Strand v. Escambia County
992 So. 2d 150 (2008)
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Rule of Law:
Bonds issued under a tax increment financing (TIF) plan are not considered "payable from ad valorem taxation" under Article VII, Section 12 of the Florida Constitution, and thus do not require a voter referendum, so long as bondholders have no legal right to compel the government to levy ad valorem taxes to satisfy the debt.
Facts:
- On May 4, 2006, Escambia County adopted an ordinance establishing the Southwest Escambia Improvement District to finance infrastructure improvements.
- The ordinance authorized the use of tax increment financing, creating a Trust Fund to be funded by annual appropriations equal to the 'Tax Increment'—the increase in ad valorem (property) tax revenues resulting from rising property values within the District.
- In conjunction with the ordinance, the County adopted a resolution authorizing the issuance of up to $135 million in bonds to finance a four-lane road-widening project in the District.
- The bonds were designated as payable from the Trust Fund, which would primarily consist of the Tax Increment Revenues.
- The financing documents specified that supplemental non-ad valorem revenues could be used if necessary but that the County did not covenant to maintain services that generate these revenues.
- Both the ordinance and resolution explicitly stated that the bonds did not constitute a pledge of the County's full faith, credit, or taxing power, and that bondholders could not compel the exercise of the ad valorem taxing power.
Procedural Posture:
- Escambia County filed a complaint for bond validation in the Circuit Court of the First Judicial Circuit, in and for Escambia County.
- Dr. Gregory Strand, as an intervenor, opposed the validation, arguing it required a referendum.
- The circuit court (trial court) entered a final judgment validating the bond issuance, finding it did not require a referendum.
- Dr. Gregory Strand (Appellant) appealed the final judgment directly to the Supreme Court of Florida.
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Issue:
Does a tax increment financing plan, where bonds are repaid from annual appropriations of ad valorem tax revenues but bondholders cannot compel the levy of ad valorem taxes, require a voter referendum under Article VII, Section 12 of the Florida Constitution?
Opinions:
Majority - Wells, J.
No. A tax increment financing plan does not require a voter referendum because such bonds are not 'payable from ad valorem taxation' in the constitutional sense. The critical factor is that bondholders have no right to compel the levy of ad valorem taxes to pay the debt. This case is controlled by the precedent set in State v. Miami Beach Redevelopment Agency, which established that as long as a government body is not obliged to levy ad valorem taxes and cannot be compelled to do so by bondholders, the referendum requirement of Article VII, Section 12 is not triggered. The court refused to recede from this precedent, citing the doctrine of stare decisis and the widespread reliance by local governments on this financing mechanism. Furthermore, this case is distinguishable from County of Volusia v. State because Escambia County did not pledge all available non-ad valorem revenues and expressly disclaimed any promise to maintain the programs that generate such revenues.
Dissenting - Lewis, J.
Yes. The financing plan requires a referendum because it is a transparent attempt to circumvent the plain text and intent of Article VII, Section 12 of the Florida Constitution. The substance of the plan is that bonds for a capital project are being repaid primarily from ad valorem tax revenue, which is precisely what the constitution requires voters to approve. The majority's reliance on the legal fiction from Miami Beach distorts the constitution by replacing the phrase 'payable from ad valorem taxation' with 'a pledge of the taxing power.' This case is different from Miami Beach because here, ad valorem tax revenue is the primary, not contingent, source of repayment for a typical capital project, which should bring it under the rule of County of Volusia, where indirect pledges that inevitably impact ad valorem taxes were found to require a referendum. This local-government shell game, played to avoid the Florida voter, should not be sanctioned.
Analysis:
This decision firmly entrenches the precedent of State v. Miami Beach Redevelopment Agency, solidifying tax increment financing (TIF) as a primary tool for Florida local governments to fund major projects without direct voter approval. The court's holding reinforces a significant legal distinction: the constitutional referendum requirement is triggered not by the practical source of repayment funds (even if they are property taxes), but by whether bondholders have the legal power to force the government to levy taxes. This creates a durable and widely used loophole, empowering local authorities in public finance but also limiting direct taxpayer control over long-term government debt secured in substance, if not in form, by property tax revenues.
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