Florida Supreme Court rules in favor of Escambia County, Fla., use of TIF financing without referendum

By Sheri Kasprzak

New York, Nov. 20 - The Florida Supreme Court ruled this week that Escambia County will be able to use tax increment financing to fund infrastructure improvements without a bond referendum.

The decision overturns a ruling from the Circuit Court of the First Judicial Circuit for Escambia County, which ruled that the county did require a referendum to conduct the sale of its tax increment bonds.

The county was embroiled in a lawsuit for the past two years with Gregory Strand over whether the county could use certificates of participation to finance infrastructure construction without a bond referendum.

"The circuit court determined that the bonds could be validated without the referendum required by article VII, section 12, Florida Constitution, because the bonds to be issued under the ordinance and the resolution do not constitute an indebtedness, liability or pledge of the faith, credit or taxing power of the county," said the Supreme Court's ruling.

"On appeal, Dr. Strand argues that the bonds should not have been validated because the county did not comply with the Community Redevelopment Act, chapter 163, Florida Statutes. The county responds that chapter 163 does not apply to the county's issuance of bonds. Rather, the county intends to issue the bonds based upon the powers granted to the county by section 125.01, Florida Statutes. We agree with the county."

Escambia had planned to sell $350 million in certificates of participation. The suit also impacted $12 billion in outstanding Florida school board COPs, according to a statement from the Securities Industry and Financial Markets Association.

"We hope and expect that this is the final chapter in this epic saga," said a statement from Sifma released Thursday.

"The rule 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 questions in the case remain valid."

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