BRADENTON, Fla. - After a year-long hiatus, tax increment financing is again on strong legal footing in Florida now that the state Supreme Court has issued the final word on how the debt must be sold.
Late Wednesday, the state's high court justices refused to reconsider the case known as Strand v. Escambia County. That solidified their Sept. 18 ruling that said it is constitutional for TIF bonds to be sold without first holding a public referendum, upholding decades of case law on the issue in the state.
"We hope and expect that this is the final chapter in this epic saga," said a statement from the Securities Industry and Financial Markets Association, which provided legal assistance to Escambia County. "The ruling protects the contractual rights and obligations of bondholders and upholds two decades of the Florida state court's rulings that bonds issued with a pledge of tax revenues do not require a referendum."
"On behalf of all market participants, we are pleased that the market for these bonds will continue without disruption and the $350 million of outstanding Florida tax increment bonds and $12 billion of outstanding Florida school board certificates of participation, which were questioned in the case, remain valid," SIFMA said. "We have worked tirelessly to ensure that the markets for these bonds can continue uninterrupted, and we have coordinated closely with a constellation of Escambia County interests to defend this excellent result for issuers, investors, the marketplace and the securities industry."
At one point early in the case more than a year ago, a ruling by the Supreme Court called into question the legality of COPs sold by Florida issuers, many of which are public school districts. Justices revised their initial opinion, removing references to COPs, and said their opinion only affected future TIF bonds.
A year later, justices reversed themselves and said TIF bonds could be issued without a referendum. They also upheld a lower court ruling that validated $135 million of TIF bonds that Escambia County wanted to sell to finance the widening of a road.
"The ruling is a very positive thing for local governments in Florida," said Randy Hanna, managing shareholder at Bryant Miller Olive LLP, who represented the Florida League of Cities in the Strand case. "Projects have been on hold pending this decision and it will be great to move these projects forward."
"It is also great to have some certainty in this area of law again," Hanna added.
Elaine Johnson James, a partner at Edwards Angell Palmer & Dodge LLP and co-counsel to Escambia County, who wrote briefs and argued before the Supreme Court, said Wednesday's ruling ends the case.
"This is wonderful news," James said. "Now the citizens and the governor in Florida can have some peace and repose about the state of the law."
Projects in Florida on hold because of the Strand case include a $515 million bond-financed ballpark for the Florida Marlins. The Marlins ballpark has been embroiled in a lawsuit challenging a community development plan by Miami and Miami-Dade County, which is based partly on the use of TIF financing.
The judge in the lawsuit, Jeri Beth Cohen, withheld her final decision in the Marlins suit until the state Supreme Court ruled on the Strand case. There was no word yesterday when Cohen might issue her final ruling in the case.