that’s only one expensive blow facing the city after a judge ruled a long-controversial parking surcharge unconstitutional. Next up, the city faces an injunction seeking to block it from continuing to collect the fee at government-owned parking lots, garages and other facilities.

Miami-Dade Circuit Judge Thomas Rebull dealt the city a huge defeat Friday by ruling that its interpretation of the state law was wrong, instead siding with attorneys representing people who use the lots.

With their summary judgment victory, attorneys for the motorists who paid the parking tax plan to ask Rebull to issue an injunction to stop Miami from continuing to collect it.

If the judge grants the request, which appears likely in light of his ruling on the legal meaning of the statute, the attorneys hope to win class-action certification for people who have used the lots. That would open the door to collecting tax refunds totaling more than $114 million since November 2018, according to the plaintiffs’ attorneys. That cutoff date is based on a five-year statute of limitations. Unless the city wins on appeal, the plan would be to use credit card receipts or sworn statements from cash users to determine how to divvy up the refunds.

“The plaintiffs have a pending injunction claim that will force the city to stop charging the tax if it does not voluntarily do so at this point,” attorneys Frank Maderal and Rachel Furst said in a statement, stressing that the judge’s ruling is “clear.”

“This is a big step toward the plaintiffs’ obtaining a class-wide refund of the city’s wrongful tax collection in the past.”

Miami officials said they’re weighing their next move.

“The city greatly respects the court, yet strongly disagrees with the order,” City Attorney Victoria Mendez said. “The city is analyzing its options for challenging the ruling.”

In his ruling, Rebull found that the city can only impose the tax — approved by the state Legislature and local voters two decades ago — if more than 20% of the value of its real property is tax exempt, including schools, churches and other eligible nonprofits. But that threshold, during the course of an economic boom in the real estate market, has not been met or exceeded since 2017, according to attorneys for the plaintiffs, who filed a lawsuit against the city of Miami in October 2022.

“Simply put, [the] Plaintiffs’ interpretation of the parking surcharge statute is a fair reading of its text,” Rebull wrote in a 30-page decision issued Friday. “The City’s interpretations are not.”

For years, the city has been allowed to levy the parking tax 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. But there’s a catch: Large Florida cities such as Miami can only impose the parking tax to supplement revenue as long as more than 20% of the value of their real property is tax exempt.

The lawsuit, citing public records filed with the state Department of Revenue, claims Miami officials began violating that critical provision in 2017 when the city’s tax-exempt share of property owned by schools, churches and homesteaded residents fell below that threshold. Since then, due to exploding construction, new taxable properties and rising real estate values, Miami’s tax-exempt status has dropped further.

In his ruling, Rebull found every one of the city’s arguments flawed. At a hearing in December, the city’s attorneys argued that the 20% threshold in the parking tax law “does not apply prospectively, but only needed to be met one time when the surcharge was first enacted,” in 2003, according to the judge’s decision.

Then, in their “fallback argument,” the city’s attorneys said the “threshold is measured by square footage, not value” and, in their “second fallback argument,” they said that the “exempt from ad valorem taxes” part of the law “is not limited to ad valorem tax exemptions,” the judge’s ruling says. At the hearing, the city’s attorneys also argued as a “third fallback” that the property appraiser’s valuations “are not determinative and that under the statute, an independent appraising expert would be required.”

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 tax 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 noted 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.

If the class is certified and prevails against the city of Miami, 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, according to attorneys for the class of motorists.

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, according to the plaintiffs’ lawsuit. 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.

The latest parking tax case is not the first time that the city has been sued over the issue. In 1999, amid a severe financial crisis, the state Legislature allowed Miami to impose a similar parking tax to help boost revenues. But a resident, as well as Miami-Dade County, challenged the tax, and it was rescinded after the Florida Supreme Court ruled in 2002 that it was unconstitutional because the parking surcharge benefited only one Florida city, Miami.

As a result, the city reimbursed funds to people who had paid the tax. The following year, the state Legislature modified the law allowing Miami and other large Florida cities with a population of 200,000 or more to adopt such a parking tax — but with certain conditions, including meeting the threshold on the tax-exempt provision for real property. In 2003, Miami voters approved the 15 percent parking tax in a referendum.

Miami Herald staff writer Joey Flechas contributed to this story.