author: QUINCE, J. POLSTON, J.,

text:
    Walter E. HEADLEY, Jr., Miami Lodge No. 20, Fraternal Order of Police, et al., Petitioner, v. CITY OF MIAMI, Florida, Respondent.
    No. SC13-1882
    Supreme Court of Florida.
    [March 2, 2017]

      Ronald Jay Cohen of Rice Pugatch Robinson & Schiller, P.A., Fort Lauderdale, Florida, and Robert David Klausner of Klausner, Kaufman, Jensen and Levinson, P.A., Plantation, Florida, for Petitioners
    Victoria Mendez, City Attorney, John Anthony Greco, Deputy City Attorney, Diana Vizcaino, Former Assistant City Attorney, and Kerri Lauren McNulty, Assistant City Attorney, Miami, Florida, for Respondent
    Richard Anthony Sicking, Coral Gables, Florida, for Amicus Curiae Florida Professional Firefighters, Inc., International Association of Firefighters, AFL-CIO
    Noah Scott Warman of Sugarman & Susskind, P.A., Coral Gables, Florida, for Amicus Curiae Hollywood Fire Fighters, Local 1375, IAFF, Inc.
    Thomas Wayne Brooks of Meyer, Brooks, Demma and Blohm, P.A., Tallahassee, Florida, for Amicus Curiae Florida Education Association
    Paul Andrew Donnelly and Laura Ann Gross of Donnelly and Gross, P.A., Gaines-ville, Florida, for Amicus Curiae Communications Workers of America
    G. Hal Johnson, Tallahassee, Florida, for Amicus Curiae Florida Police Benevolent Association
    Daniel H. Thompson and Mitchell Wayne Berger of Berger Singerman LLP, Fort Lauderdale, Florida, and Stephen Hale Cypen of Cypen & Cypen, Miami Beach, Florida, for Amicus Curiae Board of Trustees of the City of Hollywood, etc., et al.
    David Clayton Miller and James Chum-ley Crosland of Bryant Miller Olive P.A., Miami, Florida, for Amicus Curiae The City of Hollywood, Florida
    . Michael Patrick Spellman, Hetal Desai McGuire, and Jeffrey Douglas Slanker of Sniffen and Spellman, P.A., Tallahassee, Florida; and Harry Morrison, Jr. and Kraig Armantrout Com, Florida League of Cities, Inc., Tallahassee, Florida, for Amicus Curiae Florida League of Cities
    John Maxwell Hament, Sarasota, Florida, for Amicus Curiae East Naples' Fire Control & Rescue District
   QUINCE, J.

Walter E. Headley, Jr., Miami Lodge No. 20, Fraternal Order of Police, Inc. (“the Union”), seeks review of the decision of the First District Court of Appeal in Walter E. Headley Jr., Miami Lodge No. 20, Fraternal Order of Police v. City of Miami, 118 So.3d 885, 887 (Fla. 1st DCA 2013), on the ground that it expressly and directly conflicts with the decision of the Fourth District Court of Appeal in Hollywood Fire Fighters Local 1375 v. City of Hollywood, 133 So.3d 1042 (Fla. 4th DCA 2014), regarding whether an employer must demonstrate that funds are available from no other possible reasonable source before unilaterally modifying a collective bargaining agreement. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the reasons that follow, we approve the decision of the Fourth District and quash the decision of the First District.

FACTS.

This case involves a certified bargaining agreement (“CBA”) between Miami Lodge No. 20, Fraternal Order of Police (the Union), which represents officers employed by the City of Miami’s police department, and the City of Miami (“the City”). The agreement covered the period of October 1, 2007, through September 30, 2010. Headley, 118 So.3d at 888. On July 28, 2010, the City declared a “financial urgency” and invoked the process set forth in section 447.4095, Florida Statutes (2010). Id. It notified the Union that it intended to implement changes regarding wages, pension benefits, and other economic terms of employment. Id. Following negotiations concerning the financial urgency, the City informed the Public Employees Relations Commission (PERC) that a dispute remained between the parties. Headley, 118 So.3d at 888. Despite agreeing on a special magistrate, the parties did not pursue the impasse resolution process. Id.

On August 31, 2010, the City’s legislative body voted to unilaterally alter the terms of the CBA in order to address the financial urgency, and adopted changes that:

[IJmposed a tiered reduction of wages, elimination of education pay supplements, conversion of supplemental pay, a freeze in step and longevity pay, modification of the normal retirement date, modification of the pension benefit formula, a cap on the average final compensation for pension benefit calculations, alteration of the normal retirement form, and modification of average final compensation.

Id. The Union then filed an unfair labor practice (“ULP”) charge with PERC on September 21, 2010, arguing that the City improperly invoked section 447.4095 and unilaterally changed the CBA before completing the impasse resolution process provided for in section 447.4095. Id. at 889.

