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HomeMy WebLinkAboutDocumentation_Special Meeting_Tab 01_04/19/2010 RESOLUTION NO. 11 -10 A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, FLORIDA, EXPRESSING OPPOSITION TO THE PROPOSED PALM BEACH COUNTY 1% FIRE RESCUE SALES SURTAX; MEMORIALIZING THE VILLAGE COUNCIL'S UNANIMOUS DECISION TO DECLINE PARTICIPATION IN A PROPOSED INTERLOCAL AGREEMENT WITH PALM BEACH COUNTY WHICH A MAJORITY OF FIRE RESCUE PROVIDERS MUST EXECUTE AS A CONDITION PRECEDENT TO THE MATTER BEING CONSIDERED BY COUNTY ELECTORS; PROVIDING AN EFECTIVE DATE; AND FOR OTHER PURPOSES. WHEREAS, at its April 6 meeting, the Palm Beach County Board of County Commissioners voted to place on the August 24, 2010 primary ballot a referendum question which, if approved by county electors, would allow for a one percent county sales surtax to fund Palm Beach County fire rescue services from participating providers; and WHEREAS, the participation by a majority of all county fire rescue service providers in an interlocal agreement with Palm Beach County for the collection and distribution of said surtax is a condition precedent to the matter being placed before the county electors for consideration; and WHEREAS, if adopted by the county electors, said surtax would be in lieu of ad valorem taxes and non -ad valorem assessments which are currently collected for fire rescue services; and WHEREAS, the Village of Tequesta is a fire rescue service provider, and has, historically, successfully funded its fire rescue services by means of ad valorem levies and /or non -ad valorem assessments; and WHEREAS, numerous issues and questions regarding the proposed surtax exist, including but not limited to the relative volatility of sales tax revenue compared to property tax revenue, the proposed method of surtax collection and the equity of the proposed method of distribution to participating providers; and WHEREAS, the Village Council, having thoroughly studied and discussed the proposed surtax, has determined that its imposition would not be a benefit to the Village or to those who utilize the Village's fire rescue services; and WHEREAS, at its April 8, 2010 council meeting, the Village Council discussed this issue and unanimously agreed that it would not become a party to the requisite interlocal agreement with Palm Beach County and would not participate in the proposed surtax, and called a special meeting for April 19, 2010 in order that it could properly consider a resolution in opposition to the proposal. NOW, THEREFORE, BE IT RESOLVED BY THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, FLORIDA, THAT: SECTION 1 : The Village Council of the Village of Tequesta hereby expresses its opposition to the proposal of Palm Beach County to institute a 1% sales surtax for the purpose of funding Palm Beach County fire rescue services, the proceeds of which surtax, if approved, must be in lieu of any ad valorem taxes and /or non -ad valorem assessments for fire rescue services that are currently collected by the Village. SECTION 2 : The Village Council of the Village of Tequesta hereby memorializes its unanimous decision to decline participation in a proposed interlocal agreement with Palm Beach County which a majority of fire rescue providers must execute as a condition precedent to the surtax being considered for approval by county electors. SECTION 3 : This resolution shall take effect immediately upon adoption. ATTORNEYS AT LAW 1111 Hypoluxo Road, Suite 207 JOHN CORBETT TELEPHONE (561) 586 -7116 TRELA J. WHITE TELECOPIER (561) 586 -9611 BRADLEY W. BIGGS *^ KEITH W. DAVIS* R. MAX LOHMAN ABIGAIL FORRESTER JORANDBY * Board Certified in City, County and Local Government Law ^ State Certified County and Circuit Court Mediator MEMORANDUM TO: Michael Couzzo, Village Manager CC: Mayor and Council FROM: Keith W. Davis, Esq. DATE: April 15, 2010 RE: Proposed Palm Beach County Fire Rescue 1% Sales Surtax At your request, and as discussed with you and Mayor Watkins on April 14, 2010, I have prepared the following summary of the proposed county fire rescue 1% sales surtax, including the process for implementation and a list of questions, concerns and outstanding issues that have been raised by various persons and groups relative to said surtax: I. Chapter 2009 -182, Laws of Florida, amended Sec. 212.055, F.S. by creating a new 1% discretionary sales surtax with no expiration to be used for the funding of fire rescue services and facilities. The law became effective July 1, 2009 and now Palm Beach County has begun to take steps toward implementing this surtax. Several things have to happen before the surtax can be implemented by the county. First and foremost, an interlocal agreement that includes a majority of the service providers in the county must be executed. After that, the matter must be placed on the ballot for approval by county voters. 