Transcript Special Assessment Overview Presented to: New Clerk Academy May 14, 2013 5/14/2013 ORLANDO 300 S. Orange Avenue Suite 1170 Orlando, FL 32801 407-648-2208 407-648-1323 fax MIAMI 255 Alhambra Circle Suite 404 Coral Gables, FL.

Special Assessment Overview
Presented to:
New Clerk Academy
May 14, 2013
5/14/2013
ORLANDO
300 S. Orange Avenue
Suite 1170
Orlando, FL 32801
407-648-2208
407-648-1323 fax
MIAMI
255 Alhambra Circle
Suite 404
Coral Gables, FL 33134
305-448-6992
305-448-7131 fax
Presentation Outline
I. General Description of Special Assessments
II. Legal Considerations – Nabors, Giblin & Nickerson
III. Financing Considerations
IV. Property Assessed Clean Energy
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I. General Description of Special Assessments
General Description
Local governments have many service and capital funding needs, from building or staffing
new fire stations to construction of stormwater or road improvements, but they often don't
have the funding to provide these services for their citizens. Florida's home rule authority
allows local governments to collect charges from property owners for certain services and
facilities through special assessments, which are a form of non-ad valorem fees.
Special assessments are charges assessed against the property of some particular
locality because that property derives some special benefit from the expenditure of the
money.
Special assessments fall under two categories: (i) service assessments and (ii) capital
assessment.
Service assessments are items such as fire, garbage/solid waste and stormwater
services that provide revenue for operating costs.
Capital assessments are for construction of roads, stormwater facilities, fire stations,
street lighting, beach re-nourishment and other capital projects. They are fixed
according to the debt service schedule at assessment initiation, and end when the
affected property owners pay off the borrowed amount.
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Tax vs. Assessment
Is an assessment a tax? No.
Similarities
Both generate revenue to pay for services and
facilities
Both are mandatory and can be collected on the
tax bill
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Tax vs. Assessment
Differences
Taxes
Assessments
Need not benefit property
Must specifically benefit property
Authorization by general law
Authorization by home rule
powers
Legislature must prescribe a tax
base
Local Governments may develop
the rate of assessment and
method of apportioning costs
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Examples of Special Benefit
Fire Protection
Road Improvements (Paving and O&M)
Beautification
Sidewalks
Street lighting
Parking Facilities
Downtown Redevelopment
Solid Waste
Water and Sewer Improvements
Stormwater
Beach Re-nourishment
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Methods of Apportionment
A logical and factually driven method must be developed to
spread the costs among the benefited properties. Methods
of apportionment include:
Per Parcel or Unit
Linear Front Foot
Physical Use of Property
Relative Proximity to Facility
Amount of Service/Facility Required
Square Footage of Improvements
Relative Value of Property
Trip Generation
Combination of Factors
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Collection Methods
The method with which assessments are collected
can have a significant impact on their ability to be
bonded.
Uniform Collection Method (Tax Bill - Section
197.3632, Florida Statute).
Separate Bill
Utility Bill
Combination of Methods
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Collection Methods ― Pros and Cons
Tax Bill
Separate Bill
Utility Bill
Pro’s
• Highest collection rate
(95 – 98%)
• One bill with all charges
• Use tax roll data from
Property Appraiser
• Deadlines set by local
government
• Time frame set by local
government
• Use tax roll from Property
Appraiser
 Can use for government property
 Deadlines set by local government
• Time frame set by local
government
 Easier to charge exempt property
 Can use for government
Con’s
• Strict deadlines
• Strict time frame
• Exempt property
information missing
• Cannot use for
government property




 Collection issues regarding
non-payment
 Utility bill gets crowded
 Difficult to correlate utility accounts
to property uses (methodology
issues)
 May miss vacant property or those
without an utility account.
Lowest collection rate (70 – 90%)
More expensive to implement
No full picture of charges
Exempt property information
missing
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Procedures for Implementation
Notice of Intent
Define benefit or service area
Develop apportionment methodology
Calculate initial/not to exceed rates
Adopt procedural ordinance
Adopt initial resolution
Provide for public notice
Public Hearing/Adopt final rates
Collect assessment
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II. Legal Considerations – Nabors, Giblin &
Nickerson (Refer to Separate White Paper)
III. Financing Considerations
Bonding Special Assessments
Special Assessment Bonds can be issued to fund capital projects
such as road improvements, water and sewer improvements,
stormwater improvements, street lighting, and beach renourishment to name a few.
The bonds are secured by and paid from special assessments
collected from each affected property.
Typically property owners are provided the opportunity to prepay
(pay upfront) their fair share of the capital costs instead of being
levied an annual assessment. Additionally prepayments of
assessment are accepted during the term of the financing. As a
result, optional prepayment flexibility on the bond is desired.
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Bonding Special Assessments – Credit Concerns
The expected annual assessment collections are equal to or
slightly greater than the annual debt service payment due
(minimal debt service coverage) which creates potential credit
concerns for lenders.
In order to mitigate these concerns the following should be
considered when analyzing a potential financing:
Make-up of assessment base – developed vs. undeveloped
property
Collection method – uniform collection method (via property tax bill)
creates strong incentive to pay
Lien position – a lien on parity with ad valorem taxes is preferred
Treatment of property upon sale – assessments typically stay in
place upon transfer of property
Debt service reserve fund – can provide liquidity in the event
assessment are delinquent
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Bonding Special Assessments – Other Considerations
Due to the recent economic climate and real estate market
crash, it has been increasingly difficult for local governments to
find lenders willing to lend funds solely secured by special
assessment even if all of the credit concerns on the prior page
are addressed.
For smaller projects ($10 MM or less) with shorter repayment
terms (10 years or less), the most likely financing vehicle would
be via a privately placed bank loan.
Some financial institutions will require a back up pledge in order
to provide the loan. This can be in the form of covenant to
budget and appropriate from legally available non ad valorem
revenues.
This creates a policy decision for elected officials as to whether the
countywide general fund should be used for credit support on a
financing that might not have countywide benefit.
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IV. Property Assessed Clean Energy
Property Assessed Clean Energy (PACE)
Local government makes funding available to commercial and
residential property owners to finance the installation of
qualifying improvements.
Repayment is through a special assessment on the property tax
bill; subject to same rights and requirements for the payment of
taxes.
Qualifying improvements include renewable energy, energy
efficiency and wind resistance measures.
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Property Assessed Clean Energy (PACE)
Energy Efficiency: Improvements that reduce consumption through the
efficient use of electricity, natural gas, propane, or other forms of energy
include, for example:
– Air and duct sealing and Insulation, windows;
– HVAC systems and cooling energy recovery;
– Daylight harvesting, lighting and lighting controls;
– Electric vehicle charging equipment.
Renewable Energy: Any system in which the electrical, mechanical, or
thermal energy is produced through hydrogen, Solar PV or thermal,
geothermal, Biomass, biogas, ocean or wind.
Wind Resistance Improvements:
– Improving the strength of the roof deck attachment;
– Creating a secondary water barrier to prevent water intrusion;
– Installing wind-resistant shingles or storm shutters;
– Installing gable-end bracing;
– Reinforcing roof-to-wall connections.
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