At a hearing before a PERC hearing officer, the City presented evidence of its financial situation. Id. The evidence showed that:

[T]he City’s budget was approximately $500 million and that it faced a deficit of approximately $140 million for the 2010/2011 fiscal year; that the City had already implemented hiring freezes, completed all previously contemplated layoffs, ceased procurement, and instituted elimination of jobs as employees left; that labor costs comprised 80% of the City’s expenses; that, if additional action was not taken to reduce expenditures, the City’s labor costs would exceed its available funds, which would leave the City unable to pay for utilities, gas, and other necessities and render it unable to provide essential services to its residents; and that the City’s unemployment rate was 13.5% and property values were in decline, with 49% of homes in the City having negative equity-

id. In response, the Union suggested raising the millage tax rate, installing red light cameras, imposing non-union employee layoffs and furloughs, freezing the current cost of living adjustment, and changing the pension funding methodology. Id. These changes, according to the City, “would not adequately address the shortfall because they either failed to generate enough revenue to offset the deficit or they would increase the City’s long term financial obligations.” Id.

The hearing officer then issued an order recommending dismissal of the Union’s ULP charge. Id The hearing officer found that the statute had been properly invoked by the City and the parties were not required to proceed through the impasse procedures before implementing the changes. Id. In the final order, PERC first defined “financial urgency” as “a financial condition requiring immediate attention and demanding prompt and decisive action which requires the modification of an agreement; however, it is not necessarily a financial emergency or bankruptcy.” Id. PERC went on to explain that a determination of financial urgency requires an examination “of the employer’s complete financial picture on a case-by-ease basis” and an evaluation of whether the employer acted in “good faith.” Id. (quoting PERC’s final order). As to good faith, PERC focused on whether “a reasonable person could reach the conclusion that ‘funding was not available to meet the employer’s financial obligations to its employees.’ ” Id. at 889-90 (quoting final order). The order also found that section 447.4095 did not require the City to proceed through the impasse resolution process before implementing changes to the CBA. Id at 890. PERC interpreted the statute to require “impact bargaining,” which allowed the employer to make the changes after providing notice and a reasonable opportunity to bargain. Id.

The First District affirmed PERC’s final order, finding that it did not err in interpreting or applying section 447.4095. Id at 896. Petitioner now seeks review, arguing that an employer must demonstrate that funds are available from no other possible reasonable source before unilaterally modifying a CBA and that modification can only be made after completing the impasse resolution process.

ANALYSIS

Petitioner first argues that before unilaterally modifying a CBA pursuant to the financial urgency statute, an employer must demonstrate that funds are available from no other possible reasonable source. Deciding this issue will require the interpretation of section 447.4095, Florida Statutes (2010). Issues of statutory interpretation are subject to de novo review. See, e.g. Fla. Dep’t of Envtl. Prot. v. ContractPoint Fla. Parks, LLC, 986 So.2d 1260, 1264 (Fla. 2008). However, on judicial review of a PERC order, “the view of the PERC majority is ... presumptively the product of special expertise to which courts should defer.” United Faculty of Fla. v. Pub. Emps. Relations Comm’n, 898 So.2d 96, 100 (Fla. 1st DCA 2005).

Thus, PERC’s determination that the statute does not require the employer to demonstrate that the funds are available from no other possible reasonable source is an interpretation of chapter 447 that is entitled to deference. See Pub. Emps. Relations Comm’n v. Dade Cty. Police Benevolent Ass’n, 467 So.2d 987, 989 (Fla. 1985) (“[A] reviewing court must defer to an agency’s interpretation of an operable statute as long as that interpretation is consistent with legislative intent and is supported by substantial, competent evidence.”). Despite this tenet of appellate review, where an agency has erroneously interpreted a provision of the law, an agency’s construction is not entitled to deference. See City of Safety Harbor v. Commc’ns Workers of Am., 715 So.2d 265, 266 (Fla. 1st DCA 1998) (citing Pensacola Jr. College v. Public Emps. Reis. Comm’n, 400 So.2d 59 (Fla. 1st DCA 1981); Se. Volusia Hosp. Dist. v. Nat’l Union of Hosp. & Health Care Emps., 429 So.2d 1232 (Fla. 5th DCA 1983)).

The right to contract is expressly guaranteed by article 1, section 10 of the Florida Constitution. It is equally enforceable in labor contracts by operation of article 1, section 6 of the Florida Constitution. Petitioner argues that PERC’s interpretation of the financial urgency statute violates the Union’s right to collectively bargain under article 1, section 6 and its right to contract under article 1, section 10 because the statute impermissibly allows for unilateral changes to CBAs. Generally, an agreement regarding wages, hours, or terms and conditions of employment reached through the collective bargaining process cannot be unilaterally modified during the term of the agreement absent a compelling state interest. Headley, 118 So.3d at 890.

The statute at issue in this case, section 447.4095, provides:

Financial urgency—In the event of a financial urgency requiring modification of an agreement, the chief executive officer or his or her representative and the bargaining agent or its representative shall meet as soon as possible to negotiate the impact of the financial urgency. If after a reasonable period of negotiation which shall not exceed 14 days, a dispute exists between the public employer and the bargaining agent, an impasse shall be deemed to have occurred, and one of the parties shall so declare in writing to the other party and to the commission. The parties shall then proceed pursuant to the provisions of s. 447.403. An unfair labor practice charge shall not be filed during the 14 days during which negotiations are occurring pursuant to this section.

