‘Tennis heaven’ gets $1M tax break
Lake Nona center receives benefit meant for charities
The USTA National Campus at Lake Nona, a nearly $70 million “tennis heaven” with features like clay courts covered in crushed red brick imported from Italy, is avoiding property taxes by claiming a tax break meant to help charities.
The perpetual tax break saves the United States Tennis Association more than $1 million a year in property taxes that would otherwise help fund Orange County schools, libraries and other local government services.
That’s enough money to pay the salaries of 15 public school teachers.
Former Orange County Property Appraiser Rick Singh initially denied the tennis association’s application for the tax break, which is meant for properties owned by nonprofits and used for “charitable purposes.” But Singh reversed course and approved it after months of litigation and negotiations with the tennis association and with affiliates of the Tavistock
Group, the developer of Lake Nona that is owned by billionaire investor Joe Lewis.
Tavistock was one of the largest donors to Singh’s 2020 reelection campaign. Records show companies linked to Tavistock gave at least $9,000 to Singh’s campaign, though Singh ultimately lost the race to former Democratic state Rep. Amy Mercado. A spokeswoman for Tavistock said the donations were not related to Singh’s approval of the exemption.
In a brief interview, Singh said he did not recall the details of the exemption discussions but defended his decision to approve it. “I asked them to prove the fact that they’re doing charitable work,” he said.
Though the state law establishing the “charitable purpose” tax break is vague, Florida courts have long ruled that property tax exemptions are supposed to be narrowly interpreted, and tax attorneys say the USTA’s exemption could be vulnerable to a legal challenge. Some similar facilities in Central Florida pay property taxes, such as the National Training Center in Clermont, the USA Triathlon-certified complex owned by Orlando Health.
Chuck O’Neal, a local environmentalist who disagrees with Singh’s decision to grant the exemption, said the tax break ultimately shifts costs onto people who still pay property taxes.
“It’s costing average working people,” he said. “It’s forcing them to shoulder the weight of all of our government services.”
Mercado, who formally took over the as the county property appraiser last week, said she is still in the early stages of learning the office. But Mercado said she plans to review property tax exemptions like the USTA’s.
“As I mentioned during my candidacy, I will be auditing the agency’s policies and practices, which includes, among other things, the review of all wholly exempt properties,” Mercado said.
The USTA wanted more
The USTA and Tavistock announced plans to build the “New Home of American Tennis” in Lake Nona in the spring of 2014, and the 63-acre, 100-court complex opened less than three years later. A Tavistock executive called the new tennis campus “a natural springboard” that would spur development of a broader sports and performance district within Lake Nona.
Taxpayers helped make the deal happen. The USTA and Tavistock negotiated an incentive package with state and local officials worth an estimated $20 million that included cash grants, tax breaks and training grants; money for a new road; a four-year sponsorship deal with Visit Orlando; and fundraising support plus a property lease with affiliates of the University of Central Florida, which agreed to base its men’s and women’s tennis teams at the facility.
Many of the exact details remain shrouded in secrecy: Both Visit Orlando’s now-expired sponsorship agreement and the continuing lease signed by UCF’s fundraising foundation and athletics association included confidentiality clauses. None of the agencies involved would disclose the financial terms.
As part of the deal, Tavistock agreed to lease the land for the tennis center to the USTA for up to 70 years. The Sentinel reported at the time that the lease was for $1 a year, though neither Tavistock nor the USTA would confirm the terms now.
The original incentives included a property tax break from Orange County, issued through an “economic development” program that county launched in 2012.
Under that deal, the county commission agreed to cut the tennis center’s county property taxes by 75 percent for a decade. The tax break saved the USTA just under $100,000 in property taxes in 2017 — about 10 percent of its total tax bill.
But the tennis association wanted more.
In early 2017, shortly after the USTA national campus opened, the USTA asked Rick Singh to exempt the property from taxes entirely. The organization said it was eligible under a decades-old state law allowing property tax exemptions for property owned by nonprofits and used for a “charitable purpose.”
The United States Tennis Association is a nonprofit — but it’s a wealthy one. The organization, which organizes the prestigious U.S. Open tennis tournament and sells sponsorships to companies like Mercedes, Rolex and J.P. Morgan, generated more than $300 million in revenue, had more than $400 million in assets, and paid its top executive more than $1.3 million in 2019, according to its most recent tax filings. Ten executives made more than $500,000.
But the USTA said it provides many charitable services its Lake Nona campus. Among other things, the organization said it offers free “family zone” courts for children to use, tennis programming for sick kids at the nearby Nemours Children’s Hospital, and adaptive clinics for disabled wounded veterans through the VA Hospital at Lake Nona. It also hosts home matches for the tennis teams from Lake Nona High School and the University of Central Florida, and provides lodging and training for aspiring Olympic team members.
“The USTA National Campus provides public access to tennis training for players of all ages and skill levels,” the USTA said in a statement.
Singh’s office initially rejected the application. But the USTA, working with Tavistock, sued. And after about six months of negotiations, Singh’s office relented and granted the exemption.
As part of the deal, Tavistock transferred the deed to the land from one of its corporate subsidiaries to a private foundation that tax records show is led by Joe Lewis’ daughter and two Tavistock executives.
With a full tax exemption in place, records show the USTA is now saving just under $1.1 million annually in property taxes — an amount that will likely grow as the value of the property appreciates over time.
The tennis association’s 2020 savings included $403,000 in school taxes, $391,000 in city taxes, $261,000 in county taxes, $22,000 in library taxes, and $16,000 in water-management district taxes.
Vague law, potential for abuse
The leaders of some of the local governments that are losing out on the tax revenue don’t appear to mind. Representatives for both Orlando Mayor Buddy Dyer and Orange County Mayor Jerry Demings said they had no objections to the USTA’s tax exemption.
“As a charitable organization, the USTA provides a multitude of services that not only benefit our residents, but also provide jobs and philanthropic work for our residents,” said Cassandra Lafser, a spokeswoman for Dyer. “USTA’s location here also further solidifies Orlando as an international sports destination, bringing additional visitors and investment to our economy.”
Orange County Public Schools takes the biggest revenue hit. And while School Board Chair Teresa
Jacobs said she couldn’t comment on the USTA’s tax exemption specifically, she said she is generally concerned “about the potential for misuse of property tax exemptions for charitable purposes.”
“The challenge for property appraisers and local governments stems from overly broad statutes that permit what many would consider to be abuses of these exemptions,” Jacobs said.
But even though state law only vaguely defines what kind of charities should be eligible for tax exemptions, the Florida Supreme Court has ruled that exemptions must be “strictly construed against the party claiming them.” And the USTA’s exemption could be especially vulnerable to a legal challenge.
That’s because the land is owned by one entity — the Tavistock Foundation — and leased to another — the USTA.
And in 2018, a Florida appellate court ruled that property must be owned and used by the same entity in order to be exempted from taxes.
“It is not enough that an exempt entity owns the property and that the property is being used for exempt purposes,” the First District Court of Appeal ruled in the case, which it said a Christian church and school in the Panhandle was not eligible for a property tax exemption. “The exempt entity owner must also be the entity using the property for exempt purposes.”