VIERA, Fla. -- Brevard County, Fla., commissioners yesterday voted overwhelmingly to hold a referendum in March on whether to terminate annual lease payments for a certificates of participation issue.
By a vote of 4 to 1, the five-member commission also approved tentative ballot language to be presented to voters on the $23.9 million COPs deal. The financing was sold in 1989 to fund a controversial government operations center in Viera.
"From the beginning, this issue has been about letting the people of the county have their say," commission Chairman Karen Andreas said following the vote. "Now they will have their say."
The lone vote against the referendum, which will be held on March 16, came from Sue Schmitt-Kirwan, who argued that the action would have dire financial consequences for the county.
"I don't think people realize the effect this vote will have on our standing in the financial community," she said after the vote. "I'm sorry to see it happen."
The four commissioners voting to hold the referendum were Andreas, Truman Scarborough, and newcomers Nancy Higgs and Scott Ellis.
On Nov. 3, Higgs and Ellis defeated candidates for commissioner who had been opposed to holding a referendum.
Under the guidelines for the ballot language, voters would first be asked whether the county should discontinue its annually renewable lease funding for the COPs and vacate the government center.
Voters will also be asked a second question: Should Brevard County be authorized to sell general obligation bonds to refinance the COPs, if the first question is defeated.
Andreas said that county attorney Robert Guthrie will be asked to word the precise ballot language, which will then be discussed and approved at the commissioners' next regular meeting on Jan. 5.
Officials at Municipal Bond Investors Assurance Corp., which insures the COP issue, said yesterday that they were not surprised by the commissioners' action.
"We believe that given all the facts that Brevard County will vote to maintain the government center in Viera," said Michael Ballinger, an MBIA vice president. Ballinger confirmed that MBIA has conducted a poll of 450 county residents asking them how they would respond to a referendum to void the COP issue. However, Ballinger declined to reveal the results of the poll, which was held the weekend of Dec. 4.
The vote came after about 25 county residents voiced their opinions on whether the referendum should be held. The speakers seemed to be evenly divided over whether the lease should be terminated.
Yesterday's vote followed a report from the county's financial adviser, Thomas Holley, outlining the negative consequences for the county's finances of a decision to vacate the COP lease.
Holley estimated that a decision to discontinue appropriations on the 1989 COP issue would, in general, increase the cost of selling county debt by 80 basis points.
Holley based his estimate on the difference between a triple-A-rated bond -- the rating on most of the county's debt, which is insured -- and BBB-rated bonds, the lowest investment-grade.
Holley also estimated that the county would be faced with between $20 million and $25 million in increased borrowing costs over the next 30 years if the COP issue is rejected.
As Brevard County's commissioners approached yesterday's vote to hold the referendum, a number of local Florida governments have expressed concerns.
Last week, for example, the Melbourne Beach town commission unanimously voted to retrain the government center in Viera. The town is the first city in Brevard County to take a stance on the issue.
In addition, a group representing Brevard County's 15 municipal governments, the Space Coast League of Cities, voted Monday night to put the question of the referendum before their governing bodies.
Last week, the school board of St. Lucie County, Fla., sent Brevard County Commissioner Schmitt-Kerwin a letter expressing concerns over the effect of a referendum on the COP market in Florida.
"If Brevard decides to deliberately default on this obligation, no investor will be willing to purchase such notes in the future," wrote Tom Coss, the school board's chairman. "Hundreds of municipalities in Florida and across the United States will feel the impact of such an irresponsible act."
As Brevard County heads to its referendum in three months, it backed away this week from a potential confrontation with Moody's Investors Service. On Monday, it completed defeasance of the county's remaining uninsured debt.
In October, the rating agency had warned that it would take "negative rating action" on Brevard's uninsured debt if the county sought a referendum on the COP issue that could lead to a voiding of the lease. With the defeasance, Moody's yesterday issued a statement announcing that it had withdrawn its A rating on the county's $300,000 general obligation limited tax bonds, Series 1964.