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Item D ( BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: December 10. 2003 Division: County Administrator Bulk Item: Yes No-L Department: County Administrator AGENDA ITEM WORDING: Discussion of the response from Monroe County to the proposal by the Secretary of the Florida Department of Community Affairs in reference to the Monroe County Comprehensive Plan and Work Program. ITEM BACKGROUND: The County's progress in meeting the Comprehensive Plan and Work Program requirements is to be evaluated by the Governor and Cabinet. The Secretary to the Department of Community Affairs has identified that the County has made significant effort in meeting its obligations but has not made substantial progress. The Secretary has made a presentation to the Board of County Commissioners including a proposal to be recommended to the Governor and Cabinet as a way of meeting obligations in the future. The Administrator will be providing to the Board of County Commissioners some additional financial information prior to the December 10 meeting. PREVIOUS RELEVANT BOCC ACTION: Presentation by the Secretary of DCA at the November 19,2003 meeting and discussion by the Board of County Commissioners and the scheduling of a special meeting on December 10. (This meeting was previously discussed as being held on December 8.) CONTRACT/AGREEMENT CHANGES: N/A STAFF RECOMMENDATIONS: Discussion and preparation of a response to the Secretary of the Department of Community Affairs as deemed appropriate by the Board of County Commissioners. TOTAL COST: N/A BUDGETED: Yes No COST TO COUNTY: N/A SOURCE OF FUNDS: REVENUE PRODUCING: Yes _ No _ AMOUNT PER MONTH_ Year APPROVED BY: County Atty _ OMB/Purchasing _ Risk Management _ DIVISION DIRECTOR APPROVAL: . ~r. -1_ !a ~ James L. Roberts DOCUMENTATION: Included x To Follow Not Required_ AGENDA ITEM #~ DISPOSITION: MEMORANDUM TO: Board of County Commissioners FROM James L. Roberts County Administrator DATE: November 17,2003 SUBJECT: Recommendation for Wastewater Funding ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ On November 10, 2003, the Secretary of the Department of Community Affairs sent the County Commission a recommendation for dealing with issues pertaining to the implementation of the Comprehensive Plan and Work Program. On November 14, I sent to you a review by Mr. McGarry concerning certain aspects of that proposal. I also indicated to the County Commission that we would look at issues pertaining to the proposal for a $200 million bond issue for wastewater facilities. One of the County's major goals, and certainly of great importance to the Department of Community Affairs, is implementation of a successful wastewater program. The County has been wrestling with the question of how to implement the program and fund it. If we look at the monies that have been connnitted, spent, and progrannned for a variety of projects around the Keys (excluding Key West), it appears as though approximately $200 million falls into one of those categories. That, of course, does not mean that all those projects are implemented but rather that they are either implemented, planned or have specific funding reserved. The list includes the public participation with the privately owned Stock Island system, the north Key Largo utility, Conch Key, Bay Point, Big Coppitt ($6 million progrannned in the infrastructure sales tax fund), the Key Largo Wastewater District, Layton, Key Colony Beach and the two very large projects in Islamorada and Marathon. The State and federal governments have provided significant contributions to those numbers through State appropriations, FEMA grants and a $4.3 million grant for the Little Venice project. What is it that remains to be done in unincorporated Monroe County? A staff review of the Monroe County Wastewater Master Plan, with some inflation factor added, suggests that there is slightly under $300 million left to program and implement in unincorporated Monroe County. When the two categories are added together, the numbers are approximately the $500,000,000 that was originally discussed when Congress passed the authorization of $1 00 million. Through a referendum, the voters of Monroe County approved the extension of the one cent infrastructure sales tax. Some of those funds were to be utilized for wastewater facilities. In fact, there is a category called "Physical Environment" which has a total from FY .~~_...'":'~" ~-""-?"~.' '..--.--'- 2005 through FY 2019 of $64 million. In addition, funding in FY 2003 and FY 2004 shows . another $6 million which is identified for the proposed Big Coppitt system. Therefore, the .: County has already made a COnlllntment of approximately $70 million over the next 16 years. If the State follows through on its proposal to purchase environmentally sensitive lands, then this sum of money could be totally dedicated to wastewater facilities in unincorporated Monroe County. Presently, the County anticipates approximately $10,500,000 per year of revenue. There are some special categories for which revenue should be set aside with the great majority of the money going for specific projects. In FY 2003, the Board of County Connnissioners adopted a $21 million bond which is to be utilized primarily for public safety facilities (fire stations, EMS facilities, courthouses, medical examiner facility, Upper Keys government center). Payment on those bonds ranges from $1.8 million per year to up to $2 million per year by the end of 2019. The balance of the infrastructure sales tax fund has been identified for projects. How then can the County anticipate the funding of wastewater projects in unincorporated Monroe County? First, it must be recognized that the wastewater authority for unincorporated Monroe County is the Florida Keys Aqueduct Authority, with the exception of Stock Island and the Key Largo Wastewater District. The FKAA has significant borrowing capacity based on the revenue flows paid by the users of wastewater systems. Already, the FKAA has proceeded through a court validation process pertaining to the Marathon project and should have the ability to do so for other projects as required. At this time, their borrowing limits are not known and would have to be detennined However, there is an Interlocal Agreement in place between Monroe County and the FKAA in reference to cooperating on development of wastewater systems. That Agreement is that the County will provide or work with the FKAA in locating and purchasing property for wastewater plants and in assisting with some of the up front costs leading to the FKAA's implementation of systems. If the Board of County Connnissioners wishes to pursue a commitment to funding a specific amount by the County, there should be research and an agreement with the Florida Keys Aqueduct Authority concerning nmtual responsibilities and financial obligations. One question for the County would be whether the currently allocated amount of infrastructure sales tax funds for wastewater projects is sufficient and available according to a reasonable timetable, even though it will not all be available prior to 2010. If the answer is that funding must be accelerated, then the County Connnission can move toward a debt obligation using the infrastructure sales tax funds as support. In August of 2003, Public Financial Management presented to the County a debt capacity report which was geared toward providing funding for the purchase of environmentally sensitive lands. If the State proposal is to take on most of that responsibility, the debt capacity report can be viewed as a potential resource for the development of wastewater treatment facilities. Once again, the County should consider the nmtual and relative participation of the FKAA. - 2 PFM analyzed a wide variety of potential funding sources. After review and . consideration of the use of those sources and the difficulties associated especially with -: utilization of ad valorem millage, it seemed that the best source of funding remains the infrastructure sales tax. PFM concluded that for any meaningful amount to be bonded from this source there would have to be a readjustment of other projects within the program Depending upon interest rates and further analytical work to be done, it is possible that there could be a total of $50 to $60 million of