Brevard Parents Action Committee (BPAC)

Keep BPS On TRACK!

Trust, Respect, Accountability and Communication for Kids!

 

Brevard County Schools currently has over 500 million dollars in long term debt not approved by the voters.

That's more than:

By the Florida Constitution, long term debt by a local taxing authority to finance (or refinance) capital projects must be approved by vote of the electors.

Florida Constitution Article VII Section 12 states:

SECTION 12. Local bonds.
Counties, school districts, municipalities, special districts and local governmental bodies with taxing powers may issue bonds, certificates of indebtedness or any form of tax anticipation certificates, payable from ad valorem taxation and maturing more than twelve months after issuance only:
(a)  to finance or refinance capital projects authorized by law and only when approved by vote of the electors who are owners of freeholds therein not wholly exempt from taxation; or
(b)  to refund outstanding bonds and interest and redemption premium thereon at a lower net average interest cost rate.

How did Brevard Public Schools assume 1/2 billion dollars in debt without a vote?

Certificates of Participation (COP).

According to Investopedia, a Cerificate of Participation is:

  • defined as "A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues."
  • and explained as "The authority usually uses the proceeds to construct a facility that is leased to the municipality, releasing the municipality from restrictions on the amount of debt that they can incur."

COPs allow investors to purchase a stake in Brevard County Public Schools and they are paid interest on that stake.

This is accomplished by the creation of an intermediary corporation, Brevard County School Board Leasing Corp., to which all revenue flows through.

Brevard County School Board Leasing Corp. creates a lease-purchase agreement for ground leases on the real property (schools and other facilities), secured by anticipated revenue to Brevard Public Schools, and will issue a COP against this ground lease to generate revenue to finance capital outlay projects.

The structure of this long term debt effectively circumvents the Florida Constitution's requirement to put the matter to a vote since it is the corporation taking on the debt and not the School District. The Florida Courts have ruled in favor of this debt structuring.