2. The interlocal agreement must specify that distribution of the collected surtax between the participating jurisdictions shall be based upon the proportion of each jurisdiction's expenditure of ad valorem taxes and non -ad valorem assessments for fire rescue services over the preceding five years, to the total of expenditures for all participating jurisdictions. In other words, the more money the particular jurisdiction has spent on fire rescue services over the past five years, the more of the collected surtax they will be entitled to. This would effectively "punish" those jurisdictions that have exercised fiscal responsibility and have been conservative in their fire rescue expenditures over the past five years. It would also seem that the county would receive a disproportionate share of the surtax proceeds due to their high costs and high salaries. The interlocal agreement must also specify that when a participating jurisdiction provides service to any other jurisdiction pursuant to an interlocal agreement, the participating jurisdiction is entitled to payment from the surtax funds that have been collected in the receiving jurisdiction. It would seem, however, that receiving jurisdictions would be put into the position of having to pay both the agreed upon costs as I mile d 4r) CDunc I y -l5 -ice l &A0 l set forth in their interlocal agreement with the providing jurisdiction, and also the sales surtax, and would realize no corresponding reduction to their ad valorem taxes or non -ad valorem assessments. 3. If, despite these issues, the interlocal agreement is signed by the requisite number of service providers, then the imposition of the additional 1% sales tax must still be approved by county voters prior to becoming effective. It is the county's intent to place this matter before the voters on the August 24, 2010 primary ballot. In order to do so, the county must pass its ordinance for the referendum no later than June 8, 2010 (second reading). The interlocal agreement would have to be fully executed by then in order for this matter to be placed on the August 24 ballot. As of the writing of this Memorandum, there are 54 days remaining for all of the above conditions precedent to occur in order for the county's timeline to be successful. This would seem to be an extremely aggressive schedule which will be difficult to meet. Moreover, given all the uncertainties surrounding this matter, as set forth below, it makes little sense to push forward at the pace being set by the county. 4. Should the surtax be approved by the voters, prior to any distribution, both the state and the county will have the ability to take 2% each for their costs of administration. 5. Other issues that have been raised with the proposed surtax include the following, none of which have clear answers at this time: a. Since sales tax revenue is typically more volatile than property tax revenue, it is unclear how a sudden drop in sales tax revenue would be accommodated considering that the effect of a sales tax drop would be felt much more rapidly (in approximately three months time) than the effect of a property tax drop (in approximately 18 month time). b. Although the participating jurisdictions would be required to reduce their ad valorem taxes and non -ad valorem assessments for fire rescue services by an amount that is estimated to equal what they will receive from their portion of the surtax, it would seem that the millage caps are not otherwise affected and that therefore, millage could be increased in other line items, thereby making null and void the idea that the surtax will not negatively impact residents and will only make visitors "pay their fair share" as has been suggested by some proponents of the surtax. c. In the event that sales tax revenue should decline significantly, there is no language in the legislation that would allow a participating jurisdiction to adjust its millage rate upward to account for any deficiency. d. It appears that participating jurisdictions that also fund CRAB through "tax increment financing" (TIF) will be harmed because the reduction in ad valorem taxes will negatively impact the TIF. e. It is unclear how use of the surtax will impact the county MSTUs. f. It is unclear, regarding the millage rate reduction requirement, whether gross millage or net millage is to be utilized. In fact, there currently exists disagreement between the Department of Revenue and the county on this point. The DOR seems to believe the adopted (net) rate should be used, but the county is operating under the belief that it is the gross millage rate that should be utilized. g. Additional questions that the county acknowledged it has yet to answer, during its April 15, 2010 meeting with various municipal representatives include: • how the surtax collection and distribution will be administered (policies will have to be created and implemented; however, these policies should not be unilaterally created by the county); 2 • how the distribution will actually be made to the other participating jurisdictions (since this detail would seem to be beyond the scope of the required interlocal agreement by the terms of the legislation itself, additional policies will have to be created and agreed upon); • how the lag time between the collection of the sales tax and distribution to the county from the state and then from the state to the municipalities will be handled; • how any subsequent rebate due to a state surplus will be handled, since by the terms of the legislation, any such surplus must be used to further reduce ad valorem taxes in the next fiscal year; and • how distributions between participating jurisdictions and non participating jurisdictions with interlocal service agreements will be handled (this would likely require a separate agreement between those jurisdictions). 