debt, at lease two-thirds of which would be available for wastewater facilities. Therefore, after consultation and analysis with the FKAA, the County would be in a position to live up to its obligation as a partner with the FKAA in implementing a wide ranging wastewater program. One of the questions is how rapidly an overall program can be implemented in conjunction with the State's mandate of201O requirements. Therefore, on a continuing basis over the next 15 years, the County has approximately $70 million worth of infrastructure sales tax funds. If there is a need to accelerate the availability of those funds, the County can use that revenue flow to support a bond issue. In addition, the County has additional capacity within the local infrastructure sales tax fund over the next 15 years to make additional funds available should it be necessary to do so. It is the Administrator's feeling that the $200 million bond issue discussed in the Secretary's letter of November 10, 2003, is an attempt to have a cormnitment for most, ifnot all, of the actual cost for wastewater facilities. It basically suggests that Monroe County should be the primary funding agent for all such facilities in unincorporated Monroe County. The County has made substantial policy decisions in reference to the utilization of its funding and has supported a wide variety of projects. It is reasonable to assume that the County will continue such a level of support in conjunction with its partners in the state and federal governments and in the Florida Keys. In an effort to assure that there not be an onerous burden placed upon the users of new wastewater facilities, the County's policy is to continue to strive to reduce those impacts wherever possible. Therefore, the Administration's recommendation m reference to this Issue IS as follows: 1. Work with the Florida Keys Aqueduct Authority to determine relative financing abilities and a cooperative way to accelerate and implement the overall wastewater program for the County; 2. Continue to use the infrastructure sales tax revenue stream to support wastewater treatment efforts throughout unincorporated Monroe County; 3. Utilize that revenue stream as support for bonding obligations should it be necessary or prudent to accelerate the availability of funding; 3 4. If requested by the State, pass a resolution that incorporates these steps and any . others detemrined appropriate by the Board of County Commissioners to .: accent the County's continuing connnitment to completing its wastewater treatment program. JLR: dlf Ene. Cc: Richard Collins Tim McGarry Jim Reynolds, FKAA Jim Quinn, DCA Hal Canary, PFM :J~~ James L. Roberts County Administrator 4 -. Nov IU ZUUJ 1~:4U r.ut . STATE OF FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS The Honorable Dixie Spehar, Mayor Key West Suite 102, 500 Whitehead Street Key West Florida "Dedicated to making Florida a better place ~o call home" I I I I I I I I I I I I I I I I I Dear Mayor Spehar I Last week J visited with you and other memh= ofthe Montoe cJunty Board of Commissioners and discussed a partnership proposal to begin implementation of$e work program associated with the Florida Keys Protection Act. The purpose of this letter ii' to formally submit to you the specific elements of the proposal. J discussed with you that the .IUUW report that will he submitted 10 the Govemor and Cabinet sitting as the Administration Commission later this month will show that Monroe County has not made the required progress in implementing the work program. I then proposed to you a partnership- With certain commitments on behalf of the county d municipal governments, the partnership I outlined to you would commit state funding from s era! revenue sources to implement the goals of the work program. Additionally, the p ership could result in an increase in the :;tnnual Rate of Growth Allocation. Our partners p would entail the following actions from Monroe County. COLLEEN CASTILLE Sec18ta'Y .lea BUSH Gollernor November 10.2003 On November 19, 2003. the MOIU'oe County Board of County C1mmissioners would adopt a resolution committing to the items listed below: I 1) ADOPT FUNDING MECH.Al\l'lSM FOR W ASTEWi<<\TER Monroe County would prepare and adopt a $200 million ~ond issue for wastewater facilities outlined in the Monroe County Sanitary WasteJ.ater Master Plan adopted in June of 2000. I have suggested that a portion of the I.ejt infrastructure sales tax, which was approved by the people of Monroe County be used' part for wastewater projects. Other sources would be acceptable, however, I believe at current revenue sources exist without increasing taxes. I I 2) PROTECT UPLAND HABITAT I Monroe County would protect its upland habitat on an i*erim basis by A) specifying that the adopted Conservation And Natural Areas Map be designated as protected species I I I I 2555 SHUMARD OAK BOULEVARD . TALLAHASSEE, FLORIDA 32399-2100 Phone; 650.488.6466/Suncom 278.8466 FAX: 850.9121.0781/Suncom 291.0761 Internet address: htto:l/www dca.st*le.flus I CRITICAl.. STATIi CONCERN FIELD OFFICE COMMUNITY PlNINING EMEftGENCV MAHA(jE~NT 27!l& 0...-_ HoQI\WaY. Sui.. 212 26SS Slo""",'G O...Iloul_'O z556 SIlu".rd Oak e.,....vaftl ~"'on. fl. 33050.2227 :.=~~;~i 3Z3g~2'OO T::~~; 323~21OO I HOUSlNO & COMMUNITY DEVELOPIlIENT :25~5 SI1u_'c Oak BcWell8'O T..Iaha..... n 323!19.,2100 (a50)4ll&-7lIS6 NOY IU lUUJ IU:41 ,.. u" The Honorable Dixie Spehar November 1 0, 2003 Page Two habitat thereby automatically applying negative points to posed development in these areas and B) prohibiting the award of positive points for de elopment in the Conservation and Natural Areas through lot donation aT aggregation. 3) PARTICIPATE AND COMMIT TOAHURRlCANE VACUATIONEXERCISE AND AGREE TO A JOINT CITY/COUNTY PLAN Monroe County would join with the Department and other elevant agencies in a comprehensive hurricane exercise scheduled for May, 200 thereby developing, testing and agreeing to a joint evacuation plan for the Florida Key - The state's commitment would entail the following items from th Department ofCooununity Affairs and our other state agencies involved in activities in the F1 rida Keys: 1) CONSERV ATlON L~'ID ACQUISITION The Department will work with two state land acquisition pro in an effort to secure funds for the Florida Keys for land acquisition for habitat prot ction. The Florida Forever Program within the Department of Environmental Protection auld provide up to $93 million over three years. Additionally, I will work with Gov or Bush to secure a budget recommendation for the appropriation of $20 million in unsp t Preservation 2000 monies CWTetltly in the Department of Community Affairs budget. 2) STORMW ATER MANAGEMENT Per the recommendation of the Monroe County Stonnwater anagement Master Plan (adopted August, 2001), the Florida Department of Trans po lion has coIIl1Ilirted to incorporate the Storrnwater retrofit into their schedule afro maintenance of U.S. Highway 1. Additionally, the South Florida Water Management Distri has committed to funding stonnwater management projects which I would suggest be u cd in other projects not associated with U.S. 1. 3) AFFORDABLE HOUSING LAND ACQUISITION DEVELOPMENT CWTently there are programs I.Ulder the Florida Housing F' ce Corporation (a housing partner of DCA) that provides bonds and tax credits for the elopmcnt of workforce housing. There is a special set-aside for developments in th Florida Keys. However, there are two reasons why few Keys developments get proposed: ) the land costs are excessively high and 2) there are not enough affordable housing ROGO 'ts available to make more than one financially feasible development a year if at all. erefore, I would propose seeking available monies from the Florida Housing Finance Corpora ion for the acquisition ofland for development of workforce housing that would remain w rkforce housing in perpetuity. The Department will request that Governor Jeb Bush and m bers of the Cabinet give Monroe County additional units for Affordable Housing for the workforce as long as Monroe County assures us that these additional units will remain affi rdable in perpetuity. We suggest that the County use a land trust to acquire the land to keep e units affordable.