Submitted By: Emory Roberts
presenter
Presentation By: Tammi Haslam
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Department: Budget
STAFF RECOMMENDATION (Motion Ready):
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Adopt Budget Resolution 2022-138 amending the Fiscal Year 2021-2022 budget to transfer funds from the General Fund Reserve for Contingencies to cover expenditures incurred as a result of loan closing costs totaling $144,500
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OCALA’S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable, .
PROOF OF PUBLICATION:
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BACKGROUND:
On February 20, 2014, Class Representatives filed a class action lawsuit against the City challenging the City’s Fire Fee as an unconstitutional tax imposed in violation of Article VII, Section 1(a) of the Florida Constitution. Class Representatives requested the trial court declare the Fire Fee unlawful and order class wide refunds to the greatest extent permitted under law.
On June 19, 2020, the Fifth DCA, in a 14-page appellate decision, reversed the trial court
and ruled the City’s Fire Fee was an unconstitutional tax. On October 11, 2021, the Court held a hearing on Class Representatives’ Motion to Compel the City to Fund the Common Fund. The Court found the Fifth DCA’s mandate was the final judgment in the case, the Fifth DCA had resolved all legal issues and properly considered and disposed of all the City’s defenses. The Court granted Class Representatives’ motion, determined the City had collected $79,282,909.44 in illegal taxes from class members since February 20, 2010, and ordered the City to deposit the illegal taxes into a separate fund (the “Common Fund”) within sixty (60) days to be disbursed upon further order of the Court.
This Court reserved jurisdiction regarding all remaining aspects concerning management
of this class action, including disbursement of the Common Fund and payment of refunds, class
representative service awards, attorneys’ fees, and costs.
After considering the various funding options, the City deems it necessary due to the Judgement and in its best interest to provide the funding of the common fund with a combination of $19,282,910 of available unrestricted funds and up to a $60 million taxable draw-down type loan.
The City requested an extension from the Court until April 4, 2022 in order to complete all necessary funding processes and to deposit the funds into the “Common Fund” as directed.
On March 1, 2022 the City Council approved a draw-down taxable loan with Truist Bank for $60 million. On March 15, 2022, the City Council adopted Budget Resolution 2022-135 to appropriate the loan revenue and a transfer from the General Fund Reserve for Contingencies to fund the Common Fund. On March 17, 2022 the City Council President and City Management signed all documents needed for the loan process. This Budget Resolution is necessary to appropriate the costs associated with obtaining the loan.
FINDINGS AND CONCLUSIONS:
On March 1, 2022 City Council approved a taxable loan from Truist Bank for $60 million. On March 18, 2022 the City finalized the loan with Bond Counsel, Financial Advisors and Truist Bank. This cost is a result of legal and financial advisor fees.
FISCAL IMPACT:
Available unrestricted funds totaling $144,500 will be needed to fund the cost associated with obtaining the Truist Bank Loan.
001-099-999-513-81-99800 ($144,500)
001-099-950-999-81-31010 $48,500
001-099-950-999-81-31020 $96,000
PROCUREMENT REVIEW:
N/A
LEGAL REVIEW:
N/A
ALTERNATIVE:
N/A
BUDGET RESOLUTION 2022-138
A RESOLUTION AMENDING THE FISCAL YEAR 2021-2022 BUDGET TO TRANSFER FUNDS FROM THE GENERAL FUND RESERVE FOR CONTINGENCIES TO COVER EXPENDITURES INCURRED AS A RESULT OF LOAN CLOSING COSTS TOTALING $144,500
WHEREAS, Florida law provides that the party recovering judgment shall recover all legal cost and charges; and
WHEREAS, on June 19, 2020, the Fifth District Court of Appeals reversed the Trial Court’s decision and ruled the City’s Fire Fee was an unconstitutional tax; and
WHEREAS, on October 11, 2021, the Court held a hearing on the motion for the City to create a Common Fund; and
WHEREAS, the Court granted Class Representatives’ motion for judgement totaling $79,282,910; and
WHEREAS, on March 1, 2022, City Council approved a taxable draw-down loan totaling $60 million; and
WHEREAS, on March 15, 2022, City Council adopted Budget Resolution 2022-135 to appropriate the loan revenue and a transfer from the General Fund Reserve for Contingencies to fund the Common Fund; and
WHEREAS, the City had until April 4, 2022 to fund the Common Fund; and
WHEREAS, on March 18, 2022 City Staff, Bond Counsel, Financial Advisor, and Truist Bank closed on the $60 million loan by supervising the transfer of documents which resulted in closing costs that were not previously budgeted.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF OCALA, FLORIDA, in regular session duly assembled that the fiscal year 2021-2022 budget be amended as outlined below:
Sources:
001-099-999-513-81-99800 Reserve for Contingencies ($144,500)
Uses:
001-099-950-999-81-31010 Professional Services - Other $48,500
001-099-950-999-81-31020 Professional Services - Legal $96,000
This resolution adopted this ______ day of ______________________, 2022.
ATTEST: CITY OF OCALA
By: By:
Angel B. Jacobs Ire Bethea Sr.
City Clerk President, Ocala City Council
Approved as to form and legality:
By: _________________________________
Robert W. Batsel, Jr.
City Attorney
Reviewed for accounting accuracy & completeness:
By: _________________________________
Sandra Wilson
City Manager