The statute does not define “financial urgency,” and the term is not defined elsewhere in chapter 447, Headley, 118 So.3d at 891. Moreover, the legislative history does not provide any guidance related to the meaning of the term. Id, The staff analysis merely notes, “The term is undefined in the bill or in chapter 447 and that its interpretation is left to practice.” Id. (citing Fla. S. Comm. on Govt, Ops., CS for SB 888 (1995) Staff Analysis (March 27, 1995) (on file with comm.)). Because there are other statutes that apply where the government is facing a financial emergency or bankruptcy, we adopt PERC’s definition that a financial urgency is a dire financial condition requiring immediate attention and demanding prompt and decisive action, but not necessarily a financial emergency or bankruptcy.

We have long held that a “statute must be given its plain and obvious meaning.” Holly v. Auld, 450 So.2d 217, 219 (Fla. 1984) (quoting A.R. Douglass, Inc. v. McRainey, 102 Fla. 1141, 137 So. 157, 159 (1931)). If the language of the statute is “clear and unambiguous and conveys a clear and definite meaning” there is no need to resort to statutory construction. Id.; accord Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So.2d 452, 454 (Fla. 1992). Because a government entity acting under section 447.4095 has the potential to impair two fundamental rights afforded to public employees, the statute must be given a strict construction. State v. J.P., 907 So.2d 1101, 1109 (Fla. 2004). Based on the plain language of the statute, a financial urgency may only be invoked where modification of the agreement is required. If there are other means of addressing the financial condition, then modification is not “required.”

We have previously set forth the standard that must be followed where a government entity attempts to change a bargaining agreement to address a revenue shortfall. In Chiles v. United Faculty of Florida, 615 So.2d 671 (Fla. 1993), the Legislature eliminated raises that had been authorized following an impasse between the State and various public employee unions. Id. There, we held that the raise was a fully enforceable contract and once it had been funded by the Legislature, “the state and all its organs are bound by that agreement under the principles of contract law.” Id. at 672-73. While we recognized that the Legislature must have leeway to respond to emergencies, we stated that the right to contract severely limits the Legislature’s ability to alter a contract. Id. at 673. Therefore, we held that “the legislature has authority to reduce previously approved appropriations to pay public workers’ salaries made pursuant to a collective bargaining agreement, but only where it can demonstrate a compelling state interest.” Id. at 673. Before doing so, “the legislature must demonstrate no other reasonable alternative means of preserving its contract with public workers, either in whole or in part.” Id. Further, “the legislature must demonstrate that the funds are available from no other possible reasonable source.” Finding that the Legislature did not satisfy the requirements of this test, we ordered the reinstatement of the pay raises. Id.

Section 447.4095 is the codification of the strict scrutiny standard we outlined in Chiles. The term “financial urgency” represents the first prong of strict scrutiny. As previously stated, a financial urgency is “a dire financial condition requiring immediate attention and demanding prompt and decisive action, but not necessarily a financial emergency or bankruptcy.” Headley, 118 So.3d at 892; see also Hollywood Fire Fighters, 133 So.3d at 1045 (quoting Head-ley). In showing that its current financial condition is dire and requires immediate attention, the local government establishes a compelling state interest and satisfies the first prong of strict scrutiny.

The phrase “requiring modification of an agreement” represents the second prong of strict scrutiny. While a local government may be able to show that its financial condition requires immediate attention and demands prompt and decisive action, this may not necessarily require modification of the agreement. As we stated in Chiles, “the mere fact that it is politically more expedient to eliminate all or part of the contracted funds is not in itself a compelling reason.” Chiles, 615 So.2d at 673. Thus, the term “requiring modification” forces the local government to demonstrate that the only way of addressing its dire financial, condition is through modification of the CBA. To do this, the local government must demonstrate that the funds are available from no other reasonable source. This satisfies the second requirement of strict scrutiny, that the law be narrowly tailored to achieve a compelling state interest.'

In the instant case, the First District held that the language from Chiles is not “constitutionally mandated” and should not be extended to section 447.4095. Headley, 118 So.3d at 893. The court further concluded that a local government “is not required to demonstrate that funds are not available from any other possible source to preserve the agreement.” Id Instead, the court held that a local government need only show that “other potential cost-saving measures and alternative funding sources are unreasonable or inadequate to address the financial condition facing the local government.” Id. In the conflict case, the Fourth District held that Chiles mandates that the Legislature must demonstrate that the funds are not available from any other source. Hollywood Fire Fighters, 133 So.3d at 1045. The Fourth District went on to reject the “modified Chiles test” outlined in Headley, which it found lowers the standard that a local government must satisfy before unilaterally modifying an agreement. H. at 1046.