- NOV IU lUUJ 10;41 1'". U'I The Honorable Dixie Spehar November 1 O~ 2003 Page Three As a beginning discussion item, I would recommend that the C unty receive 117 units that were not allocated over the last three years, and that the COWl'S annual allocation be increased from 158 units (126 market rate and 32 affordable) t 197 units (126 market rate and 71 affordable). The people at the Department of Community Affairs share the con ems of the citizens of the Florida Keys about the future of your economy and enviromnent d I hope that you see this proposed partnership as the means to work together to solve many of the most pressing issues facing this unique archipelago. I would respectfully request your indulgence in my making this PI} posal to you at your meeting oftbe Monroe COWlty Commission on the 19th of November. PIe e call me at 850-488-8466 if you bave any questions related to this proposal Yours truly, Colleen M Castille Secretary Cc: Governor Bush Members of the Administration Commission .c........'\'~~.~~.iP;."~\...""~.....,."_,,w_.,._,;<, -.~"."""'-.,":~"'t1'l"_ :-"":;"~___.---:.----.:_..._~_.,...........___,_."._".,,~_.__ County of Monroe Growth Management Division 2798 Overseas Highway Suite 410 Marathon, Florida 33050 Voice: 305.289. 2500 FAX: 305.289.2536 Board of County Commissioners Mayor Dixie Spehar, District 1 Mayor Pro Tern Murray Nelson, District 5 Corom. Charles "Sonny" McCoy, District 3 Corom. George Neugent, District 2 Corom. David Rice, District 4 MEMORANDUM TO: James L. Roberts County Administrator FROM: Timothy 1. McGarry, AICP Director of Growth Management DATE: November 12,2003 SUBJECT: Staff Evaluation of DCA Proposal for Protection ofUpIand Habitat on an Interim Basis DCA Proposal On an interim basis, Secretary Castille is asking the BOCC to: A) Specify that the adopted Conservation and Natural Areas Maps be designated as protected species habitat thereby automatically applying negative points to proposed development in these areas; and B) Prohibit the award of positive points for development in these Conservation and Natural Areas through lot donation or aggregation. Staff Evaluation This proposal reflects DCA's concerns that further fragmentation and elimination of significant upland habitat will continue to take place while the County is preparing and adopting necessary amendments to its Comprehensive Plan and Land Development Regulations to implement the recormnendations of the Florida Keys Carrying Capacity and Goal 105 of the Comprehensive Plan. It should be noted that. the Board can not implement this proposal through a simple resolution, it will take at a minimum an ordinance. Although some clarification is required on how many negative points such properties would be scored under ROGO, this proposal is similar to the alternative interim development ordinance RESULTS OF AN AGREEMENT WITH DCA THIS AGREEMENT WILL: 1. Provide $130 million for wastewater, environmentally sensitive lands, and workforce housing from DCA 2. Provide $130 million for wastewater, environmentally sensitive lands and workforce housing from Monroe County 3. Provide the means for the State of Florida and Monroe County to move forward and still allow either party not to participate should the mutual agreement not be fulfilled 4. Provide $20 million for land purchases of workforce housing over the next two years 5. Provide a pledge of $80 million for wastewater over the next 6 years 6. Return 180 market rate permits each year for Monroe County 7. Provide 300 out-of-ROGO permits for year 2004 for workforce housing 8. Provide up front cesspit credits 9. Rescind the notice of violation issued by the State Murray E. Nelson, Mayor December 10, 2003 DCA WILL PROVIDE: 1. 300 RaGa allocations for workforce housing 2. Provide $10 million for purchase of workforce building sites in 2004 3. Provide $10 million for wastewater as a match for County bonding $20 million in June 2004 4. Provide $20 million in State/Fed funds as a match for County's $20 million bond in June 2005 5. Provide 180 market rate permits per year 6. Provide $93 million for purchase of environmentally sensitive lands 7. Any changes to RaGa that could be construed as a taking would be initiated by DCA 8. Provide up front cesspit credits for the building of new homes 9. DCA will report substantial progress on 28-20 work plan 10. Rescind the Notice of Violation issued to Monroe County MONROE COUNTY WILL: 1. Bond $20 million of infrastructure funds for wastewater as a match for a $10 million grant from the State 2. Provide a pledge to expend $80 million collected from connection fees to expand wastewater projects using the connection fee funds 3. Provide a second $20 million bond on infrastructure funds to match a Federal/State match of $20 million in June of 2005 4. Bond $10 million of Land Authority revenue (~ penny of the tourist impact tax) to buy workforce housing land in 2004 ..,.~:~~, "'--' ''""....' ~... ,- 1:''''', ''T' ~ ~ ". '1-,', ''I ',,,",,''1" "",,~l' "'."'~-~""'~""~"'-'''''''-'-''.-'''';-'''''''::;--:~'''''~:o.,,"--,--~,..,....,.,... proposed by the staff in July as an alternative to a moratorium. This alternative interim development ordinance, which would have assigned an automatic ten negative points to any lots or parcels within the Conservation and Natural Areas, was considered and rejected by the Board. A significant difference is that under the DCA proposal, property owners within the Conservation and Natural Areas would not be able to receive any points for lot donation under ROGO. [As directed by the Board in September, the staff is already preparing and processing amendments to the Land Development Regulations, that would eliminate these properties from receiving points for lot aggregation.] In effect, the eIimination of any points for lot donation and the automatic assignment of negative points would place a moratorium on any lands within the Conservation and Natural Areas, as these properties would be unable to compete under ROGO. If the Board wants to support this proposal for a "temporary" moratorium, it may want to consider making its support contingent upon commitments from DCA for the following: o Taking the lead or, at least becoming an equal partner with the County in the legal defense of any taking claims resulting from such a moratorium and other taking claims filed based on mandates placed upon Monroe County; o Assisting the County to secure State financial resources and legislation to defend against and cover such claims; and, o Withdrawing or at least placing on hold, its Notice of Violation (Case No. DCA03- NOV-004) filed against the County concerning the administration of its habitat protection regulations. Unfortunately, the "quid pro quo" aspects of the DCA proposal requires the County to move forward with specific actions with no guarantees that the DCA Secretary can deliver on her promises, especially as they are dependent upon favorable action from the Governor and Cabinet and/or Florida Legislature. Therefore, a possible alternative approach would be for the County to enter into a carefully crafted Section 380.032, F.S., agreement with DCA to implement the moratorium which would make that agency a party to any legal challenges and taking claims. An alternative approach to a moratorium that could also be considered through a Section 380.032 agreement would be changing the ROGO scoring to assign a "significant" amount of positive points to any application outside of the Conservation and Natural Areas, rather than assigning "negative" points to applications within those areas. 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Q 0_. g ~ (1) f) 0._ fA fIJ -= - = = BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: August 20. 