HomeMy WebLinkAboutVI (D) Discussion re: Senior Program AGENDA 4-18-95
Item VI D
FOLEY & LARDNER
III NORTH ORANGE AVENUE. SUITE 1800
ORLANDO, FLORIDA 32801
TELEPHONE 14071 423-7656
FACSIMILE 14071 648-1743
TAMPA, FLORIDA MAILING ADDRESS: MILWAUKEE, WISCONSIN
JACKSONVILLE, FLORIDAPOST OFFICE BOX 2193 MADISON, WISCONSIN
TALLAHASSEE, FLORIDA WASHINGTON, D.C.
WEST PALM BEACH, FLORIDA ORLANDO. FL. 32802-2193 ANNAPOLIS, MARYLAND
CHICAGO, ILLINOIS
MEMORANDUM
TO: The Honorable Mayor and City Commissioners
of the City of Ocoee
FROM: Paul E. Rosenthal, Esq. , City Attorney _/ '
DATE: April 14, 1995 �f v
RE: City of Ocoee Senior Program
This memorandum is in response to your request that we
review and advise you as to the legal status of the City of Ocoee
Senior Program ("the Program") . We have specifically been asked to
comment on the aspects of the Program related to residency
requirements and the rebate of ad valorem taxes. In this regard,
we have reviewed the history of the Program as well as applicable
case law and other relevant authority. The minutes of the March
13, 1990 meeting of the Over 65 Program Committee reflect a
representation by former City Commissioner Bill Stinnett that the
legal aspects of the Program were fully researched at the time of
adoption and that the City was advised that the Program complied
with all legal requirements. The current City Attorney has not
previously been asked to provide the City Commission with a written
opinion regarding the legality of the Program. We have previously
provided a written opinion regarding the phase-out of the Program.
Set forth below are a Statement of Facts regarding the Program, a
discussion of applicable case law and our conclusions.
A. STATEMENT OF FACTS.
The Program was first established by the City Commission
in 1975 and referred to as the "Over 65 Program" . From its
inception, the Program provided free water service, free sanitation
service and a refund of ad valorem taxes. Initially, the Program
was for the benefit of all residents age 65 or older (or 62 or
older if on social security) and did not exclude any persons based
on length of residency. Free cemetery plots were added to the
Program in 1976. In 1981, the Program was modified to add a 5 year
Ocoee residency requirement and to limit free water usage to 45, 000
gallons per quarter. Free cemetery plots were later eliminated in
1989.
The Program remained essentially unchanged until 1990
when the City Commission appointed the "Over 65 Program Committee"
to review the entire Program. As a result, on August 7, 1990, the
City Commission approved Resolution 90-06 which revised the Program
and established new eligibility requirements, application
procedures and benefits. Attached is a copy of Resolution 90-06.
The benefits of the Program as set forth in Resolution
90-06 include (a) the first 10,000 gallons of water per month
without charge; (b) garbage/trash pickup service provided by the
City without charge; and (c) a refund of City of Ocoee ad valorem
property taxes up to a maximum of $100.00 per year, after payment
is made to the Orange County Tax Collector and proof of payment is
presented to the City Finance Director. In order to be eligible
for the aforementioned benefits, the following eligibility
requirements must be met:
1. The individual must have resided in the corporate
limits of the City for 10 years or more;
2. The individual must be the owner and occupant of
his or her home located within the corporate limits
of the City;
3 . The individual must be at least 65 years old or in
the alternative 62 years old and receiving Social
Security benefits; and
4. The individual must have submitted an application
for benefits to the City and have such application
approved by the City Finance Director. The
application must be submitted by April of each year
to the Finance Director, under penalty of perjury,
stating that the applicant meets all the above-
noted eligibility requirements. The application
must also include satisfactory proof of residence,
ownership, age and social security benefits. The
City Finance Director determines whether the
eligibility requirements have been satisfied.
The major changes in the Program implemented by Resolution 90-06
were (i) to increase the residency requirements from 5 to 10 years,
(ii) to limit the review of applications to April of each year, and
(iii) to cap the ad valorem tax rebate at $100 per year.