We agree with the Fourth District. The First District erred in holding that our precedent is not constitutionally mandated and should not be extended to the financial urgency statute. Moreover, the First District incorrectly stated that Chiles requires a local government to demonstrate “that funds are not available from any other possible source.” Headley, 118 So.3d at 893. Not so. As we stated in Chiles, the employer must show that the funds are not available from any other possible reasonable source. Therefore, as the First District held, if the other cost-saving measures are unreasonable, then modification is warranted. However, we do not agree with the First District that if the alternative funding sources are also inadequate then modification is permissible. Instead, the government “must demonstrate no other reasonable alternative means of preserving its contract with public workers, either in whole or in part.” Chiles, 615 So.2d at 673 (emphasis added).

We have long recognized the right to bargain collectively and the right to contract free of impairment. See Hillsborough Cty. Govtl. Emps. Ass’n v. Hillsborough Cty. Aviation Auth., 522 So.2d 358, 362 (Fla. 1988) (“The right to bargain collectively is, as part of the state’s constitution’s declaration of rights, a fundamental right. As such, it is subject to official abridgment only upon a showing of a compelling state interest.”); Yamaha Parts Distribs., Inc. v. Ehrman, 316 So.2d 557, 559 (Fla. 1975) (“Virtually no degree of contract impairment has been tolerated in this state.”). Thus, our conclusions as to this issue “are compelled by the Florida Constitution.” Chiles, 615 So.2d at 673. Accordingly, we approve the decision of the Fourth District and quash the decision of the First District on this issue.

Petitioner also argues that the First District erred in construing the statute to allow an employer to unilaterally modify the CBA without first proceeding through the impasse resolution process set forth in section 447.403, Florida Statutes (2010). This issue centers on the procedure to be followed once a local government has declared a financial urgency requiring modification of an agreement.

As the First District explained:

Section 447.4095 provides for an expedited period of negotiation, not to exceed 14 days, upon declaration of a financial urgency by a local government and requires the parties to meet as soon as possible after the declaration to “negotiate the impact” of the financial urgency. The statute further provides that, if a dispute remains between the parties after the expiration of the expedited negotiation period, an impasse shall be deemed to have occurred and “[t]he parties shall then proceed pursuant to the provisions of s. 447.403.” § 447.4095, Fla. Stat.
The impasse resolution process in section 447.403 begins with the appointment of a special magistrate who is charged with conducting a hearing and making a recommendation to the local government’s legislative body as to the resolution of any disputed issues. See § 447.403(3), Fla. Stat. The statute does not establish a deadline for the hearing, but it does provide for at least 45 days of post-hearing procedures. See § 447.403(3)—(4), Fla. Stat. (providing 15 days for the special magistrate to submit his or her recommended decision to the parties, 20 days for the parties to reject the special magistrate’s recommendations, and then 10 days for the local government’s chief executive officer to submit his or her recommendations to the legislative body). The legislative body is not required to accept the special magistrate’s recommendations and, thus, the end-result of the impasse resolution process may be the local government unilaterally imposing changes to the agreement. See § 447.403(4), Fla. Stat.

Headley, 118 So.3d at 894. Petitioner argues that by requiring the parties to proceed through the impasse resolution process under section 447.403, the statute mandates that no changes may be made to the agreement until after the conclusion of that process. Petitioner argues that because the public employer seeks to change a mandatory term of the agreement, collective bargaining is required. Respondent argues that the Legislature specifically used the term “impact” in reference to “impact bargaining,” which is a type of bargaining applicable to managerial decisions that impact terms and conditions of employment within the bargaining unit. Impact bargaining requires only notice and an opportunity to negotiate before the proposed changes are implemented. In essence, the parties dispute the point at which a modification may be made.

Employing the rules of statutory interpretation is appropriate here, as both parties provide reasonable interpretations of the statute and the statute is ambiguous as to when a modification may be made. “Impact” is a term of art in public sector labor law. See Sch. Dist. of Indian River Cty. v. Fla. Pub. Emps. Relations Comm’n, 64 So.3d 723, 729 (Fla. 4th DCA 2011). Under the concept of impact bargaining, if the modification of a subject classified as a management right would have an effect on the employees’ terms and conditions of employment, then the public employer is required to give those employees’ bargaining agent an opportunity to bargain the impact of that modification. See Jacksonville Supervisors Ass’n v. City of Jacksonville, 26 F.P.E.R. 31140 (2000). The statutory language that Respondent relies on as an indicator that the Legislature intended to allow for impact bargaining is “negotiate the impact of the financial urgency.” § 447.4095, Fla. Stat. (2013).

It is true that when the words in a statute are technical in nature and have a fixed legal meaning, it is presumed that the Legislature intended that the words be given their technical meaning. See 48A Fla. Jur. 2d Statutes § 135 (2014). However, under the principle of expressio unius, est exclusion alterius, meaning “the mention of one thing implies the exclusion of another,” legislative direction as to how a thing shall be done is, in effect, a prohibition against it being done any other way. See Sun Coast Int’l, Inc. v. Dep’t of Bus. Reg., 596 So.2d 1118, 1121 (Fla. 1st DCA 1992). Therefore, section 447.4095 permits the unilateral implementation of changes to the CBA only after parties have completed the impasse resolution proceedings and failed to ratify the agreement. If the Legislature had intended the changes to take effect earlier or under any other circumstances, it would have stated as much.