2003 Divisiory. County Adririnistratot: Bulk Item: Yes No X Department: County Administrator AGENDA ITEM WORDING: Presentation of a Debt Capacity Report from Public Financial Management, the County's financial advisor and action by the Board of County Cormnissioners, as appropriate. ITEM BACKGROUND: At the meeting of the Board of County Cormnissioners in July of 2003, in conjunction with the discussion of the acquisition of environmental sensitive lands, the BOCC asked for a report concerning the availability of funds for either direct purchase or bonding of the cost of the acquisition of such environmentally sensitive lands. The Administrator and staff have worked with Public Financial Management to review the options available. In addition, there is the possibility of utilizing, on a one time basis, existing funds from the Land Authority. The reports will be completed and submitted to the Cormnission prior to the August meeting. PREVIOUS RELEVANT BOCC ACTION: As above. CONTRACT/AGREEMENT CHANGES: N/A STAFF RECOMMENDATIONS: Discussion by the Board of County Connrussioners and approval to proceed, as appropriate. TOTAL COST: Unknown BUDGETED: Yes No COST TO COUNTY: Unknown SOURCE OF FUNDS: REVENUE PRODUCING: Yes No AMOUNT PER MONTH_ Year APPROVED BY: County Atty _ OMB/Purchasing -X- Risk Management _ DIVISION DIRECTOR APPROVAL: -~~~ James L. Roberts DOCUMENTATION: Included ----A- To Follow Not Required_ DISPOSITION: AGENDA ITEM # -rJ DEBT CAPACITY REPORT In conjunction with consideration of the potential acquisition of environmentally sensitive lands (ESl), the Board of County Commissioners instructed the Administration to have a Debt Capacity Report prepared for the August, 2003 BOCC Meeting. The purpose was to evaluate the potential funding available, either for direct acquisitions or for debt financing for the purpose of purchasing ESL. Attached to this memorandum are two documents. The first is a memorandum from the Executive Director of the Land Authority in reference to the availability of Land Authority ROGO reserves. The second is the report as prepared by Public Financial Management. In summary the condusions reached are as follows: LAND AUTHORITY The Executive Director has identified approximately $3.4 million in ROGO reserves. This amount, or part of it, could be available to assist the County in its ESl purchases. The funds are not suitable for debt financing. If the Board of County Commissioners/Land Authority chooses to utilize these funds, it may be necessary to have an amendment to the Comprehensive Plan. The Board should also be aware that there are other potential uses for these funds whi~h may be necessary due to requirements for administrative relief for ROGO applicants and the resolution of litigation. LOCAL GOVERNMENT INFRASTRUCTURE SALES SURTAX (FUND 304) This one percent sales surtax is utilized to support the capital program for the County. It is presently programmed through 2019. Use of these funds is appropriate for the intended purpose; however, use of these funds for the support of long range debt would require the elimination of anticipated and programmed capital projects. PFM suggests that by utilizing approximately $5 million per year for fifteen years and wrapping the existing debt ($21,455,000) into the total package, there could be approximately $56 million of new debt available for ESl. GUARANTEED ENTInEMENT These funds are sent to the County under the Florida Revenue Sharing Act of 1972 through a formula. These funds support other general government services. The County would see an addition of only about $360,000 per year available for debt support; however, using these funds for that Durpose would require the raising of ad valorem taxes to replace them in the budget. HALF CENT SALES TAX Once again this is revenue-shared from the State by formula. The approximate $5.3 million projected to be received would produce about $30 million in bond capacity; however, once again these funds are utilized to support the County budget and dedicating them to debt support would require the raising of ad valorem taxes. TOURIST IMPACf TAXES An approximate $1 million per year would not produce a significant level of debt capadty even if it could be utilized. These funds are presently included in the Land Authority budget. FOUR CENT GAS TAX (NEW PROPOSAL) One idea that has recently surfaced is the possibility of a legislative change to allow the County to impose a four cent additional tax on each gallon of gasoline sold. There would need to be a County-wide referendum in order for this to occur or an Ordinance adopted by the Board of County Commissioners. The theory is that the legislative change would allow this to occur only for areas of Critical State Concern. Four cents would produce approximately $2.4 million per year and support a $17 million/15 year debt capacity. STATE PARK SURCHARGES The surcharges charged by the Department of Environmental Protection and parks in the County produces for the land Authority approximately $350,000 per year. This would produce only a $2.2 million debt capacity. Funds can be used to acquire ESL or affordable housing property. These revenues are also utilized to support the General Fund general government operations. COVENANT TO BUDGET AND APPROPRIATE (CBA) CBA basically means the utilization of the County's non ad valorem revenues (where allowable) to support debt. An analysis indicates that there may be approximately $40 million of those funds available after reduction of certain government budgeted expenditures; however. that money is dedicated to support various aspects of the County budget and would have to be reolaced (probably by ad valorem taxes) if utilized for ESL. AD VALOREM REVENUES The County is able to use ad valorem revenues to support debt. In essence, general obligation bonds are issued and, if directly secured by ad valorem millage, would require a voter-approved referendum. PFM has done an analysis of one mill of increased ad valorem revenue and one quarter mill of increased ad valorem revenue. Their numbers are conservative and suggest one mill would produce $11 million per year based on Fiscal Year 2002 and one quarter mill would produce nearly $3 million per year (the actual amounts would be slightly higher based upon new property values). These would produce substantial debt financing opportunities In the range of $60 million (one mill) or approximately $47 million (one quarter mill). The issue here is the raising of additional millage and the possible need to take the question to referendum. ,. Please review the EXECUTIVE SUMMARY In the PFM Report. That page summarizes PFM's findings and feelings overall in reference to the potential for debt financing. The last bullet in the Summary suggests that, if the County Is to proceed with the issuance of debt for ESL, that utilizing a millage approach would seem to be the most prudent at this time. MONROE COUNTY LAND AUTHORITY 12()() THUr-MN AV~:NlJl'. Sun"!' 2117 · KFY Wrc;r, fl.IIIWM 33040 PHON" (.l05) 29!i ,f) I XII . FAX (:\O~;) 2t)5-S Ull MEMORANDUM TO: FROM: James L. Roberts, County Administrator Mark J. Rosch, Executive Director M ~ Monroe County Land Authority ~ DATE: August 8, 2003 SUBJECT: land Authority ROGO Reserve Pursuant to Policy 101.6.2 of the Monroe County Year 2010 Comprehensive Plan, the Monroe County Land Authority has established a budgetary reserve tor the purchase at property to provide administrative relief to ROGO applicants. Since FY 93, the land Authority has set aside 35% of its recurring land acquisition revenue into this reserve. To date there have been no expenditures from this reserve and thus the balance has grown over the years to its current level of $3.4 million. The ROGO reserve in the proposed FY 04 budget is $3.8 million. The County's ROGO ordinance has been in effect for 11 years. To date the Land Authority has purchased property from six ROGO administrative relief applicants at a total cost of approximately $800,000. All but $12,000 of this total was paid for with State funds that are no longer available (Preservation 2000 funds appropriated to the Land Authority by the FlorIda Legislature) . The ROGO ordinance creates a contingent liability that is difficult to forecast. The variables include: 1) how many property owners will choose to enter the ROGO competition; 2) how many ROGO allocations will be available for the County to issue; 3) which applicants will compete unsuccessfully for four years and become eligible for administrative relief; 4) which of the eligible applicants will choose to apply for administrative relief; 5) what form of administrative relief the Board will choose to offer; 6} how many eligible applicants will be willing sellers; and 7) the purchase price for a given property. As of the most recent ROGO ranking approved by the County Planning Commission (April 14, 2003), there were 305 applications denied a ROGO allocation Of these 305. 