Could Mount Dora retire a development district's bonds and charge property owners new special assessments?

Plain-English summary

Mount Dora asked whether it could retire bonds issued by a community development district (CDD) for roads and storm-water infrastructure, dissolve the district, and recover costs through special assessments. Some property owners had already prepaid their bond assessments, while others had balances. The city also asked whether it could assess all residents for district administration while debt remained.

The Attorney General's office gave an informal analysis. It described Chapter 190 as the preemptive framework for CDD creation, service transfers, debt assumption, and termination. Because the infrastructure had been transferred to the city, the letter said the city had to use the procedures in section 190.046(4) through (6). A transfer plan under those provisions had to assume and guarantee debt related to the service and satisfy service quality, efficiency, and charge conditions; once all services moved, the CDD board had to adopt a termination plan.

On repayment, the letter said a new special assessment “would not be the appropriate manner” to recoup the cost of retiring bonds when the properties had already been assessed for the infrastructure's special benefit. It identified outstanding enforceable assessments as the apparent funding source. It also reported finding no Florida appellate decision sanctioning municipal special assessments to fund general governmental functions or operations. The letter did not calculate any owner's assessment or approve a particular financing plan.

Currency note

This opinion was issued in 2007. Subsequent statutory amendments, court decisions, or later
AG opinions may have changed the analysis. Treat this page as historical context, not current
legal advice. Verify current law before relying on any specific rule, deadline, or remedy
mentioned here.

Common questions

Could the city simply dissolve the CDD after taking its improvements?
The letter said the transfer and termination procedures in section 190.046(4) through (6) had to be followed. Taking ownership of the infrastructure alone did not answer the statutory debt and service-transfer requirements.

Could the city assess owners again for infrastructure whose cost had already been assessed?
The letter considered a new assessment inappropriate where property had already been assessed for the initial special benefit. It said outstanding enforceable assessments appeared to be the proper source to retire the remaining debt.

What about owners who had prepaid their bond assessments?
The city wanted to end the district's ongoing administrative expense for them. The letter's objection to a new infrastructure assessment was grounded in the fact that those properties had already been assessed; it did not calculate individual balances or refunds.

Could a new assessment pay the district's administration costs?
The office said its research found no Florida appellate decision sanctioning a local special assessment for general governmental functions and operations, and no comparable municipal authority had been brought to its attention. It did not endorse the proposed administration assessment.

Background and statutory framework

The CDD had financed and built subdivision roads and storm-water facilities with bonds repaid through special assessments. The opinion treated Chapter 190 as controlling transfer and termination. Section 190.046(4) required a nonemergency transfer ordinance and a plan assuming related debt; subsection (5) allowed district supervisors to seek circuit court review, and subsection (6) addressed termination after all services were transferred. The letter distinguished a prior assessment that was invalid, discussed in Anderson v. City of Ocala, from Mount Dora's proposed reassessment after an assessment had already been imposed and collected.

Citations and references

• Chapter 190 and section 190.046, Florida Statutes: CDD transfer, debt, and termination procedure.
• Section 170.01, Florida Statutes: municipal facilities and assessment authority discussed in the letter.
• Anderson v. City of Ocala, 91 So. 182 (Fla. 1922): prior invalid assessment distinction.

Source

• Landing page: https://www.myfloridalegal.com/ag-opinions/community-development-district-bonds
• Official print view: https://www.myfloridalegal.com/print/pdf/node/8284

Original opinion text

Mr. Clifford B. Shepard

Attorney for the City of Mount Dora

Post Office Box 945050

Maitland, Florida 32794-5050

Dear Mr. Shepard:

You have asked whether the City of Mount Dora may voluntarily retire remaining community development district bonds for infrastructure improvements originally constructed by a community development district, but ownership having been transferred to the city, and impose special assessments on those property owners who have outstanding bond indebtedness in order to recoup the cost of retiring the outstanding bonds.

Alternatively, you inquire whether the city may adopt a termination plan pursuant to section 190.046(4), Florida Statutes, providing for the assumption and guarantee of the community development district’s outstanding bond debt and impose a special assessment on the property of residents who have not paid their special assessment, as well as imposing a special assessment on all residents to recoup the cost of administering the district until the bond is retired.

This office has been advised that in 1993, the City of Mount Dora created a community development district (CDD) to govern and deliver urban services to Phase 2 of the Country Club of Mount Dora subdivision. The primary purpose of the district was to finance and construct roads and storm-water management infrastructure. Bonds were issued and special assessments were imposed for repayment of the bonds. In addition, an annual administrative fee was imposed on property owners to fund the operation of the CDD.

Ownership of the improvements constructed by the CDD has been transferred to the city. It has now been proposed that the city retire the outstanding bonds and dissolve the CDD, in order to save the residents who prepaid their bond debt the ongoing administrative expense of operating the CDD. The city proposes to levy a special assessment on the residents who have outstanding bond debts, to recoup the cost of retiring the original bonds. The question has arisen, however, whether this proposal confers a sufficient "special benefit" to validate the special assessments.