This is especially trae considering that the changes here are unlike the changes that are usually the result of impact bargaining. As noted by Petitioner, impact bargaining results from management making decisions outside of the scope of an agreement which affect the agreement in some way. Bargaining under the financial urgency statute, on the other hand, seeks to alter the terms of the agreement itself. Impact bargaining requires a threshold determination as to whether the employer’s decision affects employees’ wages, hours, or working conditions. Bargaining under financial urgency inherently seeks to change wages, hours, or working conditions. Moreover, altering the agreemént effectively alters the “status quo” between the parties that will remain in place until they are changed through bargaining.

The interpretation set forth by PERC and the First District would allow a local government, once it has declared a financial urgency, the ability to exercise a management right to unilaterally alter the terms and conditions of a contract before completing the procedures set forth by the Legislature in section 447.4095. This interpretation does not comport with our acknowledgment of and respect for the constitutional right of collective bargaining and prohibition of the impairment to contract. Therefore, we also quash the decision of the First District and remand the case for proceedings that are consistent with this decision.

It is so ordered.

LABARGA, C.J., and PARIENTE, and LEWIS, JJ., concur.

POLSTON, J., concurs in result with an opinion.

CANADY, J., dissents.

LAWSON, J., did not participate.

POLSTON, J.,

concurring in result.

I agree with the majority’s view that a local government, once it has declared a financial urgency, does not have the ability to unilaterally alter the terms and conditions of a collective bargaining agreement before completing the procedures required by the Legislature in sections 447.4095 and 447.403, Florida Statutes. I would decide this on the plain requirements of the statutory provisions rather than any constitutional grounds.

      . In its decision, the Fourth District also certified conflict with the First District’s decision in Headley.

      . PERC is a commission created by the Legislature to carry out the provisions of part II, chapter 447, Florida Statutes. §§ 447.205, .207, Fla. Stat. (2010),

      . Chapter 447 does not provide a list of subjects to be treated as mandatory in terms of bargaining. Accordingly, PERC is tasked to make that decision on a case-by-case basis. Public Employees Relations Commission, Scope of Bargaining 2 (2d ed. 2005).

      . Collective bargaining means a process of mutual obligations in which a public employer and a bargaining agent have to meet at reasonable times, negotiate in good faith, and effect a written contract encompassing agreements reached concerning the wages, hours, terms and conditions of employment. § 447.309(1), Fla. Stat. (2013).

      .The Florida Legislature defines public employers’ rights as:
      [T]he right of the public employer to determine unilaterally the purpose of each of its constituent agencies, set standards of services to be offered to the public, and exercise control and discretion over its organization and operations. It is also the right of the public employer to direct its employees, take disciplinary action for proper cause, and relieve its employees from duty because of lack of work or for other legitimate reasons.
      § 447.209, Fla. Stat. (2013).


source: Caselaw Access Project

author: QUINCE, J.

license: Public Domain

text:
    CITY OF LARGO, Florida, Petitioner, v. AHF-BAY FUND, LLC, Respondent.
    No. SC15-1261
    Supreme Court of Florida.
    [March 2, 2017]

      Alan S. Zimmet and Nicole C. Nate of Bryant Miller Olive, P.A., Tampa, Florida; and Elizabeth Wilson Neiberger of Bryant Miller Olive, P.A., Miami, Florida, for Petitioner
    Joseph Hagedorn Lang, Jr. and Christopher William Smart of Carlton Fields Jor-den Burt, P.A., Tampa, Florida, for Respondent
   QUINCE, J.

This case is before the Court for review of the decision of the Second District Court of Appeal in AHF-Bay Fund, LLC v. City of Largo, 169 So.3d 133 (Fla. 2d DCA 2015). In its decision, the district court ruled upon the following question, which the court certified to be of great public importance:

DO PILOT AGREEMENTS THAT REQUIRE PAYMENTS EQUALING THE AD VALOREM TAXES THAT WOULD OTHERWISE BE DUE BUT FOR A STATUTORY TAX EXEMPTION VIOLATE SECTION 196.1978, FLORIDA STATUTES (2000), AND ARTICLE VII, § 9(a) OF THE FLORIDA CONSTITUTION?

Id. at 138. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. For the reasons that follow, we answer the certified question in the negative and quash the decision of the Second District.

