Frankenmuth Mut. Ins. Co. v. MagahaFrankenmuth Mut. Ins. Co. v. Magaha
Paula G. Drummond, Pensacola, Florida, on behalf of Appellee Ernie Lee Magaha; and David G. Tucker, Janet Lander, and James M. Messer, Pensacola, Florida, on behalf of Appellee Escambia County, Florida, for Appellees.
Carole Sanzeri, Senior Assistant County Attorney, Pinellas County Attorney‘s Office, Clearwater, Florida, for the Florida Association of County Attorneys, Inc., Amicus Curiae.
LEWIS, J.
We have for review two questions of Florida law certified by the United States Court of Appeals for the Eleventh Circuit as determinative of a cause pending before that court and for which there is no controlling precedent. Specifically, the Eleventh Circuit has certified the following questions to this Court:
(1) UNDER
FLA. STAT. § 125.031 , WHICH REQUIRES APPROVAL OF THE BOARD OF COUNTY COMMISSIONERS FOR CERTAIN LEASE-PURCHASE AGREEMENTS, CAN A COUNTY BE HELD TO HAVE APPROVED A CONTRACT ABSENT FORMAL RESOLUTION AND BASED SOLELY ON ACTS AND OMISSIONS OF THE COUNTY COMMISSION? IF SO, WHAT STANDARD GUIDES THE CONSIDERATION OF WHETHER A COUNTY COMMISSION HAS “APPROVED” A CONTRACT OR AGREEMENT?
(2) IF THE LEASE-PURCHASE AGREEMENT HAS BEEN APPROVED, DOES THE NON-SUBSTITUTION CLAUSE IN THE LEASE-PURCHASE AGREEMENT THAT PROVIDES FOR A PENALTY UPON NON-APPROPRIATION AND EXPLICITLY DISCLAIMS USE OF REVENUES FROM AD VALOREM TAXATION VIOLATE ARTICLE VII, § 12, OF THE FLORIDA CONSTITUTION?
Frankenmuth Mutual Insurance Co. v. Magaha, No. 98-2962, slip op. at 10 (11th Cir. Aug. 25, 1999). We have jurisdiction. See
I. FACTS AND PROCEDURAL HISTORY
On September 6, 1995, Frankenmuth Mutual Insurance Company (Frankenmuth) filed a two-count complaint in the
In May 1992 Escambia County Comptroller Joe Flowers signed a master lease agreement with Unisys Leasing Corporation (“Unisys“), under schedule 01 of which, Flowers agreed to lease-purchase a Unisys Model A-11 mainframe computer.1 The schedule called for seven annual payments totaling $2,353,814.1 In July 1993, the parties signed a second schedule agreeing to add a Unisys imaging system for eight annual payments totaling $1,164,635.2 In May 1994, the parties signed a third schedule adding further equipment and restructuring the finance arrangement for schedule 01. This third schedule called for eight annual payments totaling $3,541,908.3
Note 1: Six payments of $304,112 and one payment of $529,142.
Note 2: One payment of $200,000, two payments of $120,000, three payments of $134,964, and a final payment of $319,743.
Note 3: One payment of $200,000, six payments of $419,008 and a final payment of $827,860.
Flowers signed each of these agreements as “Escambia County Comptroller.” Although he warranted in paragraph 20 of the master lease that he had obtained a resolution of the “governing body” of the jurisdiction authorizing him to execute the lease, in fact, Flowers neither requested nor obtained the permission of the Escambia County Board of County Commissioners (“the Board” or “the County Commission“) before signing the agreement.
The master lease contains a number of provisions relevant to this dispute. Paragraph 21 includes a “non-appropriation clause,” which provides the lease will terminate in any given year if the “legislative body or funding authority” fails to appropriate funds to make the lease payments. The same paragraph also contains a “non-substitution clause,” providing that, in the event of non-appropriation, Flowers agrees not to purchase or rent any substitute computer equipment for the balance of the appropriation period and the one following it. Finally, an addendum clarifies that nothing in the lease shall be construed to constitute a pledge of ad valorem taxes and that, in the event of default, the Lessor has no right to compel the County Commission to appropriate funds to make the lease payments.