48 have already been in ROGO for 4 years and have either declined the Land Authority's purchase offer or have not applied for administrative relief. Depending on the outcome of future rankings, a maximum of 23 additional applications may have been in ROGO for 4 years by this time next yearo ZO'd 900'oN 61:Ll ~O.80 9rll::l 181S-S6Z-S0~:GI ^lI~OHlrll::l GNl::ll oJ'W What bUdgetary impact will this situation have? It is impossible to know for sure. After 11 years, the impact has only been $800,000. Assuming an average assessed value of $45,000 per parcel, the assessed value of the 48 "4-year aids" is approximately $2.1 million. By this time next year if the 23 "3-year aIds" are still in ROGO, the estimated assessed value of potential administrative relief properties will be $3.2 million. The estimated assessed value of all 305 applications i8 $13.7 million. These figures are only rough estimates, but they illustrate the potential order of magnitude involved and the high degree of uncertainty. The Land Authority's ROGO reserve was established pursuant to Policy 101.6.2 of the Comprehensive Plan. Should the Board wish to use a portion of the reserve for acquisitions outside of the ROGO administrative relief process, the Board should proceed by directing staff to initiate a plan amendment. 2 ~O'd 900'oN OZ:ll ~O. 80 9m:l 18IS-S6Z-S0~:aI ^lI~OHln~ aN~l ')'W / ItC"i~lutl 4 MID 7. Potential Development Credits (PDCs) . An applicant may have the option of receiving positive points, called Potential Development Credits (PUCs), for transferring dcvelop,"cnt righlll awa)' frol11 " ~cllder site tor development proposed on an eligible receiver site, as specitied in Objec:tivc 101.13 and related policies. (: PoUey 10105.8 The Residential Permit Allocation Ordinance shall be amended to award a graduated scale of positive points to dwelling units which are proposed for lots within legally planed, recorded subdivisions, which are served by existing illfrastruclure, including at a minimum potable water, electricity and paved roadways. Maximum points shall be awarded for those projects proposed within planed subdivisions which IU'C 67% to 100% built out; fewer points will be awarded for proj~ts proposed for subdivisions 33% - 61% built out; and minimum points shall be awarded for projects proposed for subdivisions 0- )3% built out. The percentage of build out shall be based upon updated, accurate data from the County's Geographic Information Sys":m (GIS). Thc Ordinance shall be amended when the pertinent information is readily avuilable on the County's GIS. Polic:y 101.5.9 Monroe County shall allow for thc= development of multiple-family units within the Permit Allocation System. If a project ranks high enough ill the Point Systeln for a portion of the development to recc.:ive an allocation award, but the project incJudes more units than are available during an allocation period, the entire project may receive allocation awards if the excess allocation is reduced trom the next allo<:lltion period(s). Multi-family affordable hou:>>i"8 or elderly housing projects lIhall be given priority. (j Polie,101.5.10 Monroe Counly may develop a program, called Transfer of ROGO Exemption (TRE), chat would allow tor the transfer ofT-site of dwelling unit:l, hotel rooms, I'C(;reacional vchicle spaces and mobile homes to another site in thc same ROGO sub-area, provided that they arc lawfully existing and can be accounted for in the County's hurricane evacuation model In addition, the new site would not be eligible for any negative environn,entAl points under ROGO with the execl)tion of those properties designated Residential High. When a multiple-family housing development utilizes a TRE, any other units in that saine project that are pennined through the ROGO process may be eligible for minor positive points on a one for one basis. Obieetin 101.6 Monroe County shall expand the Monroe County Land Authority acquisition program co provide for the purchase of land from property owners who have not been awarded building pennit allocations in the Permit Allocation System. Policy 101.6.& MOllroc Coullty shilll. upon D prol,erty owncr's requc!\t, purchnse property for fair market value ur pemlit the minimum reilsonable economic woe of the property, if the property owner meets th~ following conditions; . I. they hilv~ been d~l\ied an allocation award for t'lllr slIccclisivc years in t1~e Penn it Allocation System; : .heir propus~d oc:vdoplllcnt othcrwl!\c meets i111 applicable county, s~te, Dnd federal regulations; ; I Policy 00C41l"."1 . MonrM County Vear 20tO Comprehe"el"e PI.n I ( 2. 3.1- JO !O'd LOO'ON vv:L! ~O.80 90l::J !8!S-S6Z-S0~:GI ^lI~OHI0l::J GNl::Jl 'J'W // / ). Iheir allllcallUn .ppli~aliun I1a5 nul been withdrawn; 4. Ihey have: complied wilh all Ihe rC'llIlrcment!'i or the Permit Allocatitln Syslem; and S. they folluw the procedures for admllustr.tive relief contained in the Dwelling Unit Allocittion Ordinance, A~ u!\ed in this Policy, "minimum re;,sonable economic use" shall me.,n, a!'l applied to any residentially zoned lot of record which was buildable immediately prior III the effeclive elate of the Plan, no less than a singl~.r.mily residence. "fair market value" shall be an amount which is no less than ad valorem valuation in the Monroe Cuunty Real Property Tax Roll for the year 1992. Policy 101.6.2 By fiscal year 1998, the Monroe County l.afld Authority shall dedicate a minimum of 3S percent of its annual budget each year for 1I.,e I)urpose of acquiring land from qualified property uwners as defined by Policy 101.6.1. Funds accumulated from this suurce shall be reserved for the acquisition of land from (IUalified property owners. Policy 101.6.3 Dy January 4, 1998, Monroe County !:hall identify potential funding sources and seek funding from state, federal, andlor private sources to be used for acquisition of land from qualified property owners as defined by Policy 101.6.1. Poli~y 101.6.4 The Cuunty will coordinate with DCA to ensure that DCA continues to support enhanced land acquisition cfforts in the Keys biSSCd on needs identified in this comprehensive plan. This courdination shall ensure continued support of state ac:q"iliition efforts under CARL, Preservation 2000 ;lnd the Florida Communities Tnlst programs. The County and the Department will also support appropriate legislative changes which will have the effect of enhancing the I.and Authority efforts throughout the Count)', and the South Florida Water Management District's acquisitions on Big Pine Key. Similarly, cooperation will continue with private acquisition efforts, such as The Nature Conservancy and the Florida Land and Sea Trust. Policy 101.6.5 Monroe County shall anflually compile a list prioritizing the lands requested for County acquisition due to the Permit Allocation System. n,e lands of the property owners who meet the criteria ill Policy 101.6.1 shall be ranked ace()rding to: I. the en"irclulIlcntal sensitivity of the vegetative habitat, marine resources, and impacts to the quality of near shore waters as specified by the ranking in the Environment~" DeSign Criteria section of the l.and Development Regulations; 2. whelher the property is in known, probable, and/or potent;;,1 habit:u for one or more threatened and/or endangered speCies, as indiclltcll on the most recent I'rntected Arumal M;,ps; ilnd OOlls. Obllc:bvlI .nd Polociu . Futll'e La",", Use 3.1.31 GO'd lOO'ON ~~:ll ~O.80 90tl l8lS-S6G-so~:aI ^lI~OH10tl aNtll ')'W MONROE COUNTY, FLORIDA Debt Capacity Report August 20, 2003 Public Financial Management, Inc. 10100 Deer Run Farms Road Suite 201 Fort Myers, FL 33912 .'