Correspondence 1

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Dear Mr. Knight,

Thank you for making time for our discussion on Thursday last and for handing me the copy of Gary Maidhof's Background Information for the Joint Meeting between the City Council and the BOCC, on March 31, 2009. You said that no minutes of that joint meeting were available to you.

With regard to the Backgrounder (Staff Notes), what statute was referred to which allows City by public declaration to expand its sewer service area five miles beyond City limits? (I will write to you when I have had time to study the Backgrounder further).

Mr Wesch advised me to set out in writing to you my research findings to enable the financial issues to be reviewed by us as suggested by Mr Thorpe and with which the Commissioners had concurred. My purpose in writing to you on 12 January, 2012, was to do just that. I had also remarked to Mr Wesch that you and I had agreed not to address legalities as that was not within our domain.

I am aware of the "Florida Impact Fee Act", (F.S.163.31801), described by some as "minimalist". The rapid rate of spread of impact fees in Florida, required cases to be decided in the courts in advance of any specific legislation. (No attempt had been made within the statute to codify the extensive Case Law built up in regard to impact fees – to facilitate those most benefiting from growth to bear its costs).

I had first come across sewer Expansion Fees (Impact) in the City's 1991, Capital Financing Plan as noted in my letter to you (3c.) I did not go further in view of the governing Case Law and our agreement not to venture into legalities which, I thought, would have become unavoidable.

Furthermore, my statement, (3c). is not conjecture on my part as you inferred on Thursday, but reflects the assertion to me from an impact fee consultant for a well known leading consultancy in the field, that, "no factor financed with any grant funds may be included as a cost when computing an impact fee". (He had previously volunteered to me that Expansion, Connection or Hook-up Fee are the same when used to imply buying into infrastructure as opposed to an act of simply making the connection from a building to a laid sewer line.).

Nevertheless, I have read and understood several peer reviewed documents on cardinal cases⁽¹⁾, together with proceedings of the Circuit appeals courts and the Florida Supreme Court.

Since we had agreed not to trespass into legal issues would it not be for the County to determine which case law enables the City to levy Expansion Fees (Impact) upon County property owners notwithstanding the fact that the expansion of the sewer system to serve them is paid for from grant funds?

As I have laid out my research results as requested, should it not now be incumbent upon you to say where you agree and disagree so that we may proceed with the dialogue with which we have been charged?

NOTE (1)

Dr. Gregory Burge and Keith Ihlandfeldt, then at FSU writing on, "Impact Fees in Florida – Evaluating Florida's Growth Management Approach, which linked to case law in regard to, for example, "Contractors Builders Association of Pinellas County v. City of Dunedin 329 So.2d. (FLA 1976), also, by Dr. Gregory Burge, "Impact Fees in Relation to Housing Prices and Affordable Housing Supply".

Mary, if you would kindly arrange for Mr Thorpe and Mr Wesch to see a copy, I would appreciate that greatly. Thank you, Norman.

Haven't read the entire thing and won't be able to get to it till later this week, but answer to first question (second paragraph) is FS 180.02.

Robert,

Thanks for your cue to the statute. I have attached a .pdf as comment upon the Backgrounder for the joint meeting on 31 March, 2009.. Norman

RK re GM Backgrounder 31 Jan 2012.pdf

Further to my e-mail of 2/3/2012.

I had first come across sewer Expansion Fees (Impact) in the City's 1991, Capital Financing Plan as noted in my letter to you (3c.) My initial response was that "This cannot be right, when the state settles all expansion costs against approved contractors' invoices under its contract with the City".

After having researched further, it would appear to me that:

• The Florida Impact Fee Act (F.S. 163.31801) appears not to support charging Expansion Fees (Impact) to property owners because the County areas 112,113, 114, are established communities over decades and not New Growth to which impact fees could be appropriate. The procedure for paying with public money all eligible costs invoiced by contractors to expand the City's sewer system in public right of way in order to make it accessible from a property, leaves no unpaid costs for recovery as Expansion Fees (Impact).