The agreement continued without incident for several years after it was executed. Flowers used the equipment for a variety of municipal functions, including county payroll and central data processing services for the County Commission as well as the Road, Mass Transit and Solid Waste Departments. (Ken Gardner Depo. 23-24). In 1992 Unisys sold and assigned the lease to Chicorp Financial Services, Inc. Chicorp, in turn, sold it to Frankenmuth Mutual Insurance Company (“Frankenmuth“)—the
current owner of the lease and the plaintiff in this case. Although the County Commission and Flowers both regarded the Comptroller to be a fee officer4 rather than a budget officer, the evidence shows Flowers submitted his budget to the County Commission each year setting forth the fees he anticipated collecting, the expenses he anticipated incurring and any anticipated shortfall between the two. Each year Flowers requested [that] the County Commission appropriate funds to cover the shortfall, which for fiscal years ending 1992, 1993 and 1994, amounted to roughly half the Comptroller‘s total budget. In each of those years, Flowers listed, respectively, $301,563, $304,5612 and $304,113 as a budget expense titled “Debt Service—Computer.” Each year, the Board appropriated Flowers’ requested funds without question.3
Note 4: Under Florida law, “fee officers” are ones “assigned specialized functions within county government and whose budgets are established independently of the local governing body, even though said budgets may be reported to the local governing body or may be composed of funds either generally or specifically available to a local governing authority involved.” § 218.31(8), Fla. Stat. (1993).
The County Commission had no direct knowledge of the Unisys computer equipment, however, until it began discussing implementing its own computer network system in 1993. By letter dated August 3, 1993 Flowers wrote to the Board‘s chairperson explaining his office already had a central data processing system and that the Board should adjust its plans to integrate that system. At a June 28, 1994 meeting the County Commission voted to amend its technology plan to make use of the Comptroller‘s computer equipment.
In late 1994, Flowers became the subject of considerable controversy when Escambia County lost millions of dollars in bad derivative investments made by Flowers’ office. The political uproar led to a grand jury investigation and, eventually, a four-count indictment charging Flowers with malfeasance. Count Four specifically charged Flowers with malfeasance for entering into the Unisys lease in violation of Florida law. Flowers pled no contest and resigned from office.
Thereafter, on August 1, 1995, the Florida Legislature abolished the Office of Escambia County Comptroller by repealing the Special Act that had created it. See Ch. 95-529, Laws of Fla. As a result, Escambia County‘s elected Clerk of the Circuit Court, Ernie Lee Magaha, became responsible for the constitutional duties formerly held by the Office of Comptroller.5 In the aftermath of these events, Magaha and the County Commission obtained and reviewed, for the first time, the Unisys master lease and schedules signed by Flowers. After investigation and discussion, the County Commission determined the Unisys equipment was too old, too big, too expensive and too ineffective to serve the County‘s needs. The County Commission therefore advised Frankenmuth it
would not make the 1995 schedule 02 and schedule 03 payments of, respectively, $120,000 and $419,000. The Commission further advised Frankenmuth it considered the lease void and unenforceable due to Flowers’ failure to obtain approval before signing it. Note 5: In most Florida counties, the Clerk of the Circuit Court serves a dual function: he or she manages the circuit and county court system and serves as “ex officio clerk of the board of county commissioners, auditor, recorder and custodian of all county funds.” See Fla. Const. art. VIII, § 1(d). The Florida Constitution also provides, however, that individual counties may choose to divide the Clerk‘s duties between two county officers, one managing the courts and the other serving as custodian of county funds. Fla. Const. art. V, § 16. In 1972, Escambia County chose to divide the duties between two elected officers: a Clerk of the Circuit Court and a Comptroller. See Ch. 73-455, Laws of Fla. When the Legislature abolished that Act, the duties of the Comptroller reverted to the Clerk of Court.
