There were three important developments last week: (a) rulings in the Garrett lawsuit; (b) the District mailed the assessment notices to support the bond anticipation note; and (c) the District approved the $1,000 special assessment for operations and maintenance. These developments underscore the District’s ability and commitment to purchasing the recreational facilities and the club.
- Garrett and Bond Validation Litigation
The Court held multiple hearings on Thursday, June 20, concerning the litigation brought by Richard Garrett challenging the validity of the UPRD’s charter and on UPRD’s bond validation claim. The primary issue addressed by the Court was the authority of the Manatee County Board of County Commissioners (“BOCC”) to grant the power to levy special assessments to UPRD. Judge Nicholas denied Garrett’s motion for summary judgment which argued that UPRD did not have the authority to impose special assessments. Judge Nicholas found that Chapter 418, Florida Statutes, allows the BOCC to grant the UPRD the authority to impose special assessments in its Charter. This ruling applies to both matters. By rejecting Garrett’s motion, the judge essentially confirmed UPRD’s authority to impose the special assessments as provided for under the UPRD Charter. Importantly, Judge Nicolas quoted several times from the City of Winter Springs case to remind the objectors that his role is limited to ensuring the process was followed correctly and that “even an unpopular decision, when made correctly, must be upheld.”
Second, Judge Nicholas denied UPRD’s motion for partial summary judgment seeking to limit Garrett’s claim only to matters related directly to the formation of UPRD by Manatee County. The primary purpose of the motion being to limit the scope of the examination, and thus, the scope of the discovery. While Judge Nicholas denied the motion, in subsequent rulings related to the motions to limit discovery, he limited discovery to: (a) the period from 1/1/2017 through 8/2/2018 [when Manatee County formed UPRD]; (b) issues directly related to the formation of UPRD; and (c) information presented to the County in the formation process. All other issues and information, such as discussions among UPRD residents or interactions with Neal/Varah, will not be allowed.
Third, Garrett will be allowed to amend the pleadings to properly name Manatee County, and Manatee County will have ten days to respond. Once Manatee County has responded, the matter will be at issue and able to be set for final hearing.
Fourth, the Judge consolidated both the Garrett case and bond validation case for purposes of trial, but not for all purposes. A follow up hearing is scheduled on 7/11/19 for another case management conference to governing the scope and timing of the trial.
- Bond Anticipation Note Update
Investors are showing strong interest in the BAN. Staff has participated in numerous discussions with potential investors. The replies are due this Friday, June 28, 2019. The Board will consider its lender/investor at its meeting on July 12, 2019. If the District decides to move ahead with purchasing UPCC using the BAN, the closing could occur as early as July 23, 2019.
- Mailed Assessment Notices for the BAN
Mailed notice of the BAN special assessment were mailed last week. The equalization hearing for the BAN assessment will be held on Friday July 23, 2019. This is one of three special assessments that the District has imposed, and it is discussed in item “C” below.
- Special Assessment for O&M – one-time at $1,000 per home
This is a one-time assessment to fund: (a) district operations and (b) litigation expenses. But for the Garrett lawsuit, the District would not have needed to impose this assessment. The plan was to acquire the recreational facilities and club this spring and thereby utilize its net operating income to fund district operations.
- Special Assessment for Bonds
In our bond referendum on February 7, 2019 over 80% voted in favor of issuing long term bonds to fund the acquisition of the recreational facilities and the club. The bonds are collateralized and their debt service paid for from special assessments. These were approved by the Board using the 50%/50% allocation methodology wherein: (a) 50% of the cost is spread equally and (b) 50% of the cost is based on home value. To issue these bonds the District must complete the validation process in circuit court. Regrettably, Garrett’s lawsuit has delayed this process. However, the District is confident that it will eventually be able to validate and to sell the bonds.
- Special Assessment for Bond Anticipation Note
To accelerate the purchase of the recreational facilities and club, the District is considering issuing a bond anticipation note (“BAN”). There are two main reasons to accelerate purchase of the club: (1) our purchase and sale contract will expire in September and (2) the sooner UPRD owns the club the sooner we have access to its revenues to offset UPRD expenses.
The BAN does not need to be validated, because it has a 2-year term. Therefore, if the Board determines that it is in the best interests of the community, the BAN can used to purchase the club expeditiously.
The District has published a request from proposals from investors and lenders for the BAN. If the District decides to pursue a BAN transaction, it plans to select the investor or lender at the July 12, 2019 meeting.
To secure the BAN the District is in the process of imposing a special assessment in a manner identical to the special assessment for the bonds. Regrettably, Mr. Garrett and the “Concerned Citizens” have spread falsehoods about the BAN.
PLEASE CAREFULLY NOTE THE FOLLOWING CONCERNING THE BAN
- The assessment for the BAN very unlikely to ever be collected
UPRD plans to redeem the BAN from the sale of its long term bonds. In that case the residents would not pay any assessment for the BAN. The bonds will be sold when the validation process is completed, which is being delayed by Mr. Garrett’s lawsuit. UPRD is confident that it can validate and successfully sell its bonds before the BAN expires in 2-years. This confidence was strongly supported last week by Judge Nicholas’ rulings.
- The earliest that assessments for the BAN could occur would be 2-years after it is issued
The BAN has a term of two years. No assessments for the BAN would be legal or necessary before 2-years which would be in 2021. However, as noted above, any collection on the BAN is highly unlikely.
- Website Improvements & Newsletter Communications
With input from Board Members and the public staff continues to improve our website.
There are currently 427 subscribers to the UPRD Newsletter.
- Purchase of the Country Club
Due diligence under the contract is ongoing.