Please note that while the benefits relating to water and
garbage/trash pickup services are provided to eligible individuals
free of charge, such items are fully funded to the City from the
City's general fund. The water and sanitation funds are
"enterprise funds" which are prohibited from providing "free
service" . As a result, general fund revenues (which include ad
valorem tax revenue) are transferred to the enterprise funds to pay
for these "free" services. The cost of the Program and the fund
transfers are reflected in the City's annual budget. Specific
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revenue funding sources within the general fund are not identified
in the budget.
B. DISCUSSION.
1. General.
We have found no other Florida city with a program
similar to the Senior Program. Inquiry to the Florida League of
Cities indicates that the approach taken by Ocoee is a unique way
of providing benefits to senior citizens. We have found no case
law directly on point which would address the legal validity of the
Program as currently constituted. As a result, our legal analysis
must be based on applying existing principles of law to the
specifics of the Program.
Two main legal issues are raised by the Program. The
first relates to equal protection. The Program creates two classes
of persons, one class which receives the benefits of the Program
and one class which does not. Among those over age 65 (or over 62
and on social security) , the distinction between classes are based
upon durational residency and home ownership. City residents over
65 (or over 62 and on social security) who have resided in the City
10 years and such senior residents who do not own and occupy a home
within the City are placed in the same category as City residents
under the age of 65, all of whom receive no benefits under the
Program (unless over 62 and on social security) . The creation of
these classes raises issues of equal protection under the Florida
Constitution and the United States Constitution. Generally, a
classification that is neither suspect nor invades a fundamental
right must only be rationally related to a legitimate municipal
purpose in order to be upheld. Under this "rational basis" or
"minimum scrutiny" test, a classification will be held
unconstitutional only if it results in treatments so disparate as
to be wholly arbitrary, and a classification will not be struck
down because it results incidentally in some inequality or is not
drawn with mathematical precision. However, if a classification is
suspect or involves a fundamental right, then it is subject to
strict scrutiny and must be tested by the more stringent standard
of promoting a compelling governmental interest with a
determination being made as to whether the means adopted to achieve
the goal are necessarily and precisely drawn.
A second legal issue presented is whether the rebate of
ad valorem taxes creates an exemption from taxes in violation of
the Florida Constitution. The City derives its taxing powers from
the Florida Constitution. Section 2 of Article VII of the Florida
Constitution requires that "all ad valorem taxation shall be at a
uniform rate within each taxing unit . . . " . The City does not
have the authority to create an indirect exemption from taxation
absent a constitutional or statutory basis.
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2. Eligibility Requirements.
We evaluated three types of eligibility requirements --
residency, age and homeownership.
Residency. Florida case law provides that under certain
circumstances a municipality may classify residents and
nonresidents without denying equal protection of the laws. The
standard of review for residency requirements depends upon whether
such is a "bona fide", "durational", or "continuing" residency
requirement. Bona fide residency requirements are subjected to the
rational basis test. See Sosna v. Iowa, 419 U.S. 393 (1975) (one-
year residency requirement for filing for divorce upheld) . The
U.S. Supreme Court has made a distinction between bona fide
residency requirements and durational residency requirements
holding that durational residency requirements must be tested by
the more stringent standard of promoting a compelling governmental
interest. See Dunn v. Blumstein, 405 U.S. 330 (1972) (one-year
residency requirement for voting unconstitutional) ; Shapiro v.
Thompson, 394 U.S. 618, (1969) (one-year durational residency
requirement for receiving welfare benefits unconstitutional) ;
Memorial Hospital v. Maricopa County, 415 U.S. 250
(1974) (durational residency requirements for free medical care
unconstitutional) . The Florida Supreme Court held invalid as a
violation of equal protection a statute which contained a 5 year
requirement as a prerequisite to entitlement of the homestead tax
exemption. See Osterndorf v. Turner, 426 So. 2d 539 (Fla. 1982) .