6. As you can see, there are many issues surrounding the proposed fire rescue discretionary sales tax, few of which have answers at this time. Nevertheless, it is the county's intention to push forward, and presumably try to answer these questions and fix whatever additional problems may be created after the fact. 7. We do not believe this to be a course of action for the Village of Tequesta in view of all the unanswered questions. Tequesta has always taken a fiscal conservative approach and has required ample documentation prior to subjecting itself to any new processes. Accordingly, we continue to recommend rejection of this proposal. Y: \docs \Tequesta\Letters & Memos\Couzzo Memo -Fire Rescue Surtax 2010.doc 3 INTERLOCAL AGREEMENT BETWEEN PALM BEACH COUNTY, FLORIDA WHOSE ADDRESS IS 301 NORTH OLIVE AVENUE, WEST PALM BEACH, FL 33401, AND WHOSE ADDRESS IS REGARDING THE LEVYING OF A ONE PERCENT SALES SURTAX FOR EMERGENCY FIRE RESCUE SERVICES AND FACILITIES THIS AGREEMENT is made by and between PALM BEACH COUNTY, FLORIDA, a political subdivision of the state ( "County "), and the , a municipal corporation (the "Municipality ") (this Agreement hereinafter referred to as the "Interlocal Agreement "). RECITALS WHEREAS, Palm Beach County wishes to levy a one percent sales surtax for emergency fire rescue services and facilities pursuant to section 212.055(8), Florida Statutes; and WHEREAS, this Interlocal Agreement will satisfy the requirement of section 212.055(8)(b), which requires an interlocal agreement as a condition precedent to holding a county wide referendum on the question of approval of the ordinance adopting the levy of the one percent sales surtax; and WHEREAS, the Municipality shall receive a portion of the proceeds from the one percent sales surtax, less an administrative fee for receiving and distributing the surtax in the amount of the actual costs incurred, not to exceed 2 percent of the surtax collected; and WHEREAS, pursuant to section 212.055(8)(d) the County must develop and execute an interlocal agreement with participating jurisdictions, which must include a majority of the fire - rescue service providers in the County, in order to conduct a referendum and levy a surtax; and WHEREAS, the parties recognize that the identity and number of participating jurisdictions receiving a portion of the surtax proceeds may vary from time to time, for example, if additional fire- rescue service providers enter into the surtax interlocal agreement with the County or if a participating service provider is no longer eligible to participate; and WHEREAS, it is in the mutual interest of Palm Beach County and the Municipality to establish intergovernmental relations that encourage, promote and improve the coordination, overall effectiveness and efficiency of governmental fire rescue activities and services within Palm Beach County; and WHEREAS, Section 163.01, Florida Statutes, known as the "Florida Interlocal Cooperation Act of 1969," permits local governmental units to make the most efficient use of their powers by enabling them to cooperate with other localities on a basis of mutual advantage and thereby provide services and facilities in a manner and pursuant to forms of governmental 1 organization that will accord best with geographic, economic, population, and other factors influencing the needs and development of local communities; and WHEREAS, Palm Beach County and the Municipality find this Interlocal Agreement to be necessary, proper and convenient to the exercise of their powers, duties and purposes authorized by law; and NOW, THEREFORE, in consideration of the recitals, agreements and mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties agree as follows: SECTION 1. Recitals and Authority. The foregoing recitals are true and correct and by this reference are incorporated as a material part of this Interlocal Agreement. This Interlocal Agreement is entered into pursuant to the provision of Florida law, including but not limited to Chapters 125, 163, 166, 189, and 212, Florida Statutes, and the Florida Constitution. SECTION 2. Distribution of Surtax Proceeds. The County shall distribute the surtax proceeds, less the County's administrative costs, to the Municipality based on the proportion of the Municipality's expenditures of ad valorem taxes and non -ad valorem assessments for fire control and emergency rescue services in each of the immediately preceding five (5) fiscal years to the total of the expenditures for all participating entities. By March 31 of each year, the Municipality shall attest to its expenditures for fire control and emergency rescue services by submitting to the County certain information and reports, as specified by the County, certified by the Municipality's chief executive officer. Expenditure amounts shall be documented by an official financial report or entity approved allocation plan, and shall be subject to audit by the County. Adjustments to surtax distributions resulting from changes necessary to correct audit