Three and a half years after a court gave the Florida PACE Funding Agency final judgment to issue $5 billion in bonds, a dispute over the choice of many of the state's tax collectors to not collect the tax supporting PACE bonds may be nearing an end.
The PACE funding agency has appealed a circuit court ruling in favor of the county tax collectors to the Florida Supreme Court and the case is advancing. Most recently, two parties asked the judge to allow oral arguments.
The FPFA is suing Florida and 60 county governments and tax collectors it says are flouting a Florida Supreme Court order from October 2022.
PACE, which stands for property assessed clean energy, allows property owners to take out loans for clean energy and, in Florida, hurricane-resistant home improvements that are repaid through voluntary tax assessments on the property.
Since the FPFA gained a final judgment validating the bonds in October 2022,
The FPFA has objected to the refusal of governments and/or tax collectors of about 42 of the state's 67 counties to collect the environmental assessment taxes supporting the bonds.
The FPFA has in recent years issued at least $150 million in bonds of the $5 billion authorized.
"Over three years ago, some tax collectors informed FPFA of their decision not to comply with Florida law and collect FPFA's assessments," FPFA Executive Director Wendi Leach told The Bond Buyer.
"Since then, FPFA and its third-party administrators have worked tirelessly to collect assessments in these affected counties and ensure full, timely payment on the court-validated bonds supported by those assessments," she said.
"FPFA's efforts include the ongoing legal challenges …, financial contributions and staff and contractor time spent mitigating the damage these tax collectors continue to cause by their non-compliance," Leach said. "Through that effort, FPFA made full, timely payments in 2024 and 2025. The 2026 bond payments are currently being processed and we should be able to determine if there will be a shortage in the next few weeks."
In the current case, FPFA had asked a circuit court to direct the tax collectors to collect the PACE tax because, according to FPFA, the final judgment for the bonds in October 2022 required this.
Instead, the circuit court ruled the tax collectors were not parties to the earlier proceedings and were not subject to any order directing them to do anything.
In March FPFA appealed the decision to the Florida Supreme Court.
FPFA
"The circuit court should never have entertained, in the first place, the tax collectors' attack on the jurisdictional sufficiency of the statutory notice scheme the legislature created for the bond validation," FPFA said.
"This court's prior decision implicitly addressed or necessarily considered whether the tax collectors were parties to the bond validation proceedings, thereby foreclosing consideration of that issue by the circuit court," FPFA said.
"Even if the circuit court had remained free to consider the tax collectors' third bite at the jurisdictional apple [due to prior appeals], it got it wrong on the merits," the PACE agency said. "The tax collectors were represented by the state at the bond validation proceedings and, separately, were also bound by publication of the statutorily prescribed notice of the proceedings."
Regarding the lower court's finding that the tax collectors hadn't been ordered to do anything, FPFA argued that the final judgment and a March 2024 circuit court order directed the tax collectors to collect the agency's assessments. The circuit court order said "the tax collectors … are without discretion to collect the non-ad valorem assessments."
FPFA asked the Supreme Court to reverse the lower court's order. Further, it asked the court to send the case back to the circuit court to consider the agency's motion to hold the tax collectors in indirect civil contempt so as to coerce them into collecting the PACE taxes.
In the
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Service of process in the U.S. legal system are the steps a litigant must take to provide formal written notice to a defendant telling him, her or it of the suit, and what the defendant must do initially to respond to the suit.
The FPFA's "argument that the tax collectors were deemed to be parties via constructive notice by publication pursuant to section 75.06(1), Florida statutes, is incorrect, as a plain reading of this statute shows that it is directed to parties or entities located in, or with an interest in property in, those local governments comprising the special purpose local government entity, and Leon County, as the statutory venue county," the Hillsborough tax collector said.
"There is simply no order or judgment from either the circuit court or this court that clearly and unequivocally directs the Hillsborough County Tax Collector … to do anything, so that there was no basis for finding of contempt," the Hillsborough tax collector said.
"The proper remedy … for determining whether the bond validation final judgment actually compelled any specific performance by any tax collector, would be a mandamus action filed against a specific tax collector in that tax collector's home county," the tax collector said. The tax collector said FPFA in fact filed several mandamus actions against various county tax collectors and the circuit courts repeatedly found in favor of the tax collectors.
In a reply brief, FPFA responded to the tax collectors by arguing the tax collectors were made parties to the bond validation in three ways.
First, "upon publication of the validation order 'in the county where the complaint is filed' and 'in each county' embracing the bond issuer, all persons 'having or claiming any right, title or interest' 'are made parties defendant to the action and the court has jurisdiction of them to the same extent as if named as defendants in the complaint and personally served with process.' The agency complied," PACE said, quoting partly from a state statute.
Second, a Florida statute makes the bond judgment "forever conclusive as to all matters adjudicated," PACE said, quoting the statute.
Third, the state government represented the tax collectors through the state attorneys at the bond hearing, PACE said. "The circuit court found the state's interest – 'including its political subdivisions' – adequately represented."
"The Final [bond] Judgment clearly and definitely adjudged that the agency's assessments 'must be collected as a ministerial act by the tax collector' and that the tax collector is 'without any discretion with regard to the collection,'" PACE said, at points quoting from the final bond judgment.
According to FPFA, the tax collectors say just because the judgment is final, that doesn't imply "enforcement." But "a judgment no court may enforce is no judgment at all," the agency said.