--'~\":f~. ,~"':',:~-;.;\"'3!'T~:,',~!," -, -..,;- Monroe County Debt Capacity Report August 20, 2003 EXECUTIVE SUMMARY . Public Financial Management, Inc. ("PFM") has examined Monroe County's existing revenue sources and determined the estimated debt capacity of each to aid in the funding of environmentally sensitive land ("ESL") purchases. . The County has the option of pledging either non-ad valorem or ad valorem revenues. . The County's Guaranteed Entitlement, Half-Cent Sales Tax, Infrastructure Sales Surtax (Fund 304) and Covenant to Budget and Appropriate revenues have the capacity to secure bonded debt on a stand-alone basis. However, these revenues are currently tied to long-term capital projects and operational expenses. Over reliance on these revenues for bonded debt service will result in an increase of ad valorem millage in order to balance the County's budget. Use of Fund 304 to pay debt service will result in the elimination of anticipated capital projects. . Florida statutory limit for ad valorem millage is 10 mills. The County has proposed an ad valorem millage of 4.4756 mills. A slight millage increase for operational expenses would not require voter approval. However, the issuance of bonded debt secured by ad valorem tax revenues would require a voter-approved referendum. . The County's total assessed value has grown by an average of approximately 7.8 percent over the past five fiscal years. · ~ mill ad valorem tax revenues will generate an average of $5.4 million in revenues over the next 15 years at an assumed 7.8 growth percentage. This is sufficient to support a $47 million ESL financing. . PFM recommends that the County proceed with an issuance of Limited General Obligation (~mill ad valorem tax) Bonds, Series 2003, to support the acquisition ofESL. Public Financial Management Page J Monroe County Debt Capacity Report August 20, 2003 I. INTRODUCTION Public Financial Management, Inc. ("PFM"), as Financial Advisor to Monroe County ("County"), has examined the County's existing revenue sources and determined the estimated debt capacity of each to aid in the funding of environmentally sensitive land ("ESL") purchases. The premise underlying debt financing of ESL purchases is that the rate of price inflation on land in the Florida Keys greatly exceeds the interest rate on municipal bonds under almost any imaginable scenario. In addition, such unique lands may be spoiled beyond reasonable restoration by the time pay-as-you-go ("P A YGO") financing becomes available to save a particular site. Thus, both cost savings and urgency justify issuance of municipal bonds for ESL purchases. This Debt Capacity Report summarizes the County's existing debt and available revenue streams that could support debt service payments, identifies existing commitments of those revenues and calculates the par amount of bonds that could be issued within the constraint of the annual average debt service computed. A key element in that calculation is "coverage," the extent to which pledged revenues must exceed related debt service. More volatile, less reliable revenue streams suggest higher coverage ratios are needed to attain investment grade ratings and qualify for bond insurance. PFM recognizes the County maintains a balanced budget; that is, every dollar of revenue is committed to an appropriation for operations, capital expenditures or debt service. A new program, such as ESL purchases, requires reallocation of existing revenues, increases in rates or appropriation of revenue growth. II. EXISTING BONDED DEBT: GENERAL FUND The County may use its General Fund revenues to secure an ESL financing. As of August 2003, the County has limited General Fund bonded debt outstanding. The following page includes a breakdown of the County's General Fund bonded debt service, including securities, existing covenants and other details. Public Financial Management Page 2 Monroe County Debt Capacity Report 1 ''-lit' \ Ill' ltlll I D.lle ci jkhtT 1,1-11 1:1111 ( 1\:llllF',:' ~1..'cuI"11\ j;.1I1hl .Jll I I II. 1\ 1 ~tl ) 11 ':' \1\1 1',1 ]{,IIC ( '"VIILlnl Maturity 2003 2004 2005 2006 2007 2008 l~:--ut..' .\nllII1tl1 Datcel Ddl\l"r\ 11l"\11.11He l\..ltlIh~' ~l'Cllr]f\. IHkr\\ nll'l ',dl 1)111\ hl,,!l> .\1\1" 1"e ..\ R.ltc' ( .1 I\C lLlflt Maturity 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 _ ."-, "'~~~~:...""!':::;'-::i~~-"'l-": ",,:,:._';to. .....}~~ August 20, 2003 Guaranteed Entitlement Revenue Refunding Note, Series 2002 3,495,144 12/19/2002 12/19/2003 N/A Guaranteed Entitlment SunTmst No Prepayment Penalty 1.05X Pledged Revenues N/A Principal 541,359 556,045 571,254 590,663 609,146 626,677 Coupon 2.96% 2.96% 2.96% 2.96% 2.96% 2.96% Interest 103,456 87,432 70,973 54,064 36,580 18,550 Debt Service 644,815 643,477 642,227 644,727 645,727 645,227 Infrastmctme Sales Surtax Revenue Bonds, Series 2003 21,455,000 3/4/2003 3/26/2003 MBIA A3/A One Cent Infrastmcture Sales Surtax William R. Hough & Company 10 years @ par 1.30X Pledged Revenues N/A Principal 1,105,000 1,145,000 1,170,000 1,205,000 1,240,000 1,285,000 1,335,000 1,385,000 1,445,000 1,505,000 1,575,000 1,645,000 1,720,000 1,805,000 1,890,000 Coupon 2.00% 2.00% 2.00% 2.00% 2.40% 2.75% 3.00% 3.25% 3.40% 3.50% 3.60% 3.70% 3.75% 4.00% 4.00% III. EXISTING REVENUES SOURCES Interest 683,696 652,230 629,330 605,930 581,830 552,070 516,733 476,683 431,670 382,540 329,865 273,165 212,300 147,800 75,600 Debt Service 1,788,696 1,797,230 1,799,330 1,810,930 1,821,830 1,837,070 1,851,733 1,861,683 1,876,670 1,887,540 1,904,865 1,918,165 1,932,300 1,952,800 1,965,600 PFM has included the following section summarizing the existing County revenue sources that may be used to secure a financing of ESL. The revenue amounts are based upon the County's FY2004 Proposed Budget and FY2002 CAFR. While the County's low level of indebtedness may indicate Public Financial Management Page 3 Monroe County Debt Capacity Report August 20, 2003 that there is capacity to issue future debt on a senior lien basis (i.e. bondholders that have achieved "senior-lien" status on a particular County revenue stream will have a prior claim to that revenue), only a fraction of the County's annual revenues are actually available to support debt serviCe as these funds will be used for operational expenses, P A YGO capital expenditures and the possible issuance of additional bonded debt down the road. Local Government Infrastructure Sales Surtax (Fund 304)- The Local Government Infrastructure Surtax is levied at one cent pursuant to an ordinance enacted by a majority vote of the County's governing body and approved by vote in a countywide referendum. Generally, the proceeds of this revenue must be expended to finance, plan, and construct infrastructure; to acquire land for public recreation or conservation or protection of natural resources. In 1998, the infrastructure surtax was voted in to secure the Infrastructure Sales Surtax Bonds, Series 1998. In 2000, the County's share of this tax declined due to the incorporation of Marathon. Currently, the County has voted in the infrastructure surtax to secure the Infrastructure Sales Surtax Bonds, Series 2003 ($21,455,000). This tax expires in 2018. Summary of Revenue . FY2004 Proposed Revenues: $10,500,000 . Bonded Debt Pledged to Revenue: Infrastructure Sales Surtax Bonds, Series 2003 . Average Annual Debt Pledged to Revenue: $1.8 million/year . Use of Additional (Unused) Revenues: Funding of the Monroe County Board Capital Plan, including dedicated amounts for wastewater, solid waste and land acquisition · Use of these funds for support of debt would require the elimination of anticipated capital projects Guaranteed Entitlement-The Florida Revenue Sharing Act of 1972 was a major attempt by the Legislature to ensure a minimum (guaranteed) level of revenue parity across units of local government. Provisions in the enacting legislation created the Revenue Sharing Trust Fund for Municipalities. Currently, the trust fund receives 2.9 percent of the net cigarette tax collections and 2.25 percent of sales and use tax collections. An allocation formula serves as the basis for the distribution of these "guaranteed entitlement" revenues to each County that meets the strict eligibility. There are no use restrictions on these revenues; however, there are some statutory limitations regarding funds that can be used as a pledge of indebtedness. Currently, the only bonded debt secured by the County's Guaranteed Entitlement is the Revenue Refunding Note, Series 2003 ($3,495,144). Summary of Revenue . FY2004 Proposed Revenues: $1,000,000 · Bonded Debt Pledged to Revenue: Revenue Refunding Note, Series 2003 . Average Annual Debt Pledged to Revenue: $640,000/year · Use of Additional (Unused) Revenues: Funneled into General Fund to support general government operations · Use of these funds for support of debt would require raising ad valorem taxes Public Financial Management Page 4 "'-~'''"'~'~~~~1M~~1"iI'~~~;'~~';o_" '... Monroe County Debt Capacity Report August 20, 2003 Half-Cent Sales Tax-Created in 1982, the Half-Cent Sales Tax Program generates the largest amount of revenue for local governments among the state-shared revenue sources currently authorized by the Legislature. It distributes net sales tax revenue to'counties and