FACTS

AHF-Bay Fund, LLC (AHF) appealed a judgment awarding $695,158.23 in damages and prejudgment interest to the City of Largo, Florida (City) for AHF’s failure to make payments pursuant to an agreement for payment in lieu of taxes (PILOT agreement) between the City and RHF-Brittany Bay (RHF), AHF’s predecessor in interest. AHF-Bay Fund, 169 So.3d at 135. Under the agreement, AHF was required to make payments that equaled the ad valorem taxes that would have otherwise been due but for the statutory tax exemption found in section 196.1978, Florida Statutes (2000). H. The facts that prompted the filing of suit are as follows:

In December 2000, RHF acquired the subject property. RHF was a tax exempt 501(c)(3) organization as defined by the Internal Revenue Code. See 26 U.S.C. § 501(c)(3) (2000). RHF planned to develop the property to provide affordable housing for persons with low to moderate income pursuant to chapter 420, Florida Statutes. As set forth in section 196.1978, Florida Statutes (2000), affordable housing projects owned by a 501(c)(3) organization are exempt from ad valorem taxation.
To finance the project, RHF reached an agreement with the City wherein the City would arrange for the issuance of tax-exempt bonds that carried a considerably lower interest rate than RHF could have obtained using traditional bank financing. In exchange for the issuance of the bonds, RHF entered into the PILOT agreement, thereby agreeing to make annual payments to the City “in an amount equal to the portion of ad valorem taxes to which the City would otherwise be entitled to receive for the [pjroperty as if the [pjroject were fully taxable in accordance with standard taxing procedures.” The PILOT agreement provided that the amount of the payments would be determined by multiplying the property’s assessed value by the millage rate established by the City each year. The PILOT agreement also provided that “the City has and will provide services to [RHF] as a result of [RHF’s] status as a tax-exempt entity.”
The PILOT agreement specified that it was binding on any subsequent owners of the subject property as long as certain conditions were met, though it made no mention of a covenant running with the land. The PILOT agreement was not recorded in the official public records. However, simultaneously with the execution of the PILOT agreement, the parties executed a memorandum of agreement that was recorded in the public records. The memorandum indicated that the PILOT agreement was available for inspection in the city clerk’s office and that it imposed certain covenants running with the land.
RHF made the payments as required by the PILOT agreement for the years 2001 through 2005. AHF, also a nonprofit affordable housing provider, acquired the property in November 2005. AHF has continued to own and operate the property as an affordable housing community since the purchase. However, when the City did not receive the annual payment that was due on December 31, 2006, it contacted AHF. AHF denied knowledge of either the PILOT agreement or the memorandum of agreement, asserting that neither had been shown to be an exception to coverage in its title insurance policy and that neither had been referenced in the special warranty deed by which AHF took title.
Based upon AHF’s refusal to make payments under the PILOT agreement, the City filed suit in 2010. The City sought a summary judgment and the trial court granted the motion in part. Ultimately, the trial court entered a final judgment in favor of the City, awarding $695,158.23 in damages and prejudgment interest.

Id. at 134-35 (alterations in original) (footnote omitted). On appeal, the Second District reversed the trial court, finding that the PILOT agreement at issue “violates the public policy of promoting the provision of affordable housing for low to moderate income families and is therefore void.” Id. at 138. The court reasoned that the PILOT payments are the substantive equivalent of taxes because the payments are equal to the amount of taxes that would be due if the property were not tax-exempt. Id.

ANALYSIS

The certified question presents two issues: (1) whether the PILOT agreement violates section 196.1978, Florida Statutes (2000), and (2) whether the PILOT agreement violates article VII, section 9(a) of the Florida Constitution. Each will be addressed in turn. Because the issues before this Court on the certified question involve pure questions of law that arise from undisputed facts, they are reviewed de novo. Jackson-Shaw Co. v. Jacksonville Aviation Auth., 8 So.3d 1076, 1084-85 (Fla. 2008).

The Second District invalidated the PILOT agreement between the City and AHF by finding that the agreement violated section 196.1978, Florida Statutes (2000), and violated the public policy of “promoting the provision of affordable housing for low to moderate income families.” AHF-Bay Fund, 169 So.3d at 138. Specifically, the Second District held that “section 196.1978- expressly prohibits ad valorem taxation on properties being used for affordable housing.” Id. at 136. Section 196.1978, Florida Statutes (2000), provides in relevant part:

Property used to provide affordable housing serving eligible persons as defined by s. 159.603(7) and persons meeting income limits specified in s. 420.0004(9), (10), and (14), which property is owned entirely by a nonprofit entity which is qualified as charitable under s. 501(c)(3) of the Internal Revenue Code and which complies with Rev. Proc. 96-32, 1996-1 C.B. 717, shall be considered property owned by an exempt entity and used for a charitable purpose, and those portions of thé affordable housing property which provide housing to individuals with 'incomes as defined in s. 420.0004(9) and (14) shall be exempt from ad valorem taxation to the extent authorized in s. 196.196. All property identified in this section shall comply with the criteria for determination of exempt status to be applied by property appraisers on an annual basis as defined in s. 196.195.

§ 196.1978, Fla. Stat. (2000).

