State v. City of Daytona Beach
11 Fla. L. Weekly 80, 484 So. 2d 1214, 1986 Fla. LEXIS 1695 (1986)
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Rule of Law:
The Florida Legislature has the constitutional power to define and broaden the “respective purposes” of special taxing districts to include community redevelopment, thereby allowing such districts to contribute ad valorem tax increment revenues to redevelopment trust funds without violating Article VII, section 9(a) of the Florida Constitution.
Facts:
- The City of Daytona Beach sought to finance a downtown area redevelopment project, including a marina, streets, sidewalks, and lighting, requiring up to $20 million in improvement revenue bonds.
- In 1981, the city adopted a resolution declaring certain downtown property to be a slum or blighted area and established a Community Redevelopment Agency.
- In 1982, the city enacted ordinances creating a community redevelopment plan for the downtown area and establishing a redevelopment trust fund.
- In January 1985, the city enacted Ordinance No. 85-1, which provided for the issuance of the redevelopment improvement revenue bonds.
- The city prescribed three sources of payment for the bonds: operating revenue of the marina, a utilities service tax, and downtown area tax increment revenue, with the latter to be derived in part from special taxing districts.
- The state attorney contended that requiring contributions of tax increment revenue funds from special taxing districts like the Ponce de Leon Port Authority, East Volusia Mosquito Control District, East Volusia Transportation Authority, or Halifax Hospital Medical Center, for the downtown redevelopment project was unconstitutional under Article VII, section 9(a).
Procedural Posture:
- The City of Daytona Beach filed an action in the court of first instance (presumably a Florida Circuit Court) seeking validation of improvement revenue bonds.
- The state attorney opposed the validation of these bonds, arguing their unconstitutionality.
- The court of first instance entered a final judgment validating the revenue bonds.
- The State of Florida, through the state attorney, filed a direct appeal to the Supreme Court of Florida from the final judgment validating the bonds (Appellant: State of Florida; Appellee: City of Daytona Beach).
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Issue:
Does Article VII, section 9(a) of the Florida Constitution prohibit special taxing districts from contributing ad valorem tax increment revenues to a community redevelopment trust fund for purposes outside their originally defined "respective purposes," even when the legislature has explicitly authorized such contributions?
Opinions:
Majority - Overton, Justice
No, Article VII, section 9(a) of the Florida Constitution does not prohibit special taxing districts from contributing ad valorem tax increment revenues to a community redevelopment trust fund for purposes outside their originally defined "respective purposes," because the legislature has the power to define and broaden the "respective purposes" of such districts. The Court rejected the state attorney's argument that allowing special taxing districts to contribute ad valorem tax increment revenues for community redevelopment violated Article VII, section 9(a), which restricts tax levies to 'respective purposes.' The Court affirmed its prior decision in State v. Miami Beach Redevelopment Agency, which upheld tax increment financing as a method where increased ad valorem taxes from property improvements fund redevelopment, noting that the contribution never exceeds the increment and does not reduce the special district's existing tax base. Crucially, the Court determined that the legislature possesses the authority to declare community redevelopment as one of the 'respective purposes' of special taxing districts and to expand their purviews, citing specific legislative acts (Chapter 84-539, Laws of Florida; Section 163.353, Florida Statutes (Supp. 1984); and Section 163.387, Florida Statutes (Supp. 1984)) that granted such authority to ensure the preservation and enhancement of the districts' tax bases.
Dissenting - Shaw, Justice
Yes, special taxing districts are prohibited from contributing ad valorem tax increment revenues to a community redevelopment trust fund for purposes unrelated to their original "respective purposes," and using these funds for capital projects also requires a referendum vote. Justice Shaw argued that 'ad valorem tax increment' is fundamentally an ad valorem tax, and thus pledging it for local bonds requires a referendum vote by electors under Article VII, section 12(a), Florida Constitution. He contended that the majority's decision effectively disregarded the plain meaning of Article VII, section 12(a) and undermined the limiting language of Article VII, section 9(a), which mandates that special districts may only levy taxes 'for their respective purposes.' Citing State ex rel. City of Gainesville v. St. Johns River Water Management District, he asserted that the specified special districts (Ponce de Leon Port Authority, East Volusia Mosquito Control District, East Volusia Transportation Authority, and Halifax Hospital Medical Center) were not established for downtown redevelopment and therefore cannot constitutionally levy taxes for such a purpose. He further argued that even if they could levy such taxes for capital projects, a referendum within each district would be a constitutional prerequisite.
Analysis:
This case significantly broadens the scope of permissible activities for Florida's special taxing districts, reaffirming the Legislature's expansive power to define and redefine their statutory purposes. By validating the use of tax increment financing from various special districts for a shared community redevelopment goal, the decision streamlines the funding mechanisms for urban renewal projects. It suggests that legislative intent, expressed through enabling statutes, can effectively override previous judicial interpretations concerning the specificity of a district's 'respective purposes,' provided the financial contribution directly correlates with an increased tax base. This ruling potentially encourages more inter-governmental collaboration in funding public improvement projects, allowing cities to leverage the fiscal capacity of surrounding special districts for comprehensive development.