• Annexation of the areas 112 ,113, 114, into the City would have demanded, by the statute on Annexation Procedures (F.S.171.04), a majority vote in favor by the registered electors in those areas. That is not the case and simply choosing to avoid the annexation would not seem to me to obviate the need for majority consent.

• Corroboration that no Expansion Fee (Impact) was due is given by the assertion to me from an impact fee consultant for a well known leading consultancy in the field, that, "no factor financed with any grant funds may be included as a cost when computing an impact fee". (He had previously volunteered to me that Expansion, Connection or Hook-up Fee are the same when used to imply buying into infrastructure as opposed to an act of simply making the connection from a building to a laid sewer line).

• In addition, to demand payment twice for the same thing, in my view, is simply unconscionable and unjust.

It would follow therefore that the charge of $3,425.00 demanded by the City from each property owner able to connect to the sewer as indicated on the County Assessment Notice would not be warranted.
Sincerely, Norman

As has been previously explained to you and supported by your third bullet – the expansion fee is for buying into the existing system. It is not part of the new project. You just cannot expect to hook up to the City's existing system, use their existing lift stations, their existing collection system and capacity on their existing central waste water treatment plant for free. The DEP grant has paid for none of this.

In-City folks pay for this and it would be totally illogical to expect that the city would serve areas outside of the city without collecting for the same.

Thank you for sharing your thoughts with me about the City's Expansion Fee (Impact) and their alleged right to recover them from County property owners, together with the Backgrounder and my thoughts upon it.

From our research, since the case law has not been codified within the Florida Impact Fee Act, either the authority for such recovery is in the statute or in the extant case law out there somewhere.

As mentioned in my e-mail of 2/6/2012, the Florida Impact Fee Act statute would seem to exclude any such authority with respect to the Project in view of the statute's rationale for impact fees as an "important source of revenue for a local government to use in funding the infrastructure necessitated by new growth" (and that those who benefit from the growth should contribute to the costs of providing the necessarily added infrastructure).

This is clearly not the case with the established communities in areas 112.113 and 114, but truly is the case with regard to the new Hidden Lake Preserves (HLP) which is a 178.8 acre tract that was originally part of the Crystal River Mall Subdivision and the subject of a quasi judicial hearing before the City Council members on 13 June 2011, which I attended. A total of 464 dwellings had been approved for the development.

In regard to the HLP wastewater, the public record is a follows:

1. All wastewater gravity systems will be owned and maintained by the Developer, and the Developer will be responsible for all repairs required to those systems.

2. The Developer will install a lift station to the City's specifications, and the City will assume ownership and responsibility for its operation and maintenance. The City will also be responsible for the line that connects the lift station to the City transmission main.

3. The Developer will install off-site improvements consisting of 5,400 linear feet of sewer main on the east side of Highway 19, which will basically extend city service capacity from its current terminus north of Turkey Oak to Ashburn Street, and turn over ownership of the line to the city upon completion.

This in my view would be entirely consistent with the Florida Impact Fee Act.

However, we have not been made aware of any case law purporting to lend authority to the proposed levy upon County property owners in areas 112, 113 and 114. Our view is that it would be incumbent upon City to cite to you the element of case law which supports the proposed recovery of $3,425.00 from the county property owners to be assessed.

I must also emphasize that the underlying contracts between the City and the State of Florida effective and signed by the parties in 2004, defines that, ""Assessments" shall mean the special sewage assessments anticipated to be levied by the Local Government to cover the Local Government's share of the of the Disadvantaged Small Community Grant and any additional costs outside the scope and limitation of the grant funding coverage."

It is also noted, that you have not yet addressed the question of the need for majority consent raised in my e-mail to you of 2/3/2012 and the subject of my second bullet in e-mail of 2/6/2012.

Also, no "other law" establishing the necessity for any sewer service to areas 112, 113 and 114, on grounds of public health, safety and welfare has been made known to us. In fact, by contrast, the fact that higher than acceptable levels of nitrate discharging into Kings Bay has been traced to have been discharged illegally from City's Sewage Treatment Plant.