We find that the plain language of the statute does not expressly prohibit ad valo-rem taxation on nonprofit entities that provide low-income housing. Instead, the section provides an exemption to nonprofit entities. However, the, statute also requires the nonprofit entity, here the owner of an affordable housing project, to take affirmative steps to take advantage of the exemption. Specifically, section 196.1978 requires the owner to “comply with the criteria for determination of exempt status to be applied by property appraisers on an annual basis as defined in s. 196.195.” For example, if a nonprofit owner of a property forgets to file its annual form with the property appraiser then its tax exemption will be waived for that year. See § 196.011, Fla. Stat. (2000). From the text of the statute it is clear that the exemption is mot automatic, nor is ad valorem taxation on such properties “expressly prohibited.”

Numerous courts have held that tax exemptions can be waived. E.g., Housing Auth. of Poplar Bluff v. Eastwood, 736 S.W.2d 46 (Mo. 1987) (citing Sprik v. Regents of Univ. of Michigan, 43 Mich.App. 178, 204 N.W.2d 62 (1972) (public university could waive property tax exemption); Clark v. Marian Park, Inc., 80 Ill.App.3d 1010, 36 Ill.Dec. 241, 400 N.E.2d 661, 664-65 (1980) (nonprofit owner of affordable housing project waived tax exemption by agreeing to pay taxes in annexation agreement with the city); Christian Bus. Men’s Comm. v. State, 228 Minn. 549, 38 N.W.2d 803, 811 n.7 (1949) (“Failure to use due diligence in asserting a right to tax exemption may constitute a waiver of the right.”); Rutgers Chapter of Delta Upsilon Fraternity v. City of New Brunswick, 129 N.J.L. 238, 28 A.2d 759, 761 (1942) (taxpayer waived tax exemption by failing to claim exemption in manner required by statute and voluntarily paying taxes).

This case is factually similar to Eastwood, in which the Supreme Court of Missouri concluded that a PILOT agreement between a city.and a tax-exempt housing authority did not violate public policy because tax exemptions are waivable. Eastwood, 736 S.W.2d at 47-48. The PILOT agreement in that ease expressly acknowledged that the housing project was exempt from taxes. Nonetheless, the housing authority agreed to payments in lieu of taxes in exchange for the city providing general municipal services. In rejecting the argument . that the agreement was void as against public policy, the Missouri Supreme Court reasoned that courts throughout the country .have held that tax exemptions are waivable and that the agreement showed that the housing authority made a voluntary decision to subject itself to payments notwithstanding its exempt status. Id. at 47. We agree with the decision of that court as well as other courts that have held similarly.

In the instant case, RHF made a voluntary decision to subject itself to payments equaling the ad valorem taxes notwithstanding its tax-exempt status. Therefore, while nonprofit entities are typically exempt from ad valorem taxes, this is an exemption that may be waived either due to a lack of due diligence in meeting the requirements of the statute or by voluntarily agreeing to waive the exemption as the result of a contractual agreement.'Consequently, we find that' the statute does not expressly prohibit the payment of ad valorem taxes or payments that equal the amount of taxes that would be due if a property owner decides to waive the exemption and enter into a contractual agreement, as was done here.

Because the statutory exemption can be waived, and there is no statutory or constitutional provision that expressly prohibits the exaction of ad valorem taxes on nonprofit entities, this Court would only find the agreement void in the event that it is “clearly injurious to the public good” or “contravene[s] some established interest of society,” Fla. Windstorm Underwriting v. Gajwani, 934 So.2d 501, 507 (Fla. 3d DCA 2005) (quoting Banfield v. Louis, 589 So.2d 441, 446 (Fla. 4th DCA 1991)). Courts typically do not strike down a contract, or any portion of a contract, based on public policy grounds except in extreme circumstances:

Courts ... should be guided by the rule of extreme caution when called upon to declare transactions void as contrary to public policy and should refuse to strike down contracts involving private relationships on this ground, unless it be made clearly to appear that there has been some great prejudice to the dominant public interest sufficient to overthrow the fundamental public policy of the right to freedom of contract between parties sui juris.

Id. (quoting Banfield, 589 So.2d at 446-47 (quoting Bituminous Cas. Corp. v. Williams, 154 Fla. 191, 17 So.2d 98, 101-02 (1944))).

In its decision, the Second District recognized that there is a strong public policy of “promoting the provision of affordable housing for low to moderate income families.” AHF-Bay Fund, 169 So.3d at 138. However, there is also a strong public policy favoring freedom of contract. “Freedom of contract is the general rule .... ” State ex rel. Fulton v. Ives, 123 Fla. 401, 167 So. 394, 412 (1936). “[I]t is a matter of great public concern that freedom of contract be not lightly interfered with.” Bituminous Cas. Corp., 17 So.2d at 101. “[Restraint is the exception, and when it is exercised to place limitations upon the right to contract ... it can be justified only by exceptional circumstances.” Ives, 167 So. at 412. In the instant case, the City and RHF entered into a voluntary agreement, supported by valid consideration. The parties agreed on the method of calculating the consideration for their agreement and, until 2005, performed their respective obligations. While the Second District correctly noted the public policy favoring affordable housing for low-income families, we find that this contract supported that public policy by enabling RHF to procure the funding necessary for the building of the apartment complex. But for the tax-exempt bonds that RHF received in exchange for these payments, the affordable housing complex might never have been built. Therefore, we preserve the agreement between the City and RHF, considering the long-standing policy to uphold contracts between parties and the fact that the contract here supported another public policy, that of providing affordable housing to low-income families.

