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Bond ruling won’t impact Marco, city says
State Supreme Court’s decision speaks to bond financing
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A Sept. 6 Florida Supreme Court ruling sent municipalities all over the state reeling, as they tried to determine how it would bear on bonds they issue to pay for major projects.
According to Marco Island officials and the city’s attorney, the decision will have no bearing on projects like the city’s Septic Tank Replacement Program, which is funded through a combination of short- and long-term bonds and State Revolving Fund loans.
In Strand v. Escambia County, the court determined that bonds to be paid through tax increment financing must go through voter referendum before being deposited into a fund. It was a reversal of earlier decisions stating that voter approval was not required.
Tax increment financing, often used for community redevelopment and improvement projects, relies on expected property tax increases to service debt on the bonds.
The idea behind the scheme is that the financed projects establish a special district, improving that area and increasing property values, thus creating more property taxes to pay off debt incurred on the bonds. The court decided that this type of financing is unconstitutional when it allows a local government to pledge ad valorem taxes — or property taxes — for the repayment of long-term bonds without seeking the consent of voters.
Article VII, Section 12 of the Florida State Constitution says that long-term bonds (those maturing after one year or more) used to finance or refinance projects are acceptable “only when approved by vote of the electors who are owners of freeholds therein now wholly exempt from taxation.”
The clause is meant to protect voters from paying off debts they never consented to accruing.
Marco Island has never issued a tax increment financing bond, though the city has considered the use of such funding before, City Manager Bill Moss said.
“We have discussed it in the past as a way to develop one section of the city,” Moss said. “It never got very far. We did lay it out as an option, but it was never pursued.”
Naples City Attorney Robert Pritt says the case is very narrow in its focus on tax increment financing, which is typically used to revive urban areas. He said that, as far as he knows, the city of Naples has never undertaken that type of financing either.
However, the earlier opinions reversed by the case dealt with broader types of fundraising, such as “certificate of participation” financing, which serves as a type of lease-purchase plan. The set-up has typically been used to finance bonds for projects, like school expansions, that might not pass voter approval.
The Orlando Sentinel reported that Florida school systems are anxious about possible broader implications of the Sept. 6 decision.
Marco Island City Attorney Alan Gabriel said he does not anticipate the decision having any bearing on how the city undertakes a project and its financing.
“Funding based on ad valorem taxes, that’s where the authority is with the people,” Gabriel said. He noted that bonds repaid through other sources do not fall under the same rules.
“If that was the case you would never get any projects through,” he said.
In June, the Florida Supreme Court validated the city’s use of special assessment revenue bonds in the first two of the city’s 17 sewer districts, part of a $120 million plan to replace the city’s septic tanks.
Later in the month, funding of the city’s STRP went before voters, who rejected a bond that would have paid for the program partly through property taxes. The proposal, designed to reduce the burden of cost within the 17 districts, failed 56-44.
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I agree with the city attorney that the recent supreme-court decision does not seem to apply to the revenue bonds the city seeks to fund the STRP. However, I do find it interesting that he is quoted as saying: "If that was the case" (i.e., 'where the authority is with the people') "you would never get any projects through." It seems he's saying that citizens are opposed to EVERY project government seeks to implement. I guess that makes him the ultimate CAVE man! I, for one, am not opposed to EVERY project the city wishes (although I am opposed to the STRP on environmental grounds) so I guess our new city attorney is more reactionary than I! Wow! Does E. Glenn Tucker know who he hired?
Ed Foster
#1 Posted by EdFoster on September 12, 2007 at 8:19 p.m. (Suggest removal)
If the project is needed and the voters have been convinced it is needed, it should be a done deal. Why would the Attorney assume that projects would never be passed? People in Marco Island are pretty smart when it comes to their money. Just look at all the flak the current Council is taking for spending our money on an unjustified and unnecessary STRP project. If the City had taken a little more time, explained the problem to us and apologized for not securing the maintenance and upgrade funds lost to the former utility and further explained why due diligence was not performed by insisting on an inspection of the WWTP and pipes prior to purchase, there would have been a lot less hostility. Justification for the replacement of the WWTP and old sewer lines would have been so much easier and I'm sure the people of Marco Island would have agreed to pay for it. After all the alternative would harm all of us. But no, they decided to spin lies, develope the STRP to force expansion and have new users pay for what really needed to be done. We are smart and we will vote for candidates that will represent us and do OUR bidding in the future. We are not Miami Mr. Attorney, we learn from our mistakes, we vote in large numbers and we expect that our representitives be up front with us.
#2 Posted by Lolala on September 13, 2007 at 9:16 a.m. (Suggest removal)
It is time for you petty, selfish, microcosm citizens to wake up and smell the roses. Marco Island, and it's pristine Estuaries and Waterways has an effect on the entire South Florida environment. And while Mr. Foster claims to be opposed to the STRP for environmental reasons, the FDEP, Sierra Club, Conservancy and 100's of other cities and groups disagree with Mr. Foster. Whether we want the STRP or not, this Island will eventually be 100% sewered. It is just a question of how much it is going to cost us. Oh, and by the way, do not count any chickens as far as the make-up of the future Council. There is a lot of money, people, support and backing for candidates not yet officially declared that have a much better track record than any candidate to date.
Ed Issler
#3 Posted by lauralbi1 on September 13, 2007 at 9:29 a.m. (Suggest removal)
Mr. Issler, the majority of the electorate have already made up their mind as to who will be on the next Council. We have learned our lessons well. Successful candidates need to make a pledge to the people of Marco Island that they will not raise our taxes, institute new franchise fees, increase existing fees or utility costs. They must limit future multi-million dollar projects to those approved by referendum. They must justify projects prior to pursuing them. They must never invoke large non-voluntary assessments without a referendum approving them. They must pledge to either slow down significantly the STRP or to stop it altogether. They must reduce the spending authority the Staff currently enjoys. They must pledge to always be honest, nonaccusatory, respectful and responsive to our citizens. They must be willing to accept personal responsiblity for supervising the Staff and willing to admit when they are wrong. They must return our community to the beutiful peaceful island it once was. They must promise to be sensitive to our ecology, our health and our welfare. They must be willing to promote a harmonious community and a sense of belonging for all our residents. Four candidates have made these promises. I look forward to hearing many more candidates making the same promises. What I'm saying Mr. Issler, is that track records and money do not influence us anymore. We intend to be very careful as to whom we permit to represent us on the next Council. We have been fooled twice and we do not intend to be fooled a third time. A new day is about to come to Marco Island. Change is coming and it will be instituted our citizens and implemented by Allen, Batte, Hall and Neylon.
#4 Posted by bbyrone46 on September 13, 2007 at 1:46 p.m. (Suggest removal)
I agree with Ed Issler when he says: "Marco Island, and it's pristine Estuaries and Waterways has an effect on the entire South Florida environment." It does! And after 30 or so years of using onsite (septic) wastewater treatment, the Conservancy of Southwest Florida gave the 10,000 Islands (of which Marco is the largest and most populated) the only "A" for water quality. Every other estuary from Venice south didn't come close and, to my knowledge, they're all on sewer. Now, what does that say to you?
Ed Foster
#5 Posted by EdFoster on September 13, 2007 at 2:28 p.m. (Suggest removal)
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