VICKI THOMAS, et al., Appellants, vs. CLEAN ENERGY COASTAL CORRIDOR, etc., et al., Appellees.
No. SC14-1282
Supreme Court of Florida
[October 1, 2015]
POLSTON, J.
This case is before the Court on appeal from a circuit court judgment validating a proposed bond issue by Clean Energy Coastal Corridor (Clean Energy).1 We affirm the circuit court‘s decision to validate the bonds, but remand for the circuit court to require Clean Energy to amend the financing agreement as described herein.
Clean Energy was created pursuant to
Participation in Clean Energy‘s PACE Program by property owners within the area covered by the interlocal agreement is voluntary, and in exchange for receiving financing for qualifying improvements, including those related to renewable energy, energy efficiency and conservation, and wind resistance, property owners agree to the imposition of non-ad valorem assessments on the benefitted property. The PACE Act requires these non-ad valorem assessments to be collected on the tax bill pursuant to the uniform method of collection authorized by
After Clean Energy‘s creation, its governing board adopted a bond resolution authorizing the issuance of revenue bonds in an amount not to exceed
When it filed its complaint, Clean Energy contemplated that local governments in both Miami-Dade and Broward Counties would join in the interlocal agreement and participate in Clean Energy‘s PACE Program. Accordingly, Clean Energy named the property owners, taxpayers, and citizens of both Miami-Dade and Broward Counties among the defendants. However, when Broward County did not adopt a resolution joining in the interlocal agreement, Clean Energy filed a notice of voluntary dismissal dropping the property owners, taxpayers, and citizens of Broward County from the case. In light of the voluntary dismissal, Clean Energy argued that two residents of Broward County (Sidney Karabel and Christopher Trapani) who had appeared in the case and responded to the order to show cause, lacked standing and moved to strike their response.
At both the initial and continued show-cause hearing, counsel for the Broward County residents, who also represents the only other property owner who appeared in the proceeding (Miami-Dade County resident Vicki Thomas), was
The only argument regarding Clean Energy‘s authority to issue the bonds raised below that is repeated in this appeal is that the bonds cannot be validated because the financing agreement to be signed by Clean Energy and property owners participating in the PACE Program purports to authorize a remedy for the collection of unpaid assessments that is not authorized by Florida law, namely judicial foreclosure. Section 4 of the financing agreement provides:
Section 4. Collection of Assessment; Lien
The Assessment, and the interest and charges thereon resulting from a delinquency in the payment of any installment of the Assessment, shall constitute a lien against the Property equal in dignity with county taxes and assessments, and when due shall be superior to all other liens, title and claims, including any mortgage, until paid. The Assessment shall be paid and collected on the same bill as real property taxes using the uniform method of collection authorized by Chapter 197, Florida Statutes. The Property Owner agrees and acknowledges that if any Assessment installment is not paid when due, the Authority [(Clean Energy)] shall have the right to seek all appropriate legal remedies to enforce payment and collect the Assessment or amounts due hereunder, including but not limited to foreclosure, and seek recovery of all costs, fees and expenses (including reasonable attorneys’ fees and costs and title search
expenses) in connection with the enforcement and foreclosure actions. The Property Owner acknowledges that, if bonds are sold or if the Authority enters into another financing relationship to finance the Final Improvements or an Abandonment Payment, the Authority may obligate itself, through a covenant with the owners of the bonds or the lender under such other financing relationship, to exercise its foreclosure rights with respect to delinquent Assessment installments under specified circumstances.3
In addressing this argument, the circuit court stated that it read section 4 of the financing agreement to mean that “the collection [of assessments] has to be in accordance with Chapter 197, and that foreclosure can only be sought if it‘s an appropriate legal remedy.” Clean Energy conceded that judicial foreclosure is not currently an appropriate legal remedy and that it is limited to collecting assessments in accordance with chapter 197‘s uniform method. Accordingly, the circuit court ruled that it would include a statement in the final judgment that “the collection of the assessment, [a]s indicated in Section 4 of [the financing agreement], has to be using . . . only a method of collection authorized by Chapter 197 of the Florida [S]tatutes, or otherwise authorized by Florida law.” The final judgment includes this limitation and further provides that “[a]ny non-ad valorem assessments levied and imposed against affected real property must be collected
The circuit court then ruled that the Broward County residents lacked standing because they had been voluntarily dismissed from the case. Accordingly, the circuit court granted Clean Energy‘s motion to strike their response to the order to show cause, and noted in the final judgment that the property owners, taxpayers, and citizens of Broward County had been removed from the case by a voluntary dismissal.