The Second District also invalidated the PILOT agreement on the ground that it violated article VII, section 9(a) of the Florida Constitution. Article VII, section 9(a) of the Florida Constitution provides in relevant part:

Counties, school districts, and municipalities shall, and special districts may, be authorized by law to levy ad valorem taxes and may be authorized by general law to levy other taxes, for their respective purposes, except ad valorem taxes on intangible personal property and taxes prohibited by this constitution.

Art. VTI, § 9(a), Fla. Const. In its decision, the district court concluded that the payments under the PILOT agreement are, in substance, disguised ad valorem taxes, and the City did not have the authority to impose taxes in circumvention of the affordable housing tax exemption. AHF-Bay Fund, 169 So.3d at 137. Thus, the court held that the PILOT agreement violated article VII, section 9(a) of the Florida Constitution, which provides that cities may only impose taxes as permitted by law. Id.

What constitutes a “tax” has been well established by Florida courts. A tax is an enforced burden imposed by a sovereign right for the support of the government, the administration of law, and the exercise of various functions the sovereign is called on to perform. State v. City of Port Orange, 650 So.2d 1, 3 (Fla. 1994) (citing Klemm v. Davenport, 100 Fla. 627, 129 So. 904, 907 (1930); City of Boca Raton v. State, 595 So.2d 25 (Fla. 1992)). Thus, there are two factors that exist when taxes are imposed: (1) the government acts unilaterally by sovereign right, and (2) the government acts in order to support routine government functions.

Neither of the two factors are present here. First, the City did not act by sovereign right in entering into the agreement with RHF. Local governments operate in several different capacities, including proprietary (i.e., as a party to a contract), and governmental (i.e., by sovereign right). E.g., Daly v. Stokell, 63 So.2d 644, 645 (Fla. 1953); Commercial Carrier Corp. v. Indian River Cty., 371 So.2d 1010 (Fla. 1979). Here,, the City’s decision to accept RHF’s offer and enter into the PILOT Agreement was a proprietary one. See Daly, 63 So.2d at 645.

[A]ny contract ... that redounds to the public or individual advantage and welfare of the city or its people is proprietary, while a government function, as the term implies, has to do with the administration of some phase of government, that is to say, dispensing or exercising some element of sovereignty.

Id. The City did not exercise any element of sovereignty by entering into the PILOT Agreement. When a city enters into an express, written contract it waives sovereign immunity. Pan-Am Tobacco Corp. v. Dep’t of Corr., 471 So.2d 4 (Fla. 1984),

In its decision, the Second District relied on our decision in State v. City of Port Orange, 650 So.2d 1 (Fla. 1994), to conclude that the payments were ad valorem taxes disguised under another name'and that the power to tax cannot be broadened by semantics. The issue in Port Orange was whether a “user fee” unilaterally imposed on all developed property for improving roads was really a “tax.” Id. at 3. However, in this case, the City did not unilaterally impose any obligations, and the payments were not used for routine government functions, such as roads. The City and RHF negotiated the method to calculate the consideration for the City’s authorization of the tax-exempt bonds. The City performed this non routine service specifically for RHF.

Furthermore, the obligation under the PILOT agreement was not citywide. Instead, the payments were offered to the City by RHF to induce the City to exercise its proprietary capacity to contract with the Capital Trust Agency for the sole benefit of RHF. Respondent argues that the City used the PILOT payments as general revenue. However, Respondent fails to provide any evidence in support of this argument, and instead appears to take issue with the value of the City’s service compared to its perceived benefit. Nonetheless, the PILOT agreement was consideration for the City to authorize the tax-exempt bonds..That authorization facilitated the conversion of the property to affordable housing.

Therefore, because the City did not act unilaterally by sovereign right for the purpose of supporting government functions, the payments negotiated by the City and RHF are not taxes and do not implicate article VII, section 9(a). Consequently, the agreement does not violate the Florida Constitution. .

CONCLUSION

Because the PILOT agreement does not violate section 196.1978, Florida Statutes (2000), or article VII, section 9(a) of the Florida Constitution, we answer the certified question in the negative and quash the decision of the Second District. We do not address Respondent’s argument concerning whether the PILOT agreement at issue is a covenant with the land, as that issue is beyond the scope of the certified question. See McKenzie Check Advance of Fla., LLC. v. Betts, 112 So.3d 1176, 1178 n.4 (Fla. 2013) (declining to address issue outside the scope of certified question).

It is so ordered.

LABARGA, C.J., and PARIENTE, LEWIS, CANADY, and POLSTON, JJ., concur.

LAWSON, J., did not participate.