Prerequisites to Bond Issuance

Question 1

When analyzing bond where look for limits & include them in the requisite resolution:

Answer 1

Constitution
Contract
Statute
Ordinance
what is Pledged.

Question 2

What are the constitutional limits on bond issuance?

Answer 2

Constitutional Restrictions
can’t Purposely Lend Credit or Mortgage an Extraterrestrial
———–
1. Public Purpose
2. No lending of credit
3. No mortgage
4. Extraterritorial Powers

Question 3

What contract restriction might you have to consider before a bond issuance?

Answer 3

Contractual requirements that things have parity

Question 4

What legislative declaration is needed in your bond issuance resolution?

Answer 4

For a public purpose.
—
Presumed valid and should be considered correct unless patently erroneous

Question 5

When declaring public purpose, compare LG powers.

~~~same discussion as pub purp in Emin Dom~~~

Answer 5

Non-C: all pwrs of self govt AS IS PROVIDED in general or special law.
———–
Muni:
Govtl, corporate and proprietary pwrs
To conduct govt, perform functs + services:
(a) For muni purposes
(b) Except as OTHERWISE PROVIDED BY LAW.

Question 6

When declaring public purpose, state powers of Munis.

~~~same discussion as pub purp in Emin Dom~~~

Answer 6

Govtl, corporate and proprietary pwrs
To conduct govt, perform functs + services:
———–
(a) For muni purposes
(b) Except as OTHERWISE PROVIDED BY LAW.

Question 7

When declaring public purpose, state powers of Charters.

~~~same discussion as pub purp in Emin Dom~~~

Answer 7

How remember:
c”H”arter is alphabetically close to “I”nconsitent.

Question 8

When declaring public purpose, state powers of Non-Charters.

~~~same discussion as pub purp in Emin Dom~~~

Answer 8

How remember:
“N”on C is alphabetically close to “P”rovided.

Question 9

What statutes empower LGs to issue Typical Revenue Bonds AND Gen Oblig Bonds?

Answer 9

Counties
(a) General (FS 125.013)
(b) Water + Sewer revenue + GOB (FS 153)
———–
Munis
(a) Capital ‘or other’ (FS 166.111)
———–
C+M
(a) Can refund (FS 132),
(b) Revenue bonds (FS 159)

Question 10

What is unique language in the Muni Home Rule regarding its powers to issue bonds?

Answer 10

Munis can issue bonds for capital “or other” projects.
FS 166.111

Question 11

What the maximum duration of a county bond?

Answer 11

40 yrs.

Question 12

TYPICAL REVENUE + GOB
———–
What’s the current max interest rate on a county bond?

Answer 12

7%

Statute has complex formula.

Question 13

COPS
———–
What are the 2 time limits on County lease purchasing COPS?

Answer 13

1. Can’t exceed 30 yrs to mature.
2. If term is longer than 5 yrs, cannot pay from AV.

Question 14

Can Cities enter lease purchase COPS?

Answer 14

Yes per Home Rule.

Question 15

CONDUIT
———–
What type of facilities get built w/ conduit bonds?

Answer 15

• Health (154),
• Housing (159) & `
• Industrial development (159) manufacturing, tourism, educational facilities + social service facilities.

Question 16

CONDUIT
———–
How are conduit bonds paid for?

Answer 16

Revenue of the project financed.

Question 17

CONDUIT
———–
Who are issuers & who are borrowers of conduit bonds?

Answer 17

Issuer:
LG via Industrial Development Authorities, Housing Finance Authorities, Health Facility Authorities, counties + cities.
and other governmental units on behalf of an underlying borrower.

Borrower:
a private party

Question 18

What are TIFs used for?

Answer 18

Community redevelopment (FS 163).

Question 19

CRA/TIF
———–
What are TIFs paid from?

Answer 19

The “tax increment” or the difference between the assessed value of the property before and after the redevelopment project.

Question 20

What is a special assessment?

Answer 20

• Charge imposed against property
• In a particular locality
• B/c that property recs a special benefit apart from the gen public’s bene
• From an improvement.

Question 21

SPECIAL ASSESSMENT
———–
You are determining the amount of a special assessments charged to Owner:
1) What is amount based on?
2) What can NEVER be used to determine amount?

Answer 21

• Apportioned according to the value of the bene rec.
• Not calculated by cost of the improvement.

Question 22

What is the statutory cap on a special assessment charge?

Answer 22

Can’t exceed value of the benefit OR cost of the improvement.

Question 23

SPECIAL ASSESSMENT
———–
What is authority for a Muni to issue special assessment bonds?

Answer 23

• Ch. 170
• Caselaw says Home Rule, pass an Ordinance.

Question 24

What is authority for Counties to issue special assessment bonds?

Answer 24

• Home Rule, pass an ordinance under Ch. 125.
• Water + Sewer improvements + acquis. (FS 153)

Question 25

How might charter/ordinances restrict ability to issue bonds?

Answer 25

Might impose restrictions, ex. pass by ordinance, not resolution; LG attorney must sign.

Question 26

How might contract provisions restrict ability to issue bonds?

Answer 26

1. New debt must have parity w/ existing debt.
2. Anti-dilution, AV must be a certain level.
3. Use of revenue.
4. Require consent of lender.

Question 27

When pledging revenue, does UCC apply?

Answer 27

No.

Question 28

What extra assurances might a lender need, re: revenue pledged?

Answer 28

Attorney opinion letter that security interest in revenue is valid & binding.

Question 29

What are the mechanics of handling pledged revenue?

Answer 29

Revenue is held in trust.
Often use a Trustee.

Question 30

Can revenue bonds be repealed?

Answer 30

No. Contracts clause.
• Fed: No State shall issue any law
• State: No law shall be passed
impairing contracts.

Question 31

Bonds secured by a covenant to budget and appropriate legally available non-ad valorem
revenues for the payment of debt service are:
(a) not permitted under FL law
(b) permitted but must be validated first
(c) permitted but only for cities and charter counties
(d) permitted

Answer 31

D

CContracts STOP

K may require cov to approp + antidilution

Question 32

The Constitution of the State of FL, prohibits cities, counties & LGs from giving, lending or using their taxing power to credit or aid any corporation.

Answer 32

TRUE

not a trick question about the U.S. constitution

Question 33

TRUE OR FALSE
———–
LGs may only incur debt for a valid public purpose.

Answer 33

ConstC STOP
public purpose must be established in the resolution.

• Charts - all pwrs of self gvt not inconst w/ gen law
• NCs - all pwrs slf gvt provided by gen + spec law.
• Munis - govt, corp, prop pwrs to conduct govt, perform function + services & may exercise any pwr for muni purp except as otherwise provided by law
• Deference to public purp unless clearly erroneous.

Question 34

Restrictions on a LG’s ability to issue or incur debt may be found in:
(a) Constitution, charter, statutes, ordinances, resolutions and contracts
(b) Constitution and statutes only
(c) Constitution, charter and statutes only
(d) none of the above

Answer 34

A

CC STOP
Const, Contracts Statutes, Ordinance, Pledge

Question 35

Existing ordinances and/or resolutions may limit the ability of a LG to incur debt.

Answer 35

TRUE

CC ST”O”P

Question 36

In determining whether a LG has duly created and perfected a security interest in pledged revenues, the requirements of Chapter 679, Florida Statutes (UCC), must be satisfied.

Answer 36

FALSE