Moreover, the Jones and Upchurch, 1994, study recently quoted by Gary Maidhof before the County commissioners, shows that nitrate concentrations of more than 212 tons per annum from the thousands of inland septic systems which discharge directly into the springshed groundwaters will inevitably be discharged from the Kings Bay springs. I referred to this in item 2d. of my comment upon the Backgrounder prepared for staff and commissioners for the joint meeting with the City of 31 March, 2009.

This very important science landmark study regarding the sustainability of water quality in our Outstanding Florida Water has apparently been shelved without action by both the City and the County for the past two decades.

I look forward to hearing from you regarding our next meeting where we can address the issues you have shared with me and to which my above mentioned comments are directed. I would hope then we would determine where we agree and disagree on that before addressing other issues raised in my letter to you dated 12 January, 2012.

Sincerely, Norman Hopkins

Robert,

Your reply below (2/6/2012) could apply should the property owners have voted a majority in favor of needing the sewer service at the price. The City acknowledged that, as recorded in the minutes of their Council meeting of 13 June, 2011, which I happened to attend. Many property owners protested at that meeting only to be ignored. One such lady protested, as in the minutes;

"If she was asking for services, she could understand. She is not asking nor does she want it. She has a functioning septic tank and if there is a pollution problem, it is coming from the North and East. She does not want to pay for the City's infrastructure and she receives no City benefits. Ms. Barnes explained that she does not appreciate being forced to take something she does not want, does not need and is not going to fix the problem."

Many others have echoed her sentiment at the well attended public meetings that have been held to review the situation. Most property owners have come to accept that the political pressure for sewers is possibly unassailable but the price being charged is both unjust and unaffordable. Their case centers upon paying only the charges necessary to repay the City's loan element over the term of the loan at a low interest rate as that offered by the state to the City. Every penny in excess has to be justified both in amount and as a necessary cost incurred. The state funding pays for every cent to expand the City's sewer system to accommodate the load from the County's designated properties in the approved plan. What in-City folks may do is not in question; what is fair and reasonable for County folk is the question.

Has City been asked by County to cite the case law permitting their charging Expansion Fees (Impact) when the expansion is not associated with growth, is financed by the state with public money, and does not manifestly accord with the majority will of the property owners involved?

It is also noteworthy that the Project embraces all segments in the FDEP approved plan and the final total costs and assessments cannot be calculated until all disbursements from FDFS are then known, enabling the quantum to be determined for repayment by City to the state with respect of the Associated Loan element together with capitalized interest over the loan term.

We were charged with the dialog needed to reach an equable solution, which requires the two of us to face facts and get on with the dialog.

Sincerely, Norman

I've already responded to the factual issue regarding the appropriateness of the Expansion Fee. I cannot and will not respond to legal arguments.

Thank you for your e-mail response of 2/15/2012.

During my brief discussion with Mr Wesch during the BOCC meeting recess on 13 December, 2012, I mentioned to him our agreement not to venture into legalities.. He said that I should do what I had been requested to do by Mr Thorpe when I was at the podium during that meeting.

My approach had been to determine the facts from official documents, which are listed in my letter to you dated 12 January, 2012, together with what published Florida Statutes and Rules I had been able to trace. For the purpose of our dialog I drew my own conclusions from the facts in order to share them with you in writing. Any matters of disagreement between us which emerge from our dialog would be unlikely to be within my qualification, or resource to answer. Nevertheless, in my view, we would be required to qualify them as best we can.

Should you already have concluded that we have reached impass on the issue of the Expansion Fees (Impact) then please say so, so that it may be set aside until other issues raised in my correspondence to you may be addressed.

I look forward to your reply and advancing our dialog. Sincerely, Norman

Robert,

I have to respectfully disagree with the assertion you make in your e-mail of 6 Feb, 2012, from which I quote:

"As has been previously explained to you and supported by your third bullet – the expansion fee is for buying into the existing system. It is not part of the new project. You just cannot expect to hook up to the City's existing system, use their existing lift stations, their existing collection system and capacity on their existing central waste water treatment plant for free. The DEP grant has paid for none of this.

