The Fla Supremes Dodge the Real Question and Approve a Bond Issue

In Citizens Advocating Responsible Environmental Solutions v. City of Marco Island, the Supreme Court validated a bond issue for wastewater improvements backed by special assessments on existing and future development in currently unserved areas of the City. The real challenge was to the improvements funded by the assessments.

Here's the problem: CARES claimed that the City was playing a major funding shell game and mixing up the costs of rehabilitating its aging 3.5 MGD existing plant with the costs of expanding the plant to 5 MGD.

The circuit court and Supremes found that there was enough evidence before the City Commission to support its legislative finding that the assessments reasonably benefit the properties to be served and were reasonably attributable and assigned to those properties.

And of course there was testimony that (a) the plant would not have had to be expanded (or new lines run) absent service to the new areas; (b) the bond proceeds were pledged to "expansion costs" for lines and treatment capacity; and (c) the existing users would get no special benefits from the expansion. The Supremes found that to be enough to meet the 2 part test for a valid special assessment in a bond validation proceeding where the bonds are funded by the assessments.

The problem, of course, is that we don't know (from this kind of appellate opinion) how much the local government was hiding, and what CARES was really asking for was meaningful cost accounting to distinguish between capacity improvements and rehabilitation of the plant. If the City had been charging pure impact or hookup fees instead of special assessments, that kind of inquiry would have been required (see the Sarasota County case from a couple months back, or the Volusia County school impact fee case). But by playing a switcheroo game, labeling the charges "special assessments" and pledging them to bonds, the City gets away with minimal scrutiny of its cost accounting.

This is wrong. Maybe the City is playing fair, but based on what I've seen of public finance lately, I don't believe it. All over the state, local governments are refusing to hand existing residents the bill for the service upgrades they want (wider roads, better drainage, better equipped parks) and pretending that the "need" for additional capital investment is entirely attributable to new development.

The Supreme Court, whether intentionally or not, made this problem worse with this decision. The Court -- and the abusive local governments - are simply daring the legislature to adopt meaningful legislation to provide minimal, uniform standards of accounting for capital improvements, and a standard approach for impact fees and other exactions.