In that case, the Court held that there was no rational basis for
distinguishing between residents of more or less than 5 years in
connection with the payment of taxes on their homes. The Court
declined to consider whether the strict scrutiny test was
applicable holding that the residency requirement did not pass the
rational basis test. Moreover, the Court cited a case in which the
United States Supreme Court held invalid a plan implemented by the
State of Alaska where certain dividends were distributed to
residents in amounts dependent upon length of residence. In that
case, the U.S. Supreme Court held that the state's argument that it
was reasonable to reward citizens for past contributions was not a
legitimate state purpose. Finally, the Florida Supreme Court has
held that a continuing residency requirement, as opposed to a
durational residency requirement, should be reviewed pursuant to
the rational basis test. See Florida State Bd. of Dentistry v.
Mick, 361 So. 2d 414 (Fla. 1978) (statute requiring nonresident
dentist to obtain a "conditional renewal certificate" and
prohibited from practicing until certificate is renewed created an
unreasonable and arbitrary classification) . With regard to the
Program, the residency requirement is durational in nature and
would, in our opinion, be subjected to the more stringent standard
of promoting a compelling governmental interest.
Age. The U.S. Supreme Court has held that age is not a
suspect classification for equal protection purposes and,
4
therefore, a rational basis for the discrimination would be
sufficient. See Gregory v. Ashcroft, 501 U.S. 452 (1991) ;
Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307 (1976)
(compelled retirement at age 50 upheld) .
Home Ownership and Occupancy. We have found no case law
or authority directly on point. In our opinion, the requirements
related to home ownership and occupancy would be subject to the
rational basis test.
3. Ad Valorem Tax Rebates.
The Florida Attorney General has issued an opinion
indicating that a municipality may not provide for the rebate of ad
valorem taxes collected on newly annexed property in the absence of
constitutional or statutory authority allowing such action. See
Op. Att'y Gen. 90-23 . The opinion is based in part on a Florida
Supreme Court case which found unconstitutional a law providing for
reduction in rent paid to a public authority in an amount equal to
the ad valorem taxes paid on the leasehold interest for the
previous year. See Archer v. Marshall, 355 So.2d 781 (Fla. 1978) .
In Archer, the Court determined that the statute created an
indirect exemption from ad valorem taxation not authorized by the
State Constitution. The Attorney General's opinion further states
that the rebate of a portion of the ad valorem taxes paid on newly
annexed property is analogous to the exemption found to be
unauthorized in Archer. Such a rebate provides an indirect
exemption from taxation which has no constitutional or statutory
basis. See Op. Att'y Gen. 90-23 . There is no constitutional or
statutory authorization for the City's ad valorem tax rebate to
senior residents.
4. Analysis.
The 10-year residency requirement is a durational
residency requirement subject to strict scrutiny. In our opinion,
it is unlikely that the 10-year residency requirement would
withstand judicial scrutiny in the event a lawsuit were brought
against the City. It should be noted that the original Program did
not include any durational residency requirement. In the event a
suit for benefits was brought by a resident meeting all of the
Program criteria except those related to durational residency, then
it is likely that a claim would be raised for benefits denied
during the period of time such a resident was denied the benefits
of the Program. We have not researched the likelihood of the
success of such a claim seeking retroactive payments. In the event
the City Commission desires to continue to maintain a durational
residency as part of the Program, then we would recommend that we
be directed to conduct further research into this issue in order to
evaluate the potential financial exposure to the City.
5
The age requirement would be subject to the rationale
basis test. In our opinion, it is likely that the age requirement
would withstand judicial scrutiny in the event a lawsuit were
brought against the City.
In our opinion, the homeownership and occupancy
requirements are not suspect classifications and would be reviewed
under the rationale basis test. The basis for distinguishing
between homeowners and renters with respect to free water and
garbage service is unclear. In our opinion, the homeownership and
occupancy requirements could be subject to challenge unless the
City established a clearer rationale basis for the distinctions.
At this point, we have not specifically researched that potential
claims which a "resident renter" may have against the City based on
such renters exclusion from the Program. If directed by the
Commission, we can research this issue.