Consequently, in September 1995, Frankenmuth filed this suit asking the court to declare the lease agreement valid and enforceable and to enjoin the County Commission and the Clerk of Court (as constitutional successor to the Comptroller) from breaching the agreement. While the case proceeded through discovery, the County Commission purchased, in April 1996, a replacement computer system. As a result, Frankenmuth now seeks declaratory relief only. These motions for summary judgment followed.
After considering the above-listed facts, the federal district court made several determinations. See id. at D341-43, 1996 WL 571042, **1-2. First, the court determined that even though the County Commission had not approved the lease-purchase agreement prior to its execution as required by
Escambia County‘s Board of County Commissioners ratified the lease and all schedules between Unisys and Joe Flowers, the Comptroller of Escambia County. As the County Commission has failed to appropriate funds to make the lease payments, Frankenmuth may exercise its rights under the non-appropriation clause in paragraph 21 [of the lease-purchase agreement]. Frankenmuth may not enforce the non-substitution clause, however, because it is void for violation of Article VII, § 12 of the Florida Constitution and for violation of public policy. Frankenmuth has no contractual rights against Ernie Lee Magaha, Escambia County‘s Clerk of the Circuit Court.
Id. at D343, 1996 WL 571042, *7. Frankenmuth appealed to the Eleventh Circuit, and Escambia County cross-appealed. See Frankenmuth, No. 98-2962, slip op. at 2.
On appeal, the Eleventh Circuit discussed the issues regarding the execution of the lease-purchase agreement and the validity of the nonsubstitution clause. See id. at 5-9. After discussing these issues, that court certified for this Court‘s consideration the two questions of law set forth above. Id. at 10. We now address those questions in turn.
II. ISSUES AND ANALYSIS
A. THE FIRST CERTIFIED QUESTION
In the first certified question, the Eleventh Circuit has asked us to determine whether, consistent with the requirements of
After careful consideration, we find Frankenmuth‘s argument regarding Flowers’ independent authority to bind the governmental entity to be without merit. It is clear that Flowers, as Comptroller of Escambia County, was a constitutional officer under the Florida Constitution. See
Turning now to the first question certified by the Eleventh Circuit, we must consider the text of
Counties may enter into leases or lease-purchase arrangements relating to properties needed for public purposes for periods not to exceed 30 years at a stipulated rental to be paid from current or other legally available funds and may make all other contracts or agreements necessary or convenient to carry out such objective. The county shall have the right to enter into such leases or lease-purchase arrangements with private individuals, other governmental agencies, or corporations. When the term of such lease is for longer than 60 months, the rental shall be payable only from funds arising from sources other than ad valorem taxation. Such leases or lease-purchase arrangements shall be subject to approval by the board of county commissioners, and no such lease or lease-purchase contract shall be entered into without said approval.
It is undisputed in this case that Flowers failed to obtain the express or formal “approval” of the Escambia County Board of County Commissioners (the Board) before entering into the agreement with Unisys. Therefore, the initial question we must answer is whether the Board had the power to approve the agreement after it was executed. We determine that Florida law clearly establishes that the Board had the power to approve, or, stated another way, ratify, that which was initially an unauthorized agreement after it had been executed. See, e.g., Ramsey v. City of Kissimmee, 139 Fla. 107, 111-13, 190 So. 474, 476-77 (1939); Brown v. City of St. Petersburg, 111 Fla. 718, 720, 153 So. 140, 140 (1933); cf. City of Panama City v. T & A Util. Contractors, 606 So. 2d 744, 747 (Fla. 1st DCA 1992) (holding that city ratified city manager‘s unauthorized termination of contract between city and third party); Tolar v. School Board of Liberty County, 398 So. 2d 427, 428-29 (Fla. 1981) (finding that municipality‘s action taken in violation of Sunshine Law could be later ratified if taken in accordance with such law); see generally 10A Eugene McQuillin, The Law of Municipal Corporations, § 29.104 at 63 (3d ed. 1999) (“It is a general rule that whatever acts public officials may do or authorize to be done in the first instance may subsequently be adopted or ratified by them with the same effect as though properly done under previous authority.“). The dispositive question thus becomes, what constitutes “approval” by the Board within the meaning of
In its opinion, the federal district court defined “approve” as “to have or express a favorable opinion of” or “to accept as satisfactory.” Frankenmuth, 10 Fla. L. Weekly Fed. at D341, 1996 WL 571042, *4 (quoting Webster‘s Ninth New Collegiate Dictionary at 98 (Merriam-Webster Inc. 1991)). In addition to the definition adopted by the federal district court, the dictionary definition of “approve” also includes “to give formal or official sanction to.” Webster‘s Tenth Collegiate Dictionary at 57 (Merriam-Webster Inc. 1996). Thus, the dictionary shows that the term “approve” may consist of either an informal or formal expression of assent.
