You asked me to see if we had any opinions on the matter of the District borrowing
moneys, and after reviewing our Opinions file, the attached is the only thing I
could find. I don't recall that this ever came ip before, except as to the
Charlotte County matter, and there is nothing in that file or in the Opinions file
around that date on the subject.
K- n -. b..W.W -
SDale Twachtm cnllcd and asked that yo ve the following
information fo -'he meeting Wednesday:
1. Recommendations (requested from staff Sept. 21, 1970)
on methods to expedite land transactions without special meeting.
/ 2. Consideration of document with land owner (Mr. J. H.
iest) to remove fill material under certain conditions from
ap Spoil Area "P."
3. Report of legal requirements to enable the Basins to C
borrow money temporarily, if necess/ LA li &-44 ,
4. Approval of 2 d agreements with Tampa Electric Co. I;
for utility modifications over Tampa Bypass Canal. Uak,
le 5. Check of a law to see if it is still operative (Lake
Griffin Acts of 1925).
STATE OP FLORIDA
S) DEPARTMENT OF LEGAL AFFAIRS
OFFICE or THE ATTORNEY GENERAL
OWrF#' THE CAPITOL
TAI.AHASSEB, FLORIDA 02304
ROBERT L. SHEVIN TALLAA FLDA
May 28, 1976 CO
Mr. Michael E. Zealy
City of Lauderdale Lakes
Zealy & Brady
Suite 400, Mercede West Building
2691 East Oakland Park Boulevard
Fort Lauderdale, Florida 33306
Attention: Mr. James C. Brady
Assistant City Attorney
Re: MUNICIPALITIES--b ^ o-~_i o finance con-
struction of municipal facility and giving note
secured by mortgage prohibited without approving
referendum of electorate. Art. VII, S12, Fla.
Const.; S166.111, F.S.
Dear Mr. Zealy:
This is in response to your letter in which you pose substan-
tially the following question:
IN THE ABSENCE OF REFERENDUM APPROVAL BY
THE MUNICIPAL ELECTORATE, MAY A MUNICI-
PALITY EXECUTE A PROMISSORY NOTE AND
MORTGAGE FOR THE PURPOSE OF ACQUIRING
FUNDS NECESSARY FOR THE CONSTRUCTION OF
A MUNICIPAL FACILITY, WHERE THE TERM OF
SUCH NOTE AND MORTGAGE EXTENDS THE INDEBT-
EDNESS OF THE MUNICIPALITY BEYOND THE END
OF THE FISCAL YEAR IN WHICH SAID NOTE AND
MORTGAGE ARE EXECUTED?
Initially, it is clear that a municipality's governing body
possesses the power to borrow money and to issue certificates
Mr. Michael E. Zealy 076-121
of indebtedness to finance the undertaking of any capital or
other project for the purposes permitted by the state consti-
tution and to pledge the funds, credit, property and taxing
power of the municipality for the payment of such debts.
Section 166.111, F.S. However, the exercise of this power is
constitutionally limited by Art. VII, SS10 and 12, Fla. Const.
Section 10 of Art. VII prohibits, generally, the pledging of
municipal credit or the using of the municipal taxing power
for other than municipal purposes. Cf., Bannon v. Port of
Palm Beach Dist., 246 So.2d 737 (Fla. 1971). Section 12 of
Art. VII, the provision by which the answer to your inquiry
is primarily controlled, provides, generally, that a munici-
pality 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 to finance capital projects authorized by law and only
when approved by vote of the electors. See S166.121,
F.S., which recognizes this limitation; and State v. County
of Dade, 234 So.2d 651 (Fla. 1970).