In our opinion, the ad valorem tax rebate of up to $100
per year is an indirect exemption from ad valorem taxation not
authorized by the Florida Constitution or state law. In the event
a lawsuit was brought challenging the ad valorem tax rebate, it is
our opinion that it would not withstand judicial scrutiny.
The Program also provides benefits of "free" water
(subject to a monthly maximum) and garbage service. In our
opinion, it is likely that a challenge to these benefits would
withstand judicial scrutiny in the event of a lawsuit only if other
aspects of the Program subject to challenge were removed. For
example, the City would arguably have a rationale basis to provide
free or discounted water and garbage service to residents over a
certain age so long as there was no durational residency or
homeownership requirement for the receipt of such benefits.
5. Financial Disclosure Considerations.
We are annually called upon to provide the City's
independent auditor with an opinion regarding certain loss
contingencies under the provisions of Paragraph 5 of the American
Bar Association Statement of Policy Regarding Lawyers' Responses to
Auditors' Requests for Information (December 1975) . Paragraph 5 (c)
address unasserted possible claims which the City has specifically
identified and upon which we have been specifically requested to
comment. Public disclosure by the client acknowledging (and thus
focusing attention upon) the existence of one or more probable
claims is a factor to be considered in determining whether or not
the City should request that a matter be addressed by the attorney
in his audit response. This memorandum identifies potential
unasserted claims against the City related to the Program. At this
time, we have reached no conclusion regarding whether the matters
raised in this memorandum require audit disclosure. Upon the
conclusion of the City's discussion of this matter, we are
6
required, as a matter of professional responsibility, to consult
with the City concerning the question of such disclosure.
C. CONCLUSION
As indicated above, there is no case law or authority
directly on point with regard to a benefits program similar to the
Program. However, there are significant areas of the Program
potentially subject to a successful legal challenge. In the event
the legality of the Program were challenged, it would be difficult
to defend the 10-year residency requirement( which would be subject
to strict security review) and the rebate of ad valorem taxes. The
ability of the Program to withstand a legal challenge would be
significantly enhanced by changing the 10-year residency
requirement to a simple requirement that the applicant for benefits
be a bona fide resident of the City on the date of application and
continue as a resident so long as the applicant continues to
receive the benefits of the Program. The ability of the Program to
withstand a legal challenge could be further enhanced by removing
the benefit of a rebate of a portion of the ad valorem taxes paid.
The ability of the Program to withstand a legal challenge could
also be further enhanced if all Program benefits were funded from
non-ad valorem revenue sources in the general fund with the City
budget specifically identifying the revenue source of all funds
supporting the Program.
We have previously provided the City with an opinion
dated April 9, 1990 regarding the phasing out of the Program in a
manner which allowed current participants to continue to receive
benefits during the phase-out period while denying benefits to
persons who would otherwise have become eligible during the phase-
out period. At that time we focused only on the non-suspect age
classification and opined that the City could pursue such a phase-
out. In light of the broader scope of this review and the opinions
expressed in this memorandum, we recede from and rescind that prior
opinion. Any such a phase-out would not cure any legal
deficiencies in the current Program and, in our opinion, a
challenge to such a phase-out would likely be successful.
The scope of this memorandum has not considered alternate
legal approaches to accomplishing the objectives of the Program.
Upon request of the City Commission, we would be prepared to
investigate the legal feasibility of any alternative programs which
the City Commission may desire to implement.
In summary, there appears to be a lawful basis to
continue the water and garbage benefits of the Program if the
residency requirements and homeownership requirements were
eliminated and a non-ad valorem revenue source were identified.
Other aspects of the Program are subject to challenge and it is
7
likely that a challenge to the 10-year residency requirement and ad
valorem tax rebate would be successful.