municipalities that meet strict eligibility requirements. Allocation formulas serve as the basis for this distribution to each County and its respective municipalities. The program's primary purpose is to provide relief from ad valorem and utility taxes in addition to providing counties and municipalities with revenues for local programs. Currently, the County allocates Half-Cent sales tax revenues between its General Fund (45 percent) and its Planning, Building and Zoning Fund (55 percent). Currently, the County has no bonded debt secured by this revenue stream. Summary of Revenue . FY2004 Proposed Revenues: $5,300,000 . Bonded Debt Pledged to Revenue: None . Average Annual Debt Pledged to Revenue: None · Use of Additional (Unused) Revenues: Funneled into the General Fund to support general government operations and the Planning, Building and Zoning Fund to support the operations of the Growth Management Division. · Use of these funds for support of debt would require raising ad valorem taxes Tourist Impact Taxes-The tourist impact tax is levied at the rate of 1 cent on most rents, leases or lets, living accommodations in hotels, motels, apartment houses, rooming houses, mobile home parks, and the like. The taxes are collected and administered by the Florida Department of Revenue. Counties may use this revenue source to acquire ESL. Currently, the County receives approximately $1 million in tourist impact tax revenues each year. Summary of Revenue . Estimated Annual Revenues: $1,000,000 . Bonded Debt Pledged to Revenue: None . Average Annual Debt Pledged to Revenue: None · Use of Additional (Unused) Revenues: Funneled into the General Fund to support general government operations. 4 Cent Gas Tax-Local governments are authorized to levy a tax up to 6 cents on every net gallon of motor fuel sold in the County. The tax may be authorized by an ordinance adopted by a majority vote of the Board of County Commissioners or voter approval in a countywide referendum. Generally counties are authorized to utilize the tax only for transportation such as street lighting, bridge maintenance public transportation operations and maintenance and roadway drainage to name a few. In addition, small counties that have a total population of 50,000 or less on April 1, 1992 are authorized to use the proceeds to fund infrastructure projects. Depending on the use of the land to be purchased, the County may not be able to use this revenue as a funding without a special exemption from the State. Legal Counsel should be consulted prior to finalizing the financing plan. Public Financial Management Page 5 Monroe County Debt Capacity Report August 20, 2003 Summary of Revenue · Estimated Annual Revenues: $2,400,000 · Bonded Debt Pledged to Revenue: None · Average Annual Debt Pledged to Revenue: None State Park Surchal1!:es-Currently, the Department of Environmental Protection ("DEP") imposes and collects a surcharge of 50 cents per person per day on admission to all state parks in areas of critical state concern located in a county, and a surcharge of $2.50 per night per campsite, cabin, or other overnight recreational occupancy unit in state parks. The proceeds from these surcharges, less a collection fee that is to be kept by DEP for the actual cost of collection, is transmitted to the Monroe County Land Authority. Such funds shall be used to purchase ESL or affordable housing. The state park surcharges will remain imposed as long as the Monroe County Land Authority is in existence. Summary of Revenue · Estimated Annual Revenues: $350,000 · Bonded Debt Pledged to Revenue: None · Average Annual Debt Pledged to Revenue: None Covenant to Bude:et and Appropriate-The County's Covenant to Budget and Appropriate ("CBA") revenues represent all legally available non-ad valorem revenues (i.e., the surplus of Total Governmental Funds Revenues over Public Safety, General Government and Debt Service expenses). The County uses its CBA revenues to fund necessary County projects and services on a P A YGO basis. The following is the calculation of the County's CBA revenues, based on numbers found in the County's FY2002 CAFR: Revenues Total Governmental Fundsl Less: Ad Valorem Revenues2 Total Revenues $160,412,640 (54.584.047) $105,828,593 Expenditures Essential and Mandated Expenditures: Public Safety! General Government! Debt Service! Total Essential & Mandated Expenditures Ad Valorem Support of Expenditures2 Net Expenditures Legally Available Non..Ad Valorem Revenues 82,854,954 31,214,821 6.049.706 120,119,481 (54.584.047) 65.535.434 $40,293,159 I Monroe County FY2002 CAFR, pg. E-5 2 Monroe County FY2002 CAFR, pg. H-I Public Financial Management Page 6 , ':.~)l:t~.,.\_~.""...,"",,'ii_~~:' Monroe County Debt Capacity Report August 20, 2003 Summary of Revenue . FY2004 Proposed Revenues: $40,293,159 . Bonded Debt Pledged to Revenue: None . Average Annual Bonded Debt Pledged to Revenue: None · Use of Additional (Unused) Revenues: Funneled into the General Fund to support general government operations and Special Revenue Fund to support various earmarked services. · Use of these funds for support of debt would require raising ad valorem taxes Ad Valorem Revenues- Ad valorem taxes may be used for any general government purpose up to the Florida 10-mill statutory limit. A levy of millage above this 10-mill limit would entail voter approval of a referendum seeking the additional taxing authority. Currently, the County has proposed an ad valorem tax millage of 4.4756, and would not require a referendum to raise this millage up to 10 mills to cover operational expenses. However, an issuance of General Obligation bonds secured by the County's ad valorem millage would require a voter-approved referendum. Local governments may levy ad valorem taxes subject to the following limitations: 1) Ten mills for county purposes 2) Ten mills for municipal purposes 3) Ten mills for school purposes 4) A millage fixed by law by a county furnishing municipal services 5) A millage authorized by law and approved by voters for special districts. The State Constitution provides two exceptions to the 10-mill cap. The exceptions include a voted millage not to exceed a period of two years. Additionally, no property may be subject to more than 20 mills of ad valorem tax for municipal and county purposes without elector approval, regardless of the property's location, under the State Constitution. For example, Duval County/City of Jacksonville is a consolidated government; therefore, it has a 20-mill cap since it operates as both a county and municipal government. Currently, the County has no debt secured by its ad valorem revenues. Summary of Revenue · County's FY2002 Total Ad Valorem Assessed Value: $11.3 billion (1 mill of this amount equals $11.3 million; y.. mill of this amount equals $2.8 million); County's proposed FY2005 Total Ad Valorem Assessed Value $14.8 billion ($14.8 million) . Bonded Debt Pledged to Revenue: None · Average Annual Bonded Debt Pledged to Revenue: None · Use of Additional (Unused) Revenues: Used to balance budget in light of capital expenditures and services funded by non-ad valorem revenues · Use of these ad valorem tax revenues for support of debt would require raising millage Public Financial Management Page 7 Monroe County Debt Capacity Report August 20, 2003 IV. PROPOSED REVENUE COVERAGE FACTORS Typically with the issuance of debt, there are limitations related to certain coverage requirements and additional bonds tests. Each revenue pledge is evaluated by financial institutions and bond insurers based upon certain credit criteria to determine the necessary coverage requirements (i.e. the ratio of total revenues to total debt service). For stronger credits such as ad valorem taxes, the ratio of revenues to debt service required by credit rating agencies is closer to 1 to 1, or 1.00 times coverage. For weaker credits such as sales tax, the ratio is much greater than 1 to 1 (i.e., a much higher coverage requirement). Higher coverage requirements will result in greater restriction of a County revenue stream for anticipated capital projects or services. The tables below include the actual coverage requirements for the County's General Fund revenues currently pledged to bonded debt and estimated coverage requirements for the County's General Fund revenues not pledged to bonded debt. Pledged Re\ ('HUeS ('0\ enlge One-Cent Infrastructure Surtax Guaranteed Entitlement 1.30 1.05 Rt.,\ t.'I1111'S 110t Pledged Estimated ( 'onTage Half-Cent Sales Tax 1.30 Covenant to Budget & Appropriate 1.00 State Park Surcharge 1.30 Tourist Impact Tax 1.30 Ad Valorem Tax Revenue 1.00 Limited (y.. mill) Ad Valorem Tax 1.10 Revenue 3 4 Cent Gas Tax 1.50 v. CURRENT INTEREST RATE MARKET Interest rates have a significant impact on the debt capacity of any given revenue. As interest rates rise debt capacity will decrease and vice versa. Therefore, any estimated debt capacity may change on a daily basis as the market fluctuates. Today's interest rates are at five-year low levels and therefore increase the County's debt capacity. The chart on the following page illustrates the 10- Year Treasury, 20- Year General Obligation Bond and 25-Revenue Bond rates over the past five years: 4 Limited ad valorem debt could result in a higher required coverage level than ad valorem debt because the issuer cannot raise the millage above '14 to pay debt service. In an ad valorem issue, the issuer receives voter approval to adjust the millage as necessary to pay debt service. Public Financial Management Page 8 ~ ......,~~.