City asks court to extend 60-day deadline to refund $80 million while being tightlipped with information

The Marion County Judicial Center is shown in Ocala, Fla. on Wednesday, August 5, 2020. [Bruce Ackerman/Ocala Gazette] 2020.

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Posted December 8, 2021 | By Jennifer Hunt Murty

On Oct. 11^th, after eight years of litigation, Circuit Judge Robert William Hodges ordered the City of Ocala to refund approximately $80 million in a class-action suit that challenged fees added to Ocala Electric Utility bills for fire services.

Those 60 days are up this week and the city isn’t prepared to refund the $80 million, according to a motion filed today with the court asking for more time.

Inquiries to the city asking for details about how they were going to fund the $80 million have not resulted in any direct answers at the direction of city attorneys.

However, some clues as to what the city has been doing to prepare to make the refunds ordered by the court can be found in their motion.

In that motion, it indicates that the city immediately began talks with their financial advisor, Dunlap & Associates, explored financing options with the city’s bank, Truist, as well as had discussions with attorneys “regarding non-ad valorem funds availability for loan repayment, bond validation, and the effects of the same on the city.”

The motion further states that the city’s finance team reviewed the city’s budgets to determine the availability of any unrestricted reserve funds as well as reassessed what budgeted capital improvement projects could be delayed, making additional funds available for internal loans.

The motion says that the city determined, however, that delaying capital improvement projects would put the city’s utilities at risk with delayed infrastructure repairs, replacements, and growth.

“After extensive consideration of all available options, the city began the process with Dunlap & Associates for issuing a Request for Quotes (“RFQ”) for a $60 million draw-down note that would be utilized after the application of $20 million in unrestricted city funds previously earmarked for other projects intended to benefit residents and class members. To save the taxpayers from additional interest expense on the loan, the city would only draw-down funding from the loan on an as-needed basis, based on the actual claims amount. The draw-down loan would meet the requirement of the Common Fund to have the full amount available if needed, but not actually deposited,” the motion reads.

The motion indicated that the city sent out a request for quotes on Nov. 15, 2021, to “24 different local banks and lenders. The city has responded to multiple detailed questions generated from potential lenders,” and has given the banks until Dec. 14 to respond.

After the finalist is selected, the motion states that the city, with the help of attorneys, “will negotiate the terms of a supplemental resolution that will be in the city’s best interest,” and present a resolution “authorizing the taxable revenue bond” at the Feb. 1, 2022, city council meeting.

The motion estimates that the “earliest loan closing date is anticipated to be mid-to-late February 2022, assuming no unforeseen circumstances that delay the loan closing.”