A:\PERDDH03.07114/14/951NIGHf TRANSFER(DISK)IPER:jed
8
RESOLUTION NUMBER 90- 06
A RESOLUTION OF THE CITY OF OCOEE, FLORIDA,
ESTABLISHING THE CITY OF OCOEE SENIOR PROGRAM;
REPEALING ALL PREVIOUS PROGRAMS; ESTABLISHING
A COMMITTEE TO STUDY METHODS OF CARING FOR THE
ELDERLY AND POOR; PROVIDING FOR THE FUTURE
APPROPRIATION OF ANY MONETARY SAVINGS; PROVIDING
THAT THE CITY OF OCOEE SENIOR PROGRAM IS SUBJECT
TO THE ANNUAL APPROPRIATION OF FUNDS BY THE CITY
COMMISSION; PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City Commission of the City of Ocoee,
Florida ("the City") has determined that it is in the public
interest to protect the health and welfare of its senior
citizens; and
WHEREAS, in order to protect the health and welfare of
its senior citizens, the City has previously established a senior
program which afforded eligible senior citizens certain benefits
and privileges; and
WHEREAS, the City established a citizen committee to
study the City of Ocoee senior program, which committee held
public hearings and made certain recommendations to the Ocoee
City Commission; and
WHEREAS, on July 24, 1990, the City Commission held a
public hearing regarding the recommendations made by the citizen
committee and voted to continue the City of Ocoee senior program
as modified by those recommendations and as further modified by
the City Commission at said public hearing; and
WHEREAS, the City Commission desires to document in this
Resolution the eligibility requirements, application procedure,
benefits and duration of its senior program in order to memorialize
the program and avoid any public confusion regarding the senior
program; and
WHEREAS, the City Commission has the authority to adopt
this Resolution pursuant to Article VIII of the Constitution of
the State of Florida and Chapter 166, Florida Statutes.
NOW, THEREFORE, BE IT RESOLVED by the Board of City Com-
missioners of the City of Ocoee, Florida, that:
Section 1. The City of Ocoee hereby establishes the
"City of Ocoee Senior Program", the terms and conditions and
benefits of said program being set forth in Exhibit "A" attached
hereto and incorporated herein by reference. The program described
in Exhibit "A" hereto shall be referred to as the "City of Ocoee
Senior Program".
Section 2. All previous actions of the City Commission
relating to the providing of free or reduced rate water service,
garbage/trash service and/or ad valorem taxes to its senior
citizens are hereby repealed in their entirety. It is the intent
of the City Commission that the City of Ocoee Senior Program be
established as set forth in this Resolution and that any and all
prior or inconsistent actions be and are hereby rescinded and
repealed.
Section 3. A citizen committee shall be appointed by
the City Commission to study other cities' programs and methods
of caring for the elderly and poor and to from time to time make
recommendations to the City Commission regarding programs which
benefit the elderly and poor.
Section 4. In the event the City of Ocoee Senior Program
results in a monetary savings over the cost of the previously
existing program for senior citizens, then any sucp savings shall,
at the discretion of the City Commission be used to fund other
programs to benefit the elderly and poor.
Section 5. The City of Ocoee Senior Program is subject
to the annual appropriation of funds by the Ocoee City Commission
in accordance with the applicable provisions of Florida law and
the Ocoee City Charter.
Section 6. The Mayor and City Clerk are hereby
authorized to execute this Resolution.
Section 7. This Resolution shall become effective
immediately upon its adoption by the City Commission of the City
of Ocoee.
ADOPTED this 7 day of August, 1990.
CITY OF OCOEE, FLORIDA
By �- 'zt I 7(,
R DABBS, JR. , Ma-7
Attest: IL,•
AN GRAFTON City Clerk
(SEAL)
FOR USE AND RELIANCE ONLY APPROVED BY THE OCOEE CITY
BY THE CITY OF OCOEE, FLORIDA COMMISSION AT A MEETING
APPROVED AS TO FOP$. /.1 HELD ON Ag6kc ; 7 , 1990
AND I{EGALITY this / day UNDER AGENDA ITEM NO. ✓ F
of r"1ol u S t- , 1990.
