## Facts

- The City of Port Orange enacted a “Transportation Utility Ordinance” creating a transportation utility and imposing a “transportation utility fee” on owners and occupants of developed property to fund the operation, maintenance, and improvement of the city’s road system.
- Undeveloped property was not charged; unpaid amounts became a lien on the affected property.
- The ordinance classified city-maintained roads as arterial, collector, or local, and allocated arterial/collector costs across all developed properties because those roads served citywide mobility.
- Local-road costs were allocated only to developed properties abutting local roads; properties fronting private subdivision roads were exempt from local-road cost allocation.
- Fee amounts were calculated using traffic counts and trip-generation estimates based on the Institute of Traffic Engineers’ Trip Generation Manual, allocating costs in proportion to estimated trips generated by each property’s land use.
- The ordinance stated that collected fees need not be spent near the assessed property and need not provide a benefit different in type or degree from that enjoyed by the community as a whole.
- To finance road projects, the City proposed revenue bonds secured by the transportation utility fee and filed a bond validation action; the circuit court validated the bonds, concluding the charge was a lawful fee.
- The State appealed directly to the Florida Supreme Court under the constitution’s bond-validation jurisdiction.

## Issues

1. Whether the transportation utility charge was a lawful user fee or special assessment, or instead an unauthorized municipal tax.
2. Whether the charge satisfied Florida requirements for property-based exactions, including a special benefit to assessed property and fair apportionment.
3. Whether the City had legal authority to issue revenue bonds secured by the transportation utility charge in a bond validation proceeding.

## Decision

- The Florida Supreme Court reversed the bond-validation judgment.
- The Court held the transportation utility charge, as structured, was not a valid user fee and did not satisfy special-assessment requirements.
- Because the pledged revenue source was unlawful, the City lacked authority to issue bonds secured by that charge, and the proposed bonds could not be validated.

## Legal Principles

- In bond validation, courts examine: (1) the issuer’s authority to issue the bonds, (2) whether the purpose is legal, and (3) whether the authorization complies with law; this includes reviewing the legality of pledged revenues.
- A user fee generally must be tied to a particularized service and not operate as a compulsory, property-based revenue measure.
- A special assessment requires (1) a special benefit to the assessed property and (2) a fair and reasonable apportionment among benefited properties.
- A charge imposed mandatorily on developed property, secured by a lien, and expressly not dependent on a special benefit different from the community-wide benefit is treated as a tax-like exaction.
- Municipal taxes require clear constitutional or statutory authorization; absent such authority, a tax cannot lawfully serve as pledged security for revenue bonds.

## Conclusion

The Florida Supreme Court invalidated Port Orange’s transportation utility fee as an unauthorized tax-like exaction and reversed the validation of revenue bonds secured by that fee because the City lacked authority to pledge an unlawful revenue source.


State v. City of Port Orange, 650 So. 2d 1 (Fla. 1994)