Florida case law9 also establishes that an approval or ratification can occur without formal resolution. For example, in Deutsche Credit Corp. v. Peninger, 603 So. 2d 57, 58 (Fla. 5th DCA 1992), the court stated, “Ratification of an agreement occurs where a person expressly or impliedly adopts an act or contract entered into in his or her behalf by another without authority.” Similarly, in City of Panama City, the First District determined that the city commission had ratified the city manager‘s unauthorized termination of a contract between the city and a third party—even though the city commission did not pass a formal resolution terminating the contract—where the city commission knew the reasons for the termination and then voted to award the contract to a third party. See 606 So. 2d at 747; see generally 10A McQuillin, § 29.106 at 82 (stating that ratification of a municipal contract may occur “by the affirmative action of the proper officials, or by any action or nonaction which in the circumstances amounts to approval of the contract“); cf. Killearn Properties, Inc. v. City of Tallahassee, 366 So. 2d 172 (Fla. 1st DCA 1979) (employing doctrine of estoppel to bar city from challenging validity of agreements on grounds of lack of proper formalities in the passage
First, we determine that an approval absent formal resolution must be made in compliance with Florida‘s Sunshine Law, which is of both constitutional and statutory dimension. See
If an “approval” by a board of county commissioners of a lease or lease purchase agreement under
Second, in addition to the requirement that a subsequent approval in the form of ratification be made “in the sunshine” in the same manner that a formal approval would have required, there are several other general principles under-girding the concept of ratification warranting our attention. In the vintage opinion of Ball v. Yates, 158 Fla. 521, 527, 29 So. 2d 729, 732 (1946), this Court stated, “Before ratification will be implied of an act of an unauthorized agent it must be made to appear that the principal has been fully informed and that he has approved.” In Peninger, 603 So. 2d at 58, the Fifth District Court of Appeal expounded upon the general pronouncement made by this Court in Ball:
An agreement is deemed ratified where the principal has full knowledge of all material facts and circumstances relating to the unauthorized act or transaction at the time of the ratification. G & M [Restaurants v. Tropical Music Service], 161 So. 2d [556] at 558 [Fla. 2d DCA 1964]. See also Ball v. Yates, 158 Fla. 521, 29 So. 2d 729 (1946), cert. den., 332 U.S. 774, 68 S. Ct. 66, 92 L. Ed. 359 (1947); Pedro Realty Inc. v. Silva, 399 So. 2d 367 (Fla. 3d DCA 1981); Bach v. Florida State Bd. of Dentistry, 378 So. 2d 34 (Fla. 1st DCA 1979). An affirmative showing of the principal‘s intent to ratify the act in question is required. [Carolina-Georgia Carpet & Textiles v.] Pelloni, 370 So. 2d [450] at 452 [Fla. 4th DCA 1979]. Moreover, the issue of whether an agent‘s act has been ratified by the principal is a question of fact. One Hour Valet of America, Inc. v. Keck, 157 So. 2d 83 (Fla. 2d DCA 1963).