FOLEY 6 LARDNER, VAN DEN BERG,
GAY, BURKE, WILSON and ARKIN
(2
By: • J)G4 JI�(Y
squire
City Attorney
FLOPPY/4758o(4)
01 (07/30/90)
EXHIBIT "A" TO RESOLUTION NO. 90- U1)
CITY OF OCOEE SENIOR PROGRAM
I. ELIGIBILITY REOUIREMENTS:
In order to be eligible to receive benefits under the City of
Ocoee Senior Program, the following eligibility requirements must
be met:
. 1. The individual must have resided in the corporate limits
of the City of Ocoee for ten (10) or more years;
2. The individual must be the owner and occupant of his or
her home located within the corporate limits of the City
of Ocoee;
3. The individual must be at least 65 years old, or in the
alternative, 62 years old and receiving Social Security
benefits; and
4. The individual must have submitted an application for
benefits to the City as set forth in Section II below
and have had such application approved by the City
Finance Director.
An individual must at all times meet the eligibility require-
ments set forth above in order to continue to receive benefits
under the Senior Program.
II. APPLICATION PROCEDURES:
1. Qualified residents seeking benefits under the City of
Ocoee Senior Program must submit an application to the
City Finance Director, under penalty of perjury, stating
that the applicant meets all of the eligibility require-
ments set forth in Section I above.
2. The applicant must include satisfactory proof of residence,
ownership, age, and Social Security benefits. Evidence
of current homestead exemption for a residence located
within the corporate limits of the City shall satisfy
the requirement in Section I(2) above. The City Finance
Director shall determine whether the eligibility require-
ments have been satisfied.
3. Applications for inclusion in the City of Ocoee Senior
Program will be accepted by the City only during the
month of April of each year.
4 . Participants in the Senior Program as of the date of
this Resolution are exempt from the application require-
ments set forth above.
5. The Finance Director may from time to time require that
participants in the City of Ocoee Senior Program submit
satisfactory evidence that they continue to meet the
eligibility requirements set forth in Section I(2) above.
III. SENIOR PROGRAM BENEFITS:
1. Participants in the City of Ocoee Senior Rrogram will
receive the following benefits:
a. The first 10,000 gallons of water per month
without charge.
b. Garbage/Trash Pickup Service provided by
the City shall be without charge.
c. A refund of City of Ocoee ad valorem property taxes,
up to a maximum of $100.00 per year, after payment
is made to the Orange County Tax Collector, and
proof of payment presented to the City Finance
Director.
2. Participants qualifying in April of each year shall begin
to receive benefits in accordance with the following
schedule:
a. Those benefits set forth in Section III(1) (a) and
(b) above shall commence as of October 1 of the
year of application; and
b. Those benefits set forth in Section III (1) (c)
above shall begin with the payment of City ad valorem
property taxes for the year following the year of
application.
3. Participants in the City of Ocoee Senior Program as of
the date of this Resolution immediately qualify for all
benefits set forth in Section III (1) above.
IV. CONTINUATION OF SENIOR PROGRAM:
1. Continuation of the City of Ocoee Senior Program is
subject to the annual appropriation of funds by the
Ocoee City Commission in accordance with the applicable
provisions of Florida law and the Ocoee City Charter.
2. The Ocoee City Commission reserves the right to terminate
and/or modify the Ocoee Senior Program, including but
not limited to its eligibility requirements and benefits,
at any time and without further notice; provided, however,
that any such termination or modification shall occur at
an advertised public hearing.
FLOPPY/475801(1)
01(07/30/90)
SENIOR CITIZEN PROGRAM APPLICATION
DATE UTILITY ACCOUNT #
NAME SS#
BIRTHDATE SPOUSE'S BIRTHDATE
SPOUSE'S NAME SS#
SERVICE ADDRESS
MAILING ADDRESS
SIGNATURE(S)
PLEASE NOTIFY THIS OFFICE IF THERE ARE ANY CHANGES.
A COPY MUST BE SUPPLIED OF THE FOLLOWING:
1. Birth certificate
2 . Social Security card or Medicare card
3 . Deed,, lease agreement, letter from a utility company
stating years of residency or declaration of domicile
stating years of residency
OFFICE USE ONLY
DATE FILED DATE POSTED