STATE OF FLORIDA AND THE TAXPAYERS, PROPERTY OWNERS AND CITIZENS OF SAID CITY OF MIAMI, INCLUDING NONRESIDENTS OWNING PROPERTY OR SUBJECT TO TAXATION, THEREIN,
v.
THE CITY OF MIAMI, A MUNICIPAL CORPORATION OF THE STATE OF FLORIDA
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Florida's Supreme Court upheld the City of Miami's authority to immediately issue $7.6 million in refunding bonds to redeem outstanding callable bonds maturing approximately seven months later, finding that allowing a time gap between issuance and maturity serves the constitutional purpose of refunding by enabling municipalities to capitalize on favorable bond market conditions.
The City of Miami is authorized to issue the refunding bonds with the proposed timeline. The court held that the Constitution and statute should be construed to effectuate the purpose of refunding—to take advantage of lower interest rates and reduce carrying charges—rather than defeat it through strict literal interpretation, and that no arbitrary time limit restricts the permissible interval between issuance and maturity.
“the real question for decision is whether or not approximately seven months may transpire from the time that new refunding bonds are issued to the maturity date of the bonds to be refunded”
Frames the central legal issue in the case regarding the permissible time gap between bond issuance and maturity.
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Join FLexlaw to unlock all legal intelligenceThe City of Miami had outstanding $25.8 million in 1940 Refunding Bonds, of which $7.6 million were callable and maturing after 1960. In August 1944, …
The full statement of facts, procedural history, and disposition for this case are member content.
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The City of Miami has outstanding $25,823,000 Refunding Bonds of 1940, Series GM, bearing interest at rates ranging from 3% to 4 per cent payable semi-annually in January and July. Of the said bonds, $7,623,000 mature after 1960 and *7are subject to call July 1, 1945, by the terms thereof provided at least thirty days notice prior to any interest payment date upon which redemption is to be made, is given.
By Resolution Number 18569 of August 16, 1944, the City Commission proposes to issue $7,600,000 of new refunding bonds, 1944 Series GM for the purpose of refunding a like amount of the outstanding callable refunding bonds of the 1940 Series GM, said bonds to be dated July 1, 1944, to mature July 1, 1965, subject to call and redemption prior to maturity at the option of the city. The resolution also provides the numbers and rate of interest the new refunding bonds shall bear.
On petition of the City, the circuit court entered a decree validating the proposed new refunding bonds. No question is raised as to the power of the City to issue new refunding bonds for the purpose of refunding outstanding bonded indebtedness that has heretofore been refunded. That question is concluded here. Richard v. City of Fort Lauderdale, 146 Fla. 349, 1 So. (2nd) 202; City of Miami v. State, et al., 139 Fla. 598, 191 So. 774; State v. City of Orlando, 126 Fla. 251, 170 So. 887.
The appeal is from the validating decree and the question is whether or not the City of Miami is authorized to issue and deliver immediately the proposed $7,600,000 new refunding Bonds. 1944 Series GM to redeem bonds maturing July 1, 1945.
The issuing Resolution Number 18569 was adopted pursuant to Chapter 15686, Special Acts of 1931 (First .Extra-ordinary Session) and Section Six, Article Nine of the Constitution regulating the issue of refunding bonds. An examination of the issuing resolution and the law as thus stated discloses that the real question for decision is whether or not approximately seven months may transpire from the time that new refunding bonds are issued to the maturity date of the bonds to be refunded.
We considered a like question in City of Miami v. State, 139 Fla. 598, 191 So. 774; Fleeman v. City of Jacksonville, 140 Fla. 478, 191 So. 840; and State v. City of Miami, 142 *8Fla. 284, 194 So. 792. In these cases, we held that an appreciable length of time might run from the issue of the refunding bonds to the maturity of the bonds refunded. In all these cases, we were treating with periods shorter than seven months, the period involved here but we have not limited the time to any arbitrary period.
One of the primary purposes of refunding is tó take advantage of lower interest rates and to reduce carrying charges when possible. The circumstances under which this can be done will depend on the facts of the particular case. We think the Constitution and the Statute referred to should be construed to effectuate this purpose rather than defeat it by a hard and fast literal one where possible to do so. Good business requires this. In the case' at bar it is shown that the market on municipal bonds is now at the highest peak known to the country and that the proposed refund will result in the saving of approximately three quarters of a million dollars to the taxpayers of the City.
It is the general opinion that the war in Europe will soon be ended, that every governmental integer has under prospect huge war programs that will call for the expenditure of billions of dollars that may materially affect the bond market. In view of these circumstances, we think the city commissioners are amply justified in issuing the new refunding bonds for the purpose of redeeming the old ones and we find no legal inhibitions to doing so. Kalber v. Stokes, Mayor, et al., 194 S.C. 339, 9 S.E. (2nd) 785; Sebern v. Cobb, 41 Idaho 386, 238 Pac. 1023; State ex rel. Maestri, Mayor v. Cave, 193 La. 419, 190 So. 631.
The judgment is affirmed.
BUFORD, C. J., CHAPMAN and ADAMS, JJ., concur.
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State v. City OF Sunrise, 354 So. 2d 1206 (Fla. 1978)…371 (Fla.1957). Simple “advance refunding” is now an acceptable method of financing municipal projects. We have so held in State v. City of Melbourne, supra; State v. City of Orlando, 82 So. 2d 874 (Fla.1955); and State v. City of Miami, 155 Fla. 6, 19 So. 2d 410 (1944). In our original opinion in this case, we held that in order to be validated, the proposed bonds must meet the “lower net average interest cost” requirement found in Article VII, Section 12(b), Florida Constitution.2 Section 166.111, Florida…
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State v. City OF Orlando, 82 So. 2d 874 (Fla. 1955)…estion of relative dignity between the old bonds and the new would be eliminated. We find nothing in the arrangement which clashes with our pronouncements in City of Miami v. State, 139 Fla. 598, 190 So. 774, and State v. City of Miami, 155 Fla. 6, 19 So. 2d 410, unless we over-emphasize the word “promptly”. We held in the first case that bonds being refunded should be promptly purchased and cancelled. But in the second opinion we decided that an “appreciable” length of time might pass and that we had not l…
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State v. The Bd. OF Pub. Instruction OF Lake Cnty., 177 So. 2d 214 (Fla. 1965)…t every element in chronology will synchronize.” Nothing herein contained is in any respect to be construed as receding from or modifying the views expressed in City of Miami v. State, 13-9 Fla. 598, 190 So. 774; State v. City of Miami, 155 Fla. 6, 19 So. 2d 410 and State v. City of Orlando, Fla., 82 So. 2d 874. The appellee has directed us to a decision of the Supreme Court of Alabama, Taxpayers and Citizens of Shelby County v. Shelby County, 246 Ala. 192, 20 So. 2d [*217] 36, and one of the Supreme Court…
Authorities Cited
- State v. City of Orlando, 126 Fla. 251 (Fla. 1936)
- The City of Miami v. State, 139 Fla. 598 (Fla. 1939)
- Fleeman v. City of Jacksonville, 140 Fla. 478 (Fla. 1939)
- Richard v. City of Fort Lauderdale, 146 Fla. 349 (Fla. 1941)
- State v. City of Miami, 142 Fla. 284 (Fla. 1940)
- Tivas v. Tivas, 140 Fla. 385 (Fla. 1939)
- State v. Simpson, 126 Fla. 374 (Fla. 1936)