In-City folks pay for this and it would be totally illogical to expect that the city would serve areas outside of the city without collecting for the same."

Comment:

1. There is only one project which is best defined in Amendment 2 to the Grant Agreement SG583140, date stamped Nov 08 2004, amending Subsection 1.01(8) to the original SG532140 document.

2. The DEP grant has paid for the additional infrastructure required:

   • The Amendment 1, dated 1/30/2003, to the SG583140 confirms funding for $861,645 for Preconstruction Activities.

   • The Amendment 2, as above, to the SG583140 confirms additional funding for $935,000 for "Crystal River WWTF Surge Tank and Headworks Improvements"

   • The Amendment 3 to the SG583140, date stamped JUN 12 2006, confirms additional funding for $755,966 for "Collection Systems in areas 101, 102, 108, & 111" (in City)

   • The Amendment to the SG583140, date stamped JUL 17 2007, confirms funding for an additional $1,031,577 for "Lift Stations #1 and #29", and "Wastewater Grant Project – City of Crystal River – Areas 103, 104, 105, 107, and 109"

3. It would appear that all expansion costs to accommodate the load from the unincorporated areas of the County are funded by the state. Also, prior to SG583140, a total of $1,569,455 was funded with public money by the state for unknown aspects of the City's Sewer service.

4. Moreover, it is emphasized that the property owners in the County Areas 112, 113, and 114, are being compelled to convert their on-site systems to the City's expanded sewer system without their majority consent, in marked contrast to practice in other Florida Counties. For example, under Policy 16-1, of our neighbor, Hernando County, in order to create an MSBU for sewer service, a petition signed by at least two thirds of property owners to be included in the MSBU area, has to be submitted to the BOCC as a pre-requisite.

Sincerely, Norman

Ken, as preparation for our meeting I have made some notes below upon the research we have conducted which I hope will be helpful. In addition, with respect to Mr Knight's reply to me dated 15 February, 2012, with respect to his, "I cannot and will not respond to legal arguments". I would respectfully refer to the Supreme Court of Florida, Case Number 88,218, which refers on its page 4 to, "Thus, a local governing body's legislative determination of “special benefit” is a factual finding rather than a conclusion of law." Which is context within which our dialog may be continued.

Research

Following a June, 2011, City of Crystal River Council meeting this Foundation was requested by County property owners affected by the planned expansion of the City's sewer system into unincorporated areas of the County to ascertain the facts concerning excessive assessments of which they had been notified by the County.

My letter to Mr Knight of 12 January, 2012, and the subsequent exchange of e-mails illustrate the concerns expressed at the BOCC meeting on 13 December, 2011.

In essence, with regard to the 2009 Interlocal Agreement, neither reason of public health, welfare and safety nor restoration of water quality to Crystal River/Kings Bay were found to have any basis in fact.

I look forward to meeting with you at an early date.

Sincerely, Norman

Ken,

Further to my e-mail of 27 February, 2012, my referring to the Supreme Court of Florida, Case Number 88,218 may lend clarity to a number of other requisites:

1. A local government's home rule power enables it to impose special assessments to finance the direct costs of providing a governmental service, including but not limited to sewage collection and disposal.

2. Such service must be of special benefit to the properties to which the assessment is to be applied.

3. For the assessments to fall valid under a local Ordinance establishing an MSBU assessment district, there must be some proof of the special benefit other than the dictum of the governing agency and for it not to have been arbitrarily derived.

4. That a functional sewer line may be accessible from a property would not seem to posit either positive or negative benefit to that property.

5. It follows that absent of any prior majority vote in favor by the property owners affected, their decision to connect and incur the costs of so doing should be subject to execution of a service contract in consideration of the benefit and the costs.

I look forward to meeting with you at an early date, and trust that this will be of help to you.

Sincerely, Norman