Fire fee lawsuit update

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

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Posted December 22, 2021 | By Jennifer Hunt Murty

As the last week of 2021 approaches, the city’s request for an extension of time to refund the approximately $80 million in fire fees remains open.

The Fifth Circuit Appellate Court’s order, entered in the summer of 2020, found the city’s fire fee services were an “unconstitutional tax” and remanded it back to the trial court, which Judge Robert W. Hodges now presides over.

Following the Appellate Court’s decision, the city attorneys maintained that the city was entitled to another trial and spent considerable efforts preparing for that new trial. Judge Hodges indicated the appellate decision did not give him authority to grant the city another trial, only an order to make them make refunds.

Judge Hodges entered an order on Oct. 11, 2021, giving the city 60 days to fund the $80 million.

On Dec. 8, the city filed a motion for extension of time to fund the $80 million. In the motion, it stated that it had identified $20 million in unrestricted funds but that the city needed more time to explore obtaining $60 million in loans.

While direct requests for an explanation from the city have been avoided at the direction of the city attorneys, documents provided in response to records request to the city give some idea of the city’s intentions.

The city put out a Request for Quotes for a $60 million taxable drawdown note with a deadline to respond by Dec. 14.

Answers crafted by city staff from the finance department, with the help of city’s financial advisor Dunlap & Associates to bank questions, shed some light on how the city intends to distribute refunds.

In answer to one lender’s question as to whether the full $60 million would be drawn at closing, the city responded as follows:

The full $60 million will not be drawn down at closing. Claimants will have a certain amount of time to file their claims. That time will be determined by the judge presiding over the case. The City of Ocala will have a certain period of time to review, verify, and approve the claims. Upon approval by the city, the claims will be paid from the $20 million set aside by the city and/or the $60 million drawdown note. There are no assurances that any or all of the $60 million drawdown note will be drawn, however, it is expected that all verified and approved claims will be disbursed to claimants on or before July 1, 2022. If less than $60 million is drawn down on or before July 1, 2022 (the “Undrawn Portion”), the amount of the Undrawn Portion will be used to reduce a like amount of the drawdown note and the remainder will be amortized at a fixed rate of interest from October 1, 2023, to October 1, 2038. As part of the order entered by the judge, the city must have $80 million available for potential claims prior to the claims being filed.

Additionally, in answers to other questions, the city indicates that it intends to pay claims from the $20 million first and then use the drawdown note to fund the remaining claims.

One notable difference between what the city represents to the banks and what attorneys for the class action have communicated is how the refunds will be distributed. It seems from the answer quoted above that the city desires a limited window for people to apply for refunds and for the city to review, verify, and approve the refunds.

Attorney for those in the class action, Derek Schroth, has previously stated that he will recommend to the court that “class members receive refund checks without the burden of filing a claim for a refund.”

Schroth also anticipates that members should expect to recoup “90 percent or more” of what they paid for fire fees through their electric bills.

The city’s motion indicates that they will not be able to consider and approve the loan options until the Feb. 1, 2022, city council meeting. Their motion for extension of time 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.”

The class action plaintiff responded to the city’s request for more time by asking the court to request and order the city to pay direct refunds to the class after payment of expenses, including attorneys’ fees, class representatives’ services awards, and costs still to be determined by the court.

The next hearing, scheduled for Jan. 3, 2022, will consider whether or not the court should have the city reimburse the class-action attorney for over $68,000 in litigation expenses as the prevailing party in the lawsuit.