Alternatively, the city proposes to adopt a termination plan pursuant to section 190.046(4), Florida Statutes, whereby the city assumes the CDD's outstanding bond debt and imposes a special assessment upon the unpaid Phase 2 residents, as well as imposing a special assessment on all Phase 2 residents to recoup the city’s cost of administering the CDD until retirement of the debt.

Due to the interrelated nature of your questions, they will be addressed together.

Chapter 190, Florida Statutes, the "Uniform Community Development District Act of 1980" (act), provides the exclusive and uniform method by general law for the establishment of independent special districts as an alternative method to manage and finance basic services for community development. The Legislature's stated intent is to "provide by general law for the uniform operation, exercise of power, and procedure for termination of any such independent district."[1] (e.s.) Section 190.003(6), Florida Statutes, defining "Community development district" states that this term means "a local unit of special-purpose government . . . the formation, powers, governing body, operation, duration, accountability, requirements for disclosure, and termination of which are as required by general law."

As this office recognized in Attorney General Opinion 2007-05, Chapter 190, Florida Statutes, constitutes a preemption of this area of the law.[2] Thus, the city lacks any authority to legislate in this area or to act in a manner inconsistent with the mandates of the act.[3]

Section 190.046(2), Florida Statutes, governs the termination of CDD's, stating that a district "shall remain in existence unless:

(a) The district is merged with another district as provided in subsection (3);

(b) All of the specific community development systems, facilities, and services that it is authorized to perform have been transferred to a general-purpose unit of local government in the manner provided in subsections (4), (5), and (6); or

(c) The district is dissolved as provided in subsection (7), subsection (8), or subsection (9)."

Given that the ownership of the systems has been transferred to the city, the procedures in subsections (4), (5), and (6) of section 190.046, Florida Statutes, must be followed. Those subsections provide:

"(4) The local general-purpose government within the geographical boundaries of which the district lies may adopt a nonemergency ordinance providing for a plan for the transfer of a specific community development service from a district to the local general-purpose government. The plan must provide for the assumption and guarantee of the district debt that is related to the service by the local general-purpose government and must demonstrate the ability of the local general-purpose government to provide such service:

(a) As efficiently as the district.

(b) At a level of quality equal to or higher than the level of quality actually delivered by the district to the users of the service.

(c) At a charge equal to or lower than the actual charge by the district to the users of the service.

(5) No later than 30 days following the adoption of a transfer plan ordinance, the board of supervisors may file, in the circuit court for the county in which the local general-purpose government that adopted the ordinance is located, a petition seeking review by certiorari of the factual and legal basis for the adoption of the transfer plan ordinance.

(6) Upon the transfer of all of the community development services of the district to a general-purpose unit of local government, the district shall be terminated in accordance with a plan of termination which shall be adopted by the board of supervisors and filed with the clerk of the circuit court." (e.s.)

Assuming that all of the above procedures have been followed, the act does not specify how the city will repay the CDD's debt when it assumes the responsibility for the services. It would appear, however, that the imposition of a new special assessment would not be the appropriate manner for the city to recoup the expense of retiring the original bonds, since the properties have already been assessed for the special benefit they received when the facilities and services were initially constructed. While it has been recognized that a governing unit may impose a special assessment for an existing public work,[4] there appears to be no authority for the reassessment of property for which a special assessment was previously imposed and collected. Rather, the special assessments that are outstanding and enforceable would appear to be the proper source for funding the retirement of the outstanding debt.

While municipalities have the authority to impose special assessments and to issue bonds to pay for the construction of facilities and services such as those enumerated in section 170.01, Florida Statutes, my research has not disclosed any Florida appellate decision sanctioning the levy and collection of special assessments by a local government for the purpose of funding or augmenting the funding of general governmental functions and operations.[5] Community development districts are specifically granted the authority to raise by user charges or fees the amount of money necessary to conduct the district activities.[6] No similar authorization for municipalities has been brought to this office’s attention.

I trust that these informal comments will be of assistance to you in resolving the issues you have raised.

Sincerely,

Lagran Saunders

Assistant Attorney General

ALS/tsh

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[1] Section 190.002(3), Fla. Stat.

[2] See also s. 190.004, Fla. Stat., entitled: "Preemption; sole authority."

[3] While municipalities possess broad home rule powers, s. 166.021(3)(c), Florida Statutes, implementing those constitutional powers provides that a municipality may not legislate on "[a]ny subject expressly preempted to state . . . government by the constitution or by general law[.]" See also City of Miami Beach v. Rocio Corporation, 404 So. 2d 1066 (Fla. 3d DCA 1981), petition for rev. denied, 408 So. 2d 1092 (Fla. 1981) (municipal ordinances are inferior to state law and must fail when conflict arises).

[4] See Anderson v. City of Ocala, 91 So. 182 (Fla. 1922), in which the Supreme Court of Florida concluded that special assessments may be levied upon an executed consideration, that is to say, for a public work already done. However, the facts of the Anderson case were that a reassessment was valid against property for improvements that had been previously assessed, but where the initial special assessment was held to be invalid.

[5] See Op. Att'y Gen. Fla. 82-103 (1982) (county not authorized to impose a special assessment for maintenance and operation of the county jail and the operation of the offices of the county property appraiser and tax collector).

[6] Section 190.011(10), Fla. Stat.