In AGO 073-164, this office concluded that, absent an approving
referendum of the county electors, a county could not purchase
improved real property for hospital purposes on a deferred
payment plan where the contingent legal liability and obliga-
tion of the county was evidenced by a promissory note secured
by a purchase money mortgage on the improved real property
so acquired. According to the view expressed therein,
such deferred payment plan would
create a conditional indebtedness on the
part of the county in the nature of a
legal liability for a capital venture
predicated upon the general credit of
the county. The plan places the county
in a position of being coerced to levy
a tax to prevent loss of property by
foreclosure. Such a mortgage with the
accompanying right of foreclosure is not
constitutionally permissible without an
See also Boykin v. Town of River Junction, 121 Fla. 902, 164
So. 558 (1935); Hollywood, Inc. v. Broward County, 90 So.2d
47 (Fla. 1956); State v. Putnam County Development Authority,
249 So.2d 6 (Fla. 1971); and Nohrr v. Brevard County Educational
Mr. Michael E. Zealy 076-121
Facilities Authority, 247 So.2d 304, 311 (Fla. 1971), in which
the general rule is stated that with respect to the financing
of capital projects of public entities in this state, "a
mortgage with the accompanying right of foreclosure is not
constitutionally permissible without an election." Cf., AGO's
073-261 and 060-62.
Likewise in the instant situation, the financing of the con-
struction of a municipal facility by a municipality's execution
of a promissory note secured by a long-term purchase money
mortgage would create a conditional indebtedness on the part
of the municipality in the nature of a legal liability for a
capital venture predicated upon the general credit of the
municipality. Such method of financing places the munici-
pality in a position of being coerced to levy a tax to
prevent loss of the facility by foreclosure. Accordingly,
I am of the opinion that such method of financing may not be
utilized unless the municipality receives prior referendum
approval by the municipal electorate.
Your question is answered in the negative.
In the absence of an approving referendum by the municipal
electorate, a municipality may not finance the construction
of a municipal facility by borrowing money and giving a
promissory note secured by a long-term purchase money mort-
Sinc r ly, I
RO L. S VIN
cGerald L. Knight
Assistant Attorney General
/ ..... .
January 12, 1976
The Exchange Bank of Temple Terrace
9385 56th Street
Temple Terrace, Florida
This is in response to your inquiry concerning the legal
authority of our client, the Southwest Florida Water Hanage-
ment District, to borrow $250,000.
Under Chapter 373, Florida Statutes, the Governing Board
of the Southwest Florida Water M'anagement District is auth-
orized and empowered to borrow money temporarily, from time
to time, for a period not to exceed one year, and to issue
^" its pro:issory note under such terms and at such rates of
interest as the Board mnay deem advisable, to be payable
from the taxes levied and imposed as provided in Chapter
373. There is, however, a limitation under the Florida
Statutes that a public corporation, such as the Southwest
Florida Water Management District, may not pay in excess
of 7.5% interest on any borrowings.
If there is any additional information that you need con-
cerning the District's authority to borrow money, please
advise and I will be glad to furnish it to you.
Yours very truly,
GIDBONS, TUCKER, McW.i.J,
SMITH, COFER & TAUb
MHyron G. Cibbons
SNote: This letter sent to Mr. G. R. Griffin, P. O. Box 1809,
January 7, 1976
Jay T. Ahern, Esquire
Southwest Florida Water
P. O. Box 457
Brooksville, Florida 33512
Re: Resolution Authorizing District to Procure Loans
for Lower Hillsborough Flood Detention Area
Receipt is acknowledged of your letter of December 31,
1975, enclosing the above proposed resolution.
This resolution will be satisfactory as long as the rate
of interest provided therein does not exceed 7-1/2%, be-
cause, under Section 215.685, the amount of interest that
the District can pay on any loan, bond, etc., is limited
Yours very truly,
Myron G. Gibbons
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Water Maniagemnment District
1 S T- P. O. BOX 457 BROOKSVILLE, FLORIDA 33512
DERRILL McATEER, Chairman, Brooksville THOMAS VAN DER VEER, Secretary, Yankeetown RONALD B. LAMBERT, Wauchula
J. R. GRAW, Vice Chairman, Ocala S. C. BEXLEY, JR., Land O'Lakes ROBERT MARTINEZ. Tampa
JOE E. HILL, Treasurer, Leeaburg N. BROOKS JOHNS. Lakelad EI.WIS H. HOMER, Clearwater
Donald R. Feaster. Executive Director
December 31, 1975
Myron G. Gibbons, Esquire
Post Office Box 1363
Tampa, Florida 33601
Re: Resolution Authorizing District to Procure Loans for
Lower Hillsborough Flood Detention Area
Enclosed is a resolution I prepared for the District's consideration
should authorization be given to procure money for the Lower Hills-
borough Flood Detention Area.