Regarding the “full knowledge” requirement discussed in Peninger, the First District stated the following in Bach v. Florida State Board of Dentistry, 378 So. 2d 34, 36-37 (Fla. 1st DCA 1979):
Before one may infer that a principal ratified an unauthorized act of his agent, the evidence must demonstrate that the principal was fully informed and that he approved of the act. Ball v. Yates, 158 Fla. 521, 29 So. 2d 729, 732 (1946). It is generally the rule that the doctrine of constructive knowledge does not apply to bring about ratification. The principal is charged only upon a showing of full knowledge, and not because he had notice which should have caused him to make inquiry, which in turn would have brought to his attention the knowledge of the unauthorized act of the employee. 2 Fla. Jur. 2d, Agency and Employment, § 52 at page 204 (1977).... There is no duty imposed upon the principal to make inquiries as to whether his agent has carried out his responsibilities. The principal “has a right to presume that his agent has followed instructions, and has not exceeded his authority.” Oxford Lake Line v. First Nat. Bank, 40 Fla. 349, 24 So. 480, 483 (1898). And,
[w]henever he is sought to be held liable on the ground of ratification, either express or implied, it must be shown that he ratified upon full knowledge of all material facts, or that he was willfully ignorant, or purposely refrained from seeking information, or that he intended to adopt the unauthorized act at all events, under whatever circumstances. Id.
Based on the above principles well established in Florida jurisprudence, we determine that a three-prong test is appropriate for determining whether an after-the-fact “approval,” or ratification, has occurred in satisfaction of
B. THE SECOND CERTIFIED QUESTION
The second certified question presented by the Eleventh Circuit has asked us to determine whether the nonsubstitution clause contained in the underlying agreement violates
Counties, school districts, municipalities, special districts and local governmental bodies with taxing powers may issue bonds, certificates of indebtedness or any form of tax anticipation certificates, payable from ad valorem taxation and maturing more than twelve months after issuance only:
(a) to finance or refinance capital projects authorized by law and only when approved by vote of the electors who are owners of freeholds therein not wholly exempt from taxation....
To more accurately reflect the procedural posture and underlying facts of this case, we rephrase the second certified question to read:
DOES THE NONSUBSTITUTION CLAUSE IN THE LEASE-PURCHASE AGREEMENT, WHICH REQUIRES UP TO A TWO-YEAR LAPSE IN COMPUTER SERVICES UPON NONAPPROPRIATION, VIOLATE ARTICLE VII, SECTION 12, OF THE FLORIDA CONSTITUTION, EVEN THOUGH THE AGREEMENT ALSO EXPRESSLY DISCLAIMS USE OF REVENUES FROM AD VALOREM TAXATION?
After careful consideration, we answer the second certified question, as rephrased, in the affirmative.
The 1968 revision to the Florida Constitution, which produced
Like many long-term municipal lease agreements, the Unisys master lease contains a non-appropriation clause, providing that, if in any given year the governing body fails to appropriate funds to make the lease payments, the lease will terminate. (Master Lease ¶ 21). Such non-appropriation or non-renewal clauses are essential to prevent long-term municipal financing arrangements from being classified as debt under state law, thus triggering state-law requirements such as voter referendum. See M. David Gelfand, State & Local Government Debt Financing, § 3:17 at 32 (Clark Boardman & Callaghan 1993).
The Unisys lease also contains a nonsubstitution clause, providing that, in the event of non-appropriation, the Lessee agrees not to procure substitute computer equipment [or equivalent services] for the remainder of the appropriation period and the one following it. (Master Lease ¶ 21). Such clauses are a common method by which the lessor creates an economic disincentive for the municipality to exercise its non-appropriation rights. Gelfand § 3:17 at 32. As one commentator has noted, however, “there is considerable doubt about the enforceability of the non-substitution clause and its effect on the validity of the lease.” Id. at 33. “[T]he inclusion of the non-substitution clause may be viewed as compelling the lessee to continue to appropriate funds throughout the full lease term, thereby rendering the optional features of the nonappropriation and nonrenewal clauses illusory.” Id.
