Fla. Supreme Court modifies bond ruling

Fla. Supreme Court modifies bond ruling

	Published : Fri, 28 Sep 2007 21:03 By : Agencies Print this Story

TALLAHASSEE, Fla. (AP) - A cloud was lifted from billions of dollars in local government construction projects Friday when the Florida Supreme Court revised a ruling that required voter approval for two types of borrowing.

The high court made it clear the referendum requirement applies only to future -- not existing -- tax increment financed bonds. They are backed by city and county property taxes generated from redevelopment and improvement programs.

The justices also removed the referendum requirement from lease purchases -- 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, said Wayne Blanton, executive director of the Florida School Boards Association.

'This allows us to proceed,' Blanton said. 'We are extremely pleased. We are 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, Blanton said.

Part of the angst was over 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.

'We are grateful for the clarification,' said Florida Association of Counties spokeswoman Cragin Mosteller. 'We are grateful to the court for their open mind.'

The counties, though, still want a rehearing to challenge the referendum requirement for future bond issues.

The justices 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 justices 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.

The case focuses on a provision in the Florida Constitution that says bonds 'payable' from property taxes, which mature more than 12 months after being issued, must get voter approval.

The high court in 1980 said that requirement does not apply if a local government pledges tax revenue but not its taxing authority. The present-day justices called that distinction a 'legal fiction.'

In their revised opinion, though, they 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.

The revision was fine with David Theriaque, a lawyer representing Dr. Gregory Strand, a Pensacola veterinarian who had challenged the Escambia bonds. Theriaque said his position also was that the opinion did not apply retroactively.

'It doesn't alter the basis for the court's decision' as to future bond issues, Theriaque said.