In my "local government
law" class in law school - and in studying for the bar - I learned that you can't pledge ad valorem
tax revenues for bonds without a referendum. I also learned the exception - you could pledge TIF
revenues or combinations of revenues, so long as the core "ad valorem
" taxing power was not implicated in the pledge.
Not any more. In Strand v. Escambia County
, the Florida Supreme Court drove a stake into the heart of the Miami Beach
case that established the "TIF
exception" and loosed an arrow (not yet struck) into the "combination of revenues" exception established in the Sarasota County School Board
Not surprisingly, a local government had taken the TIF
exception (carved out for CRA
type improvements) to an extreme, funding a major road improvement ($135M) for Perdido
Key solely from TIF
-backed bonds. The TIF
"area" is the "Southwest Escambia
County Improvement District"-- which does NOT appear anywhere in the opinion as an MSTU
; instead it appears that the County tried to use its home rule powers to simply create a TIF
-type area from whole cloth to segregate general-fund ad valorem
tax dollars into the bond payments. [I'm sure I'll here from the principles if I've got this wrong or if the Court missed it.] The Court invalidated the bonds as being in violation of Article VII, s. 12.
The Court did a very scholarly job of reviewing the bad history of ad valorem
-backed bonds in Florida and the two main "exception" cases. It also discussed (cogently) the Volusia County
case that held that the County couldn't pledge a hodge podge
of non-ad volorem
revenues to back a bond if it appeared that the county might have to raise ad valorem
taxes to replace the pledged revenues. The Court concluded that the Miami Beach
and Sarasota School Board
cases went too far and reeled them back in.
So, in the span of two weeks we find out that local governments get huge discretion to issue bonds backed by special assessments and have little or no discretion to issue bonds backed by ANY kind of ad valorem
revenues. Two results are pretty much automatic:
1) HEELLLOOOO MSTUs
and Special Districts with special assessments. I'm guessing we'll see lots and lots of these because its the only way left to raise funds to pay for infrastructure.
[Well, maybe we won't see so many in the short run. After over 25 years of Republican preaching about "no new taxes" and government waste, the citizenry thinks that it can get better roads and other infrastructure
for free. It's all new development's fault, just use impact fees to do it, and if they don't work, screw around with concurrency to create moratoria
and then make them pay for everything just to be able to do anything. In that climate, we probably won't see cities and counties establishing responsible ways to pay for infrastructure until they lose a few major cases.]
2) Bye, bye CRAs
!!! No bonding for TIF
revenues from CRAs
, so why bother - straight into special assessment districts. First they lose the power to condemn for redevelopment, and now they lose the ability to bond TIF
dollars - the two useful functions of CRAs
are now pretty much toast.