This court agrees a non-substitution clause may render a non-appropriation clause illusory, thereby requiring a lease to undergo Article VII, § 12 voter referendum. While Florida‘s courts have not addressed the precise issue, several decisions lead to that conclusion. In Nohrr v. Brevard County Educational Facilities Authority, 247 So. 2d 304 (Fla. 1971), the court validated non-referendum revenue bonds that had been authorized to raise money to build educational facilities. The court deleted from the bonds, however, certain provisions that created a mortgage on the property, allowing the bondholders to foreclose in the event of default. The court reasoned the mortgage would “morally compel” the governing body to levy taxes to avoid foreclosure in the event bond payments could not be made from non-ad
valorem revenue. Id. at 311. In effect, the mortgage provision amounted to a pledge of ad valorem taxes, which is invalid absent approval by the electorate. Similarly in State v. Brevard County, 539 So. 2d 461 (Fla. 1989), the court approved a long-term lease-purchase arrangement which included an annual “renewal option” similar to the annual non-appropriation clause in the Unisys lease. The court rejected an argument that the financing arrangement violated Nohrr, but specifically noted the deal allowed the county to “terminate the lease without further obligation” in any given year. Id. at 463. Thus, the court reasoned, “[w]ith its `annual renewal option’ under the lease, the county maintains full budgetary flexibility.”
In contrast, a non-substitution clause denies the county “full budgetary flexibility” because it renders the non-appropriation clause illusory by compelling the municipality to make the lease payments or suffer a penalty. The Attorney General of at least one State has opined a non-substitution clause compels lease payments and creates debt. See La. Atty Gen. Op. No. 86-517, 1986 WL 236994;
Accordingly, the court must address two issues to determine the validity of the non-substitution clause in this case: (1) whether the risk of non-substitution would morally compel the County Commission to appropriate funds for the lease payments; and (2) whether those funds would come from ad valorem tax dollars.
A. Moral Compulsion
Had funds not been appropriated to make the Unisys lease payments, the evidence is undisputed the consequences of non-substitution would have been disastrous. The Unisys equipment provided the primary means for county payroll and central data processing for the County Commission and numerous other county offices. At deposition, Flowers made the following comments regarding non-substitution:
Q: What would happen?
A: If they took the equipment out, then we would be shut down. We wouldn‘t be able to operate.
Q: Why is that?
A: Because everything was on that computer.
(Flowers Depo. at 65). Given these facts, the court wastes little time finding the County Commission would feel morally compelled to appropriate funds to make the lease payments to avoid the risk of running county government without a central data processing ability for up to two years. In this regard, the non-appropriation clause is rendered illusory and the lease creates a multi-year debt.
B. Ad Valorem Taxes
A municipal debt does not trigger Article VII, § 12, however, unless it pledges ad valorem tax dollars as its source of payment. E.g. State v. School Bd. of Sarasota County, 561 So. 2d 549, 552 (Fla. 1990). In this case, the addendum to the master lease specifies no ad valorem taxes are pledged:
Nothing herein shall constitute a pledge by the Lessee of the full faith and credit of the Lessee, nor does the Lessee pledge any ad valorem taxes or other moneys other than moneys lawfully appropriated by the County Commission of Escambia County from time to time.... Lessor shall not have the right to require or compel the exercise of the ad valorem taxing power of, or the appropriation of any funds by the County Commission to obtain the payment or performance of any of the Lessee‘s obligations created by this agreement.
(Addendum ¶ 1).
