Florida Supreme Court revises recent ruling requiring voter approval for two types of borrowing
The Florida Supreme Court has revised its recent ruling requiring counties to obtain voter approval for two types of borrowing. The high court made it clear the referendum requirement applies only to future and not existing tax increment financed bonds. They are backed by city and county property taxes generated from redevelopment and improvement programs. The court also removed the referendum requirement from lease purchases, whether past or future, known as certificates of participation. School districts are the heavy users of this financing approach. The Supreme Court's Sept. 6 ruling set off a cascade of rehearing requests from local governments and warning signals from bond rating companies. Building plans were put on hold pending clarification, according to Wayne Blanton, executive director of the Florida School Boards Association. "This allows us to proceed," says Mr. Blanton. "We're extremely pleased. We're glad the court acted so quickly because we were concerned about a lag time in our construction projects." School districts have issued existing certificates of participation valued at $12.9 billion and plan to offer $8.1 billion more in the next five years, Mr. Blanton reports. Part of the concern resulted from a statement in the ruling that said it was not retroactive to borrowing already "validated." Officials were still worried because most existing bonds and certificates have not gone through the optional court validation process. The justices in the revised opinion, though, wrote that it's also not retroactive to previously "issued" bonds. The counties, though, still want a rehearing to challenge the referendum requirement for future bond issues. The supreme court had included certificates of participation in the first ruling even though the case involved only a challenge to a $135 million Escambia County tax increment bond issue for a road-widening project near Pensacola. The revised opinion removes the certificates from the case. The high court also backed off from reversing a 1990 Supreme Court decision in a Sarasota County School Board case that says voter approval is not required for that kind of borrowing. The high court initially invalidated the Sarasota decision because it cited a 1980 Supreme Court ruling exempting tax increment bonds from voter approval in a Miami Beach case. The new ruling, though, still reverses the Miami Beach opinion and 27 years of legal precedent for tax increment bonds. The justices will rehear argument on that issue Oct. 9 from Escambia and organizations representing Florida's local governments. However, the revised opinion acknowledged the certificates should not have been included because they do not mature in more than 12 months. The leases are paid from annual budget appropriations.
Houston Chronicle By Bill Kaczor (Associated Press)
Strand v. Escambia County revised opinion
[Editor’s Note: For background, see below.]
NSBA School Law pages on Strand v. Escambia County