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High Court Puts City Projects In Limbo
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Published: September 18, 2007
TAMPA - Some of the city's most visible and significant projects are in limbo as Tampa officials try to decipher a state Supreme Court ruling that could have devastating effects on local government.
Central Park Village. The Heights housing project. The redesign of Curtis Hixon Park. Converting Polk Street into a two-way road and reconfiguring Zack Street as an Avenue of the Arts. All of those projects and more could be halted by the court ruling.
"This has ignited a firestorm across the state," City Attorney David Smith said.
This month, the Florida Supreme Court unanimously ruled in Strand v. Escambia County that counties, school districts, municipalities and special districts must obtain voter approval before issuing debt backed by taxpayer dollars.
More specifically, the court targeted a taxing structure known as tax-increment financing, ruling that debt backed by money generated from tax-increment financing must be approved in a referendum.
Tax-increment financing is the funding mechanism in Community Redevelopment Areas, or CRAs, which are blighted areas in the city. Tampa has nine of them.
In CRAs, the dollar value of all the property in a district is determined at a fixed date. After that date, any increase in taxes generated from increases in property values are invested directly back into the redevelopment of the area.
The city of Tampa approved a $40 million line of credit, backed by tax-increment revenue, to fund a slew of high-profile projects. The financing was heralded at the time as "truly a milestone for our city," Finance Director Bonnie Wise wrote in a February memo.
The cornerstone project is a redesign of Curtis Hixon Park. The city hired a renowned New York City architect to create a more exciting park, with restaurants and shops. Mayor Pam Iorio wants it to be a focal point of downtown, a gathering place for the city's residents to enjoy a celebration or a concert.
The project is also somewhat of a backbone for a new Tampa Museum of Art and a new Children's Museum. Both museums are designed to be located at the northern edge of the park. The idea was to create synergy among the museums, park and adjacent Riverwalk.
City officials said Tuesday the park remains a top priority - in large part because they want the museum projects, years in the making, to be completed.
Reserve Funds Might Be Tapped
Iorio said the city is looking to its reserve funds for money to finance the park project, which is expected to cost roughly $15 million. The tax-increment financing areas eventually would reimburse the pots money was taken from, perhaps by 2010, Iorio said.
Mark Huey, administrator for economic development, echoed that.
"We'll line all of our resources up to completing Curtis Hixon Park," Huey said.
The $40 million line of credit also was planned to pay for improving Ashley Drive, turning it into more of a grand entrance into the city. The money also was earmarked to pay for turning some of downtown's one-way streets into two-way roads and addressing parking shortages downtown, perhaps by adding two floors to the South Regional Garage, near the St. Pete Times Forum.
Money also was meant to be spent on a Riverwalk segment at Curtis Hixon Park and on improvements to Tampa Convention Center space that currently houses the Tampa Bay History Center.
Several of the projects - such as the Curtis Hixon Park, Ashley Drive and redeveloping Massey Park - were meant to be done in tandem, Huey said. If the court opinion stands, that won't be possible, he said.
City Councilman Tom Scott sees the potential impact.
"You can't continue doing your two-ways anymore," said Scott, chairman of the Community Redevelopment Agency. "Central Park - the numbers don't add up without that bonding."
The city, working with the Tampa Housing Authority and private sector, has big plans to transform the dilapidated Central Park Village into a thriving mixed-use complex, with retail and residential space. The area's to-be-created special assessment district planned to issue bonds, in cooperation with the city, to pay for infrastructure. The bonds were to be backed with tax-increment financing dollars.
The Supreme Court's ruling has the potential to impede those plans. It also can throw off plans to bring more infrastructure to the booming Channel District and to bring much-needed stormwater improvements to Drew Park.
"Everything is ground to a halt," said Councilwoman Linda Saul-Sena, vice-chairwoman of the Community Redevelopment Agency. "Everything is up in the air. We promised everything we've done on this on the idea we'd borrow the money. If this stands, we'll need to do a [referendum], or who knows."
Iorio said holding referendums is a possibility for all projects other than Curtis Hixon Park.
But holding a referendum could be difficult - and confusing.
The court opinion is unclear as to who would be allowed to vote in the referendum. Would it be all city voters? County voters? Or just those in the affected Community Redevelopment Areas?
And if referendums were held, would voters, who have been clamoring for tax relief, approve major projects?
Scott doesn't think so.
"The climate we're in now, I don't think the voters would approve some of these projects," Scott said.
'Knockout Punches'
Scott Paine, a former councilman who now teaches government at the University of Tampa, said governments would have to work hard to educate voters on the issue. They would need to distinguish between bonding and a new tax. If well-sold, voters might still jump on board.
The issue as a whole, though, he said, couldn't come at a worse time for municipalities that are bearing the brunt of the state's property tax reform.
"You're talking about knockout punches for local government in the state of Florida," Paine said.
Another point unclear in the court opinion: To what extent are financing plans grandfathered in?
The case also will affect school districts. Certificates of participation allow school districts to borrow against future tax collections that are designated for capital improvements.
On Monday, about a dozen motions were filed with the Supreme Court on the issue, including motions for rehearings and clarifications.
With a slowdown in growth, the Hillsborough County School District relies less on COPS money now than in past years. In the five-year plan the school board approved Tuesday, $50 million of a total budget of $316 million is COPS money, designated to pay for three new elementary schools. The schools would be funded during the 2008-09 budget year with opening dates in 2011 and 2012.
Land already has been purchased for two of those schools - one in Plant City and one in south Hillsborough County, said Cathy Valdes, the district's chief facilities officer. The other elementary would be in Tampa Heights and dependent upon proposed building of housing with grant money, she said.
The ruling also has hurt financially. Two bond rating firms put $514 million in tax-increment bonds on negative credit or ratings watches. Standard & Poors issued the same warning for certificates of participation.
The court's decision came in a $350 million bond validation case for an Escambia County road-widening project near Pensacola. The court's ruling reversed a legal precedent it set 27 years ago by backing off prior rulings that referendums are not required for two types of borrowing: tax-increment financing and certificates of participation.
Reporter Marilyn Brown contributed to this report. Information from The Associated Press also was used. Reporter Ellen Gedalius can be reached at egedalius@tampatrib.com or (813) 259-7679.
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