^The District staff is still negotiating with various banks for the best
terms. When a bank is selected, the bank's name and interest terms can
be inserted into the resolution.
It appears that this resolution will be presented to the Governing Board
for consideration on January 14, 1976.
I would like your review, comments, and suggested changes prior to the
meeting so that I may have it ready for execution upon approval.
Very truly yours,
JAY T. AHERN
cc: N. P. Stoker
T. T. Mullin
1 0 00W $11110111- -l l II i I I ,IIII-VHI--1 -
SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT
AUTHORIZING THE CHAIRMAN AND SECRETARY TO PROCURE LOANS
ON BEHALF OF THE DISTRICT
WHEREAS, the Southwest Florida Water Management District, hereinafter
called DISTRICT, was created as a public corporation under Chapter 61-691,
Laws of Florida; and
WHEREAS, the DISTRICT under Chapter 61-691, Laws of Florida, was
authorized to exercise all the powers set forth In Chapter 378, Florida
Statutes, which includes the power to borrow money; and
WHEREAS, the DISTRICT and Its powers set forth in Chapter 378, Florida
Statutes, were incorporated and continued under the Water Resource Act of
S1972 as amended and now identified as Chapter 373, Florida Statutes; and
WHEREAS, the DISTRICT was and is empowered to borrow money temporarily
and issue its notes therefore upon such terms and conditions as the District
Governing Board may deem advisable for carrying on the "Works of the
WHEREAS, the DISTRICT has determined that certain lands should be
acquired in the Lower Illllsborough Flood Detention Area, a declared "Works
of the District" in the Hillsborough River Basin; and
WHEREAS, the DISTRICT does not have sufficient funds available to it
from grants appropriation or ad valorem taxes to fund in the Hillsborough
River Basin, the acquisition of the land required in the Lower Hillsborough
SFlood Detention Area: and
WHEREAS, the DISTRICT has determined that it is necessary to borrow
money on a temporary basis in the amount of Two Hundred Fifty Thousand
NOW, THEREFORE, IT IS RESOLVED AS FOLLOWS:
C That DERRILL S. MCATEER, as Chairman, and THOMAS M. VAN DER VEER, as
Secretary, of the Southwest Florida Water Management District, or their
sucieJors ;o iln u i; ce ur any two oT tnem ne and they are authorized for,
on behalf of, and in the name of the Southwest Florida Water Management
District to borrow from the
the sum of Two Hundred Fifty Thousand ($250,000.00) Dollars, payable on or
before 197 together with interest in the amount of
per annum, and said Chairman and Secretary are hereby
authorized to execute the necessary note to the said
,to borrow said funds, and said
shall not be held responsible, in any manner,
or required, to see to the application of any funds borrowed, as provided
BE IT FURTHER RESOLVED that the Secretary of the Southwest Florida
Water Management District be, and he is hereby authorized and directed to
furnish to the
a certified copy of this Resolution, and request the signatures of the
Chairman and Secretary on said bank's usual form of signature card and the
id Bank is authorized to rely thereon.
Dated the day of ___, 1975.
SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT
DERRILL S. McATEER, CHAIRMAN
\. .... I DER VEERS CRETARY
CERTIFICATE OF AUTHORITY
I hereby certify that I am the duly elected and qualified Secretary of
he Southwest Florida Water Management District, a public corporation,
established and created under Chapter 61-691, Laws of Florida, Acts of 1961 and
operates pursuant to Chapter 373, Florida Statutes as amended and that the
following is a true and correct copy of Resolution No. adopted at a duly
end regularly called meeting of the Board of Governors of the Southwest Florida
later Management District held on 1976.
I further certify that thn following is a true and correct copy of
Resolution which is in conformity with the laws of the State of Florida and
that the same has not since been rescinded or modified.
In witness whereof, I have hereunto affixed my name, as Secretary, and
ave caused the corporate seal of the Southwest Florida Water Management
District, a public corporation, to be affixed hereto this day of
THOMAS M. VAT' ER VEER, SECRETARY
S. .. a member of the Board of Governors of the
southwest Florida -ter~-anagement District, a public corporation, do
reby certify that the foregoing is a true and correct copy of a
solution adopted as above set forth.
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