Special Assessment Overview Presented to: New Clerk Academy May 14, 2013

1. Special Assessment OverviewPresented to:New Clerk AcademyMay 14, 2013 ORLANDO MIAMI 300 S. Orange Avenue 255 Alhambra Circle Suite 1170 Suite 404 Orlando, FL 32801 Coral Gables, FL 33134 407-648-2208 305-448-6992 407-648-1323 fax 305-448-7131 fax

2. Presentation Outline General Description of Special Assessments Legal Considerations – Nabors, Giblin & Nickerson Financing Considerations Property Assessed Clean Energy

3. I. General Description of Special Assessments

4. 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.

5. 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 Tax vs. Assessment

6. Tax vs. Assessment

7. 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 Examples of Special Benefit

8. 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 Methods of Apportionment

9. 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 Collection Methods

10. Collection Methods ― Pros and Cons

11. 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 Procedures for Implementation

12. II. Legal Considerations – Nabors, Giblin & Nickerson (Refer to Separate White Paper)

13. III. Financing Considerations

14. 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 re-nourishment 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.

15. 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

16. 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.

17. IV. Property Assessed Clean Energy

18. 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.

19. 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.