Regardless of the above provision, the court finds the lease, and in particular the non-substitution clause, would inevitably require the County Commission to appropriate ad valorem tax dollars to make the lease payments. The case is
similar to County of Volusia v. State, 417 So. 2d 968 (Fla. 1982), in which the municipality sought to secure bonds by pledging “All legally available sources of unencumbered county revenue other than ad valorem taxes.” The supreme court reasoned this pledge, along with Volusia County‘s promise to do all things necessary to continue to receive the nonad valorem revenue, would inevitably lead to higher ad valorem taxes during the life of the bonds. The court denied validation, reasoning, “that which may not be done directly may not be done indirectly.” Id. at 972; cf. Brevard County, 539 So. 2d at 463 (refusing to apply County of Volusia to a case in which the municipality, unlike Escambia County in this case, “reserve[d] the right to terminate the lease without further obligation.“) County of Volusia applies squarely to these facts. The size of the lease payments together with the consequences of non-substitution indicate the County Commission would inevitably be forced to spend ad valorem taxes dollars to fund this lease. The addendum clause pledging otherwise is illusory. For these reasons, the court finds the non-substitution clause violates Article VII, § 12 of the Florida Constitution and is therefore unenforceable.
Frankenmuth, 10 Fla. L. Weekly Fed. at D341-42, 1996 WL 571042, **4-7 (footnote omitted).
We agree with the federal district court‘s thorough analysis regarding the nonsubstitution clause in the present agreement. While the addendum to the master lease agreement states that there is to be no pledge of ad valorem taxes to fund the payments due under the agreement, and further disclaims any right to compel the procurement of ad valorem taxes, this is not a case where there is a pledge of a specifically demarcated source of revenue to satisfy the underlying obligation. See Murphy, 666 So. 2d at 881 (upholding bond validation where non-ad valorem taxes were pledged as a supplement to specifically demarcated source of revenue); City of Palatka, 440 So. 2d at 1273 (validating bond where two specific non-ad valorem sources of revenue were pledged); Alachua County, 335 So. 2d at 556-58 (validating bonds funded by pledge of revenue sharing funds and race track proceeds). More importantly, this is not a case where the county has retained “full budgetary flexibility.” See School Board of Sarasota County, 561 So. 2d at 552-53 (noting that school board could maintain “full budgetary flexibility” under terms of agreement);14 Brevard County, 539 So. 2d at 464 (noting that “annual renewal option” under lease-purchase agreement would allow county to maintain “full budgetary flexibility“). Instead, due to the expense and functionality of the computer equipment covered by the agreement here, the nonsubstitution clause interrelates with other lease provisions, see County of Volusia, 417 So. 2d at 972, to “morally compel” the county to pledge ad valorem taxes to fulfill the obligations of the lease. See Nohrr, 247 So. 2d at 311. Accordingly, we answer the second certified question, as rephrased, in the affirmative.15
III. CONCLUSION
As we have analyzed, the first certified question is answered in the affirmative
It is so ordered.
WELLS, C.J., and SHAW, HARDING, ANSTEAD, PARIENTE and QUINCE, JJ., concur.
Notes
The Legislature shall have power to provide for issuing State bonds only for the purpose of repelling invasion or suppressing insurrection, and the Counties, Districts, or Municipalities of the State of Florida shall have power to issue bonds only after the same shall have been approved by a majority of the votes cast in an election in which a majority of the freeholders who are qualified electors residing in such Counties, Districts, or Municipalities shall participate, to be held in the manner to be prescribed by law; but the provisions of this act shall not apply to the refunding of bonds issued exclusively for the purpose of refunding of the bonds or the interest thereon of such Counties, Districts, or Municipalities.
Art. IX, § 6, Fla. Const. (1885). In numerous decisions, this Court held that various kinds of debts were not “bonds” for the purposes of the referendum requirement. See, e.g., State v. Miami Beach Redevelopment Agency, 392 So. 2d 875, 895-98 (Fla. 1980) (discussing this Court‘s cases construing the predecessor constitutional provision); see generally Patricia M. Lee, Note, Bond Financing and the Referendum Requirement: Harmless Creative Financing or Assault on the Constitution?, 20 Stet. L. Rev. 989, 992-998 (1991) (same).