findings will be made in subsequent distributions. SECTION 3. Default. A default by either parry under this Interlocal Agreement shall entitle the other party to all remedies available at law or in equity, which may include, but not be limited to, damages, injunctive relief and specific performance. Each of the parties hereto shall give the other party written notice of any defaults hereunder and shall allow the defaulting party not less than five (5) days from the date of receipt of such notice to cure monetary defaults and fifteen (15) days to cure other defaults. SECTION 4. Enforcement. In the event that either party seeks to enforce this Interlocal Agreement by court proceedings or otherwise, then each party shall be responsible for its own fees and costs incurred, including reasonable attorneys' fees and costs for trial, alternative dispute resolution or appellate proceedings. SECTION 5. Controlling Law. This Interlocal Agreement shall be construed and governed in accordance with the laws of the State of Florida. SECTION 6. Severability. In the event any term or provision of this Interlocal Agreement is determined by appropriate judicial authority to be illegal or otherwise invalid, such 2 provision shall be construed or deleted as such authority determines, and the remainder of this Interlocal Agreement shall be construed to be in full force and effect. SECTION 7. Amendment. This Interlocal Agreement shall not be modified or amended except by written agreement duly executed by the parties hereto. SECTION 8. Interpretation. This Interlocal Agreement has been negotiated fully between the parties as an arms length transaction. Both parties participated fully in the preparation of this Interlocal Agreement. In the case of a dispute concerning the interpretation of any provision of this Interlocal Agreement, both parties are deemed to have drafted, chosen and selected the language, and the doubtful language will not be interpreted or construed against any party. No provision of this Interlocal Agreement shall be construed to create any third -party beneficiary or to provide any rights to any person or entity not a party to this Interlocal Agreement. SECTION 9. Time of the Essence. The parties each agree that time is of the essence of this Interlocal Agreement. SECTION 10. Notice. Each party shall furnish to the other such notice, as may be required from time to time, pursuant to this Interlocal Agreement, in writing, posted in the U.S. mail or by hand delivery, or by overnight delivery service and addressed as follows: To Palm Beach County: With copy to: To Municipality: With copy to: Except as otherwise provided in this Interlocal Agreement, any Notice shall be deemed received only upon actual delivery at the address set forth above. Notices delivered after 5:00 3 p.m. (at the place of delivery) or on a non - business day, shall be deemed received on the next business day. If any time for giving Notice contained in this Interlocal Agreement would otherwise expire on a non - business day, the Notice period shall be extended to the next succeeding business day. Saturdays, Sundays, and legal holidays recognized by the United States government shall not be regarded as business days. Any party or other person to whom Notices are to be sent or copied may notify the other parties and addressees of any change in name or address to which Notices shall be sent by providing the same on five (5) days written notice to the parties and addressees set forth herein. SECTION 11. Effective Date. This Interlocal Agreement and the rights conferred herein shall become effective upon filing with the Clerk of the Circuit Court of Palm Beach County, Florida, in accordance with the requirements of Section 163.01 (11), Florida Statutes. Unless the parties mutually amend this Interlocal Agreement to provide for an earlier termination date, this Interlocal Agreement shall remain in effect for as long as the County is authorized to distribute the surtax proceeds and the Municipality is authorized to receive the surtax proceeds, in accordance with law. SECTION 12. Nondiscrimination. The parties agree that no person shall, on the grounds of race, color, religion, disability, sex, age, national origin, ancestry, marital status, familial status, sexual orientation, or gender identity or expression, be excluded from the benefits of, or be subjected to any form of discrimination under, any activity carried out by the performance of this Interlocal Agreement. SECTION 13. Annual Appropriation Each party's performance and obligation to pay under this Interlocal Agreement is contingent upon an annual budgetary appropriation by its respective governing body for each fiscal year. 4 IN WITNESS WHEREOF the undersigned set their hands as of the _ day , 2010. ATTEST: PALM BEACH COUNTY, FLORIDA, BY ITS SHARON R BOCK, BOARD OF COUNTY COMMISSIONERS Clerk & Comptroller By: By: Deputy Clerk Burt Aaronson, Chair APPROVED AS TO FORM AND APPROVED AS TO TERMS AND LEGAL SUFFICIENCY CONDITIONS By: By: County Attorney Fire - Rescue By: Financial Management & Budget ATTEST: Print Name of Municipality By: By: Municipality's Clerk Print Name & Title of Authorized Signatory APPROVED AS TO FORM AND LEGAL SUFFICIENCY By: Municipality's Attorney 5