-~~~:,'; Monroe County Debt Capacity Report August 20, 2003 Interest Rates Last Five Years 7.0 6.5 6.0 5.5 5 u 5.0 ... ... l:l. 4.5 4.0 3.5 3.0 12/04/97 12/03/98 12/03/99 12/01/00 11/30/01 11/29/02 I-I0-Year TSY - 20 GO Bond - 2S Rev Bond I VI. AD VALOREM DEBT CAPACITY SCENARIOS PFM has provided scenarios to analyze the available debt capacity for the County's ad valorem and limited ad valorem (Y-4 mill) tax revenues. The County has expressed an interest in using ad valorem tax revenues to fund the acquisition of ESL. PFM has recently advised Sarasota and Alachua Counties on issuing limited ad valorem tax bonds to fund the acquisition of ESL. Along with the Y-4 mill ad valorem tax, we have also explored the viability of using ad valorem tax revenues (1 mill) as a source of ESL funding. The FY2002 tax base to which our assumed millage applies is currently $11.3 billion, yielding $11.3 million in I-mill ad valorem tax revenues and $2.8 million in Y-4 mill ad valorem tax revenues. Additionally due to the timing, the County would not be able to levy additional millage until FY 2005. If this took place the County could receive $14.8 million in 1 mill ad Valorem tax revenues. Since the County's ad valorem assessed value grew by an average of approximately 7.8 percent over the past five fiscal years, we have assumed this growth percentage in our scenario. The following are other major assumptions in each scenario: · Bonds are amortized for a term of 15 years · Debt service in each scenario is calculated using current market rates for a Florida ad valorem credit · Cost of Issuance is estimated at $200,000; Underwriter's Discount is estimated at $6.00 per bond; and Bond Insurance is estimated at 35 basis points of total debt serv~ce · Par Amount of Y-4 mill ad valorem ($47.1 million) and I-mill ad valorem ($60 million) scenarios are conservative to account for any shortfalls in the assumed ad valorem tax Public Financial Management Page 9 Monroe County Debt Capacity Report August 20, 2003 growth rate of 7.8 percent and the County's ongoing need to fund operational expenses with ad valorem tax revenues Scenario 1: Level Debt Service Scenario: Ad Valorem Revenues Increasinf! at 7.8 PercentlYr. 5 Level Debt Service Scenario One Mill Ad Valorem Revenues Increasing at 7.8% Per Year 50 .45 <<l 35 ~ ! o =25 5ii ... 20 15 10 o 2005 2lD) 1!JJl 200l 2lIl9 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2lJ2O 1_ Oebt SeMce -+-Revenues I In Fiscal Year 2005, the County could receive approximately $15 million in I-mill ad valorem tax revenues available to secure General Obligation bonded debt. General Obligation debt, backed by the full faith and credit of the County, is subject to only I.OOx coverage restriction. The above chart demonstrates that the County has significant capacity for General Obligation debt at I-mill assuming that the FY2002 ad valorem assessed value continues to grow by 7.8 percent each year in line with five-year historical trends. Given the low coverage levels required by General Obligation debt and the County"s low General Obligation debt burden, it has the capacity to issue nearly $305 million in I-mill ad valorem debt over the next 15 years at the 7.8 percent growth rate. However, given the County's reliance on ad valorem taxes for operational expenses, PFM suggests that the County issue $60 million in bonds for 15 years secured by this revenue stream. This results in approximately $5.5 million in debt service each year and approximately $136 million in additional revenues over this period to fund operational expenses or additional bonded debt. Public Financial Management Page 10 " ,;...,-;'4,~,'.:."~~"~""",,,,,_,~,__ _~..'''';!"\,,~.,, _,,_,.~ Monroe County Debt Capacity Report August 20, 2003 Scenario 2: Level Debt Service Scenario: Limited Ad Valorem Revenues Increasin2 at 7.8 PercentIYr. 10 9 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2018 2017 2018 8 7 8 . c o == 5 i ... 4 3 2 o 1- Debt Service ...... Revenues I In 2003, the County will receive approximately $2.8 million in ~ mill ad valorem tax revenues available to secure Limited General Obligation bonded debt. Limited General Obligation debt, backed by the County's ~ mill ad valorem tax revenues, is usually subject to only 1.00x coverage restriction. The above chart demonstrates that the County has significant capacity for Limited General Obligation debt assuming that the FY2002 ad valorem assessed value grows by 7.8 percent in line with historical trends. Given the low coverage levels required by Limited General Obligation debt and the County's low Limited General Obligation debt burden, it has the capacity to issue approximately $81.6 million in ~ mill ad valorem tax debt over the next IS years assuming a 7.8 percent assumed growth rate. However, given the County's reliance on ad valorem taxes for operational expenses, we have provided the County with a IS-year, $47.1 million bond issuance scenario that guarantees the County at least I. lOx coverage from 2004 through 2007 and 1.30x in the out years. This results in approximately $4.4 million in debt service each year and approximately $16.9 million in unused quarter mill revenues to fund operational expenses or additional bonded debt. VII. NON-AD VALOREM FINANCING SCENARIOS While ad valorem tax revenues are likely the best source to secure an ESL financing, PFM has also calculated scenarios for the County's General Fund non-ad valorem revenues. Currently, General Fund revenues are tied to long-term capital projects and services. Over reliance on these revenues for bonded debt service will result in an increase of ad valorem millasze to fund oDerational eXDenditures. To ensure that the County still has considerable funding capacity following a 2003 Public Financial Management Page I J Monroe County Debt Capacity Report August 20, 2003 bond issue for ESL, we have assumed that the County issues bonds secured by each revenue stream at a par amount well below maximum debt capacity. PFM has summarized the results of the debt capacities completed for each of the County's General Fund non-ad valorem credits. For revenue streams that are likely to generate at least $15 million over the next I5-years, PFM assumed that the County issues bonds with those revenues. However, for those revenue streams that are likely to generate less than $15 million over a I5-year period; PFM assumed that the County issues a IO-year private placement note with those revenues. The estimated interest rates are based upon market rates for August 2003. Public Financial Management Page /2 ." ~ ~ l'I4 ~ l'I4 i ~ 1:: '=:l ~ '-= .s- ~ l::l ~ Q .... ~ ~ .e- ll: :::a a \l e Il: ~ = = ... - - 's oc iii (,lit = = ... - - Os ~ 0\ -.i (,lit ~ = o = ~= (,lit 's c. eQi)"'~ => .S! cS -; ~-=~~ = o~ (J f .... "" ... Qi).... ~ r-1 i: Qi) i ;~=~<= III _ ""'"=....~ ~=,Q~ =.:: ~.~ =~""'"- = c ~ ~ ~ It'l ..-4 = = = - 's III = ~ (,lit = ~ ~ f ~ .... = III ~~1: U = = ~l:OO = ; fJ 0':-= =00 ""'" = = = oe N N (,lit III oc ~ ~ 0\ l'f') (,lit = ~ .S l'f')= (,lit ... a c. ~ ... ~ = .... = ~ = ~ ~ = III = ~... ~ .S! cS -; -= ~ r .;:; .~ a. ... r-1 > Qi),Q ... 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