New Florida Supreme Court Ruling Might Hurt Redevelopment Agencies
Written by Risa Polansky on September 13, 2007
By Risa Polansky
Outlook for community redevelopment agencies across the state is hazy after a vague Florida Supreme Court ruling last week that could jeopardize the entities’ function, experts say, and the ruling also piles more doubt onto the future of a local agency already threatened with extinction.
Planting a roadblock in front of the long-accepted process of using redevelopment money to fund large capital projects, the court ruling requires a referendum — rather than agency approval only — before using the funds to finance bonds for such projects.
"The implications of the decision are just now starting to be realized throughout the state," said attorney David Cardwell, general counsel to the Florida Redevelopment Association.
The court’s decision, he said, leaves many loose ends, including who would vote in the referendum and whether it applies to set contractual obligations.
Escambia County, in which the case was based, has until Sept. 17 to ask for a rehearing or clarification, he said.
The ruling could cripple Miami administrators’ longstanding but often-criticized plan to use $50 million in Omni Community Redevelopment Agency money to fund the city’s promised share in Miami-Dade County’s port tunnel project, as the impending Sept. 30 deadline to secure the funds wouldn’t allow time for a vote by residents.
"Time is not our friend on this one," said Johnny Martinez, district six secretary for the Florida Department of Transportation, who plans to ask the tunnel’s concessionaire for an extension on the cut-off date.
In the mean time, the city is exploring other funding options, City Manager Pete Hernandez said.
It’s not just the tunnel that’s at stake.
Redevelopment agencies are funded through property valuation increases. The local government receives tax revenue from the district up to a specified level. As valuations increase, any tax money generated beyond the set level goes to the redevelopment agency.
In order to not only fund the tunnel project but continue generating revenue to contribute to revitalization, both the agency’s lifespan and boundaries would need to be extended to stretch past 2017 and include Watson Island, where the port tunnel is to be dug — ultimately, a decision by Miami-Dade County commissioners.
Mr. Hernandez last month voiced concern that the county would be unlikely to extend the agency’s life without support for the tunnel — a worry not unfounded, some commissioners said at the time.
Following last week’s state Supreme Court decision that nudges the money further out of reach than a recent no vote by the agency board already has, commission Chair Bruno Barreiro said this week "that’s not going to be the sole issue that determines if we expand it or not," but "it might" jeopardize the agency’s life.
"It’s an issue we’ll take into consideration," he said. "We take a perspective of making sure it [the agency] benefits the entire county, not just the area, and we negotiate these points."
Emphasizing the necessity of the port tunnel, designed to relieve downtown Miami of port-related traffic by diverting it through a tunnel system connecting the Port of Miami to Watson Island, Commissioner Jose "Pepe" Diaz, head of the county’s Airport and Tourism Committee, said he is unsure if the agency’s potential inability to put up the funds would sway him to vote against extending its life.
"I would really have to look at that closely," he said.
But the ruling doesn’t render redevelopment agencies useless, proponents say.
"The decision does not spell the death of CRAs," said Miami Commissioner Michelle Spence-Jones, chair of the local agency boards, in an e-mail. "It only, at this point, limits the financial tools available to have maximum impact of improving the quality of life of those who live in the CRA district."
Carol Westmoreland, executive director of the Florida Redevelopment Association, said the ruling wouldn’t stop agencies from doing what they’re meant to do but could complicate the process.
In addition to the "time issue" of a referendum taking longer to pass than a vote by the agency board, there’s a "higher probability the voters will say no," she said, because the issue becomes "more political than financial."
Jim Villacorta, executive director of the local redevelopment agencies, said in an e-mailed statement that "for more than two decades Florida’s communities have benefited from access to bond funding and we are hopeful that redevelopment efforts will not be adversely impacted by the court’s reversal of its long established precedent." He did not respond to calls to elaborate on the direct impact of the ruling on area agencies.
"I think there are unintended consequences" of the decision, Ms. Westmoreland said. "Situations that the court did not opine about are causing the ripple effect."