ANALYSIS
This Court has explained the standard of review for bond validation cases where the bond issuance is funded by special assessments:
This Court performs expedited review in bond validation cases to “facilitate[ ] an adjudication as to the validity of bonds so as to provide assurance of the marketability of the bonds.” City of Oldsmar v. State, 790 So. 2d 1042, 1050 (Fla. 2001). Our review authority in these cases is “circumscribed in scope and purpose,” id. at 1049, and is generally limited to three issues: (1) whether the public body has the authority to issue bonds; (2) whether the purpose of the obligation is legal; and (3) whether the bond issuance complies with the requirements of law. See Keys Citizens for Responsible Gov‘t, Inc. v. Fla. Keys Aqueduct Auth., 795 So. 2d 940, 944 (Fla. 2001); State v. Osceola County, 752 So. 2d 530, 533 (Fla. 1999). However, where, as here, a bond issuance is funded by special assessments, we will apply an additional two-pronged test to evaluate whether those special assessments meet the requirements of the law. The Court in City of Winter Springs v. State, 776 So. 2d 255[, 257] (Fla. 2001), explained:
To comply with the requirements of the law, a special assessment funding a bond issuance must satisfy the
following two-prong test: (1) the property burdened by the assessment must derive a special benefit from the service provided by the assessment; and (2) the assessment for the services must be properly apportioned among the properties receiving the benefit. See Lake County v. Water Oak Management Corp., 695 So. 2d 667, 668 (Fla. 1997) (citing City of Boca Raton v. State, 595 So. 2d 25, 30 (Fla. 1992)).
We have further explained that “[s]ubsumed within the inquiry as to whether the public body has the authority to issue the subject bond is the legality of the financing agreement upon which the bond is secured.” State v. City of Port Orange, 650 So. 2d 1, 3 (Fla. 1994).
In this case, the financing agreement‘s references to judicial foreclosure are inconsistent with its requirement—and Florida law—that collection of non-ad valorem assessments must be accomplished pursuant to chapter 197‘s uniform method. See generally
Because judicial foreclosure is not an appropriate legal remedy for collecting the non-ad valorem assessments, we find no error in the circuit court‘s decision to read the financing agreement in a manner that effectively severs this inappropriate remedy and limits Clean Energy to the appropriate legal remedy—also provided by the financing agreement—of collecting assessments pursuant to the uniform method. See Fonte v. AT&T Wireless Servs., Inc., 903 So. 2d 1019, 1024 (Fla. 4th DCA 2005) (“As a general rule, contractual provisions are severable, where the illegal portion of the contract does not go to its essence, and, with the illegal portion eliminated, there remain valid legal obligations.“).
Indeed, this Court‘s precedent supports reading bond documents in a manner that complies with Florida law. For example, in County of Palm Beach v. State, 342 So. 2d 56, 58 (Fla. 1976), we reversed the trial court‘s final judgment invalidating a bond issuance by Palm Beach County based on the trial court‘s conclusion that, although the County‘s bond resolution could have been read to provide for the proper use of bond proceeds for capital expenses, it could have also
While we agree with the circuit court that judicial foreclosure is not an appropriate remedy, we conclude that additional steps are required to implement the circuit court‘s ruling since the financing agreement will serve as the form for all financing agreements between Clean Energy and the property owners who participate in its PACE Program. Specifically, we remand with instructions for the circuit court to require Clean Energy to amend the financing agreement to remove all references to judicial foreclosure and to file the amended agreement in the circuit court following its approval by Clean Energy‘s governing board. Cf. State v. City of Venice, 2 So. 2d 365, 367-68 (Fla. 1941) (remanding to circuit court “with directions to require the amendment of the resolution and the bonds” to correct language regarding the pledged funds that was “too broad to be sustained”
Finally, we agree with the circuit court that the Broward County residents lack standing since Clean Energy‘s voluntary dismissal of all Broward County property owners, taxpayers, and citizens divested them of any justiciable interest in the bond validation proceeding. Rich v. State, 663 So. 2d 1321, 1324 (Fla. 1995) (holding that a “person interested” and therefore entitled to intervene in a bond validation proceeding pursuant to
CONCLUSION
For the foregoing reasons, we affirm the circuit court‘s final judgment validating Clean Energy‘s bonds, but remand with instructions for the circuit court to require Clean Energy to amend the financing agreement as described herein.
It is so ordered.
LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, CANADY, and PERRY, JJ., concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND IF FILED, DETERMINED.
An Appeal from the Circuit Court in and for Leon County – Bond Validations John C. Cooper, Judge – Case No. 13-CA-3457
for Appellants
Edward George Guedes and Jeffrey Daniel De Carlo of Weiss Serota Helfman Cole & Bierman, P.L., Coral Gables, Florida,
for Appellees