Florida Supreme Court Clarifies Decision Regarding Referendum Approval for Local Governments
October 1, 2007
Mark E. Raymond- West Palm Beach
Richard B. "Rick" Stephens- Lakeland
Edward W. "Ed" Vogel- Lakeland
Michael L. "Mike" Wiener- Lakeland
On September 6, 2007, the Florida Supreme Court held that under the Florida Constitution local governments must obtain referendum approval to issue bonds that are secured by a pledge of ad valorem tax revenues. Strand v. Escambia County, 32 Fla. L. Weekly S550a. The Florida Supreme Court provided that its decision in Strand did not affect outstanding bonds that were validated. The decision receded from 27 years of legal precedent that had previously interpreted the applicable constitutional provision, left uncertainty in the Florida municipal bond market for TIF Bonds that were not validated, and potentially called into question certificates of participation issued by school boards and other financings that directly or indirectly pledged or are secured by ad valorem revenues of an issuer.
Revised Opinion Clarifies: Strand Decision Was Not Retroactive
The Florida Supreme Court issued a revised opinion on September 28, 2007, to clarify its previous opinion. The Court held that the decision in Strand was prospective and “does not retroactively apply to bonds and obligations that have been issued based on authority of the precedent from which this Court now recedes.” Therefore, TIF bonds previously issued in reliance on State v. Miami Beach Redevelopment Agency, 392 So. 2d 875 (Fla. 1980) remain valid.
The Florida Supreme Court also clarified that its decision did not affect the validity of certificates of participation. In its revised opinion, the Florida Supreme Court held that receding from Miami Beach does not impact the ultimate holding of State v. School Board of Sarasota County, 561 So. 2d 549 (Fla. 1990), or the validity of similar certificates of participation issued or to be issued in reliance thereon. See 561 So. 2d at 552 (explaining that like the agreements this Court authorized without a referendum in State v. Brevard County, 539 So. 2d 461 (Fla. 1989), the agreements at issue in School Board of Sarasota County do not “matur[e] more than twelve months after issuance”). The revised opinion can be found at: http://www.floridasupremecourt.org/decisions/2007/sc06-1894.pdf
In response to the revised opinion S&P removed all of Florida’s TIF bonds and COPs from credit watch and Fitch removed all Florida TIF Bonds from credit watch.
The oral argument on the rehearing in Strand is scheduled for Tuesday, October 9, 2007, at 9:00 a.m. Eastern. The Court stated in its revised order that it will not entertain any arguments related to bonds previously issued or validated or any arguments related to certificates or obligations issued in reliance upon State v. School Board of Sarasota County. The revised order can be found at: http://www.floridasupremecourt.org/decisions/2007/sc06-1894order.pdf
Other documents related to the case of Strand v. Escambia County, case number 06-1894, are available on the Supreme Court of Florida’s Web site at: http://www.floridasupremecourt.org/pub_info/summaries/briefs/06/06-1894/index.html
For more information, email Rick Stephens at rick.stephens@hklaw.com, Ed Vogel at ed.vogel@hklaw.com, Mark Raymond at mark.raymond@hklaw.com, or Michael Wiener at michael.wiener@hklaw.com, or call toll free, 1-888-688-8500.