The dissolution of the town of Cedar Grove.

• Author: Arline, Terrell K.
• Position: Bay County, Florida

On October 3, 2008, the Bay County supervisor of elections certified the passage of a referendum to dissolve the town of Cedar Grove located in Bay County. Dissolving a municipality may seem straightforward; just close the doors of city hall and walk away. In reality it was not that simple. Municipal dissolution in Florida had never before happened by a vote of the local electors. There was no template to apply, no outline, no playbook. The unprecedented transfer of all assets and liabilities of the town to the county proved to be quits complicated. Over the next few years, Bay County's experience with the dissolution of Cedar Grove involved the entire range of issues facing local governments, from policing to planning, finance to franchises, litigation to land use, employee relations, and even a homemade Star Wars car. A brief review of the dissolution of the town of Cedar Grove should provide guidance to counties and municipalities in Florida faced with a similar challenge.

A Grassroots Campaign

A thorough review of the historical background and politics surrounding the town's citizen-based dissolution effort is beyond the scope of this article. Suffice it to say it started with a strong grassroots campaign. Two years later, the proponents helped elect two pro-dissolution commissioners who, upon taking office, obtained a majority on the commission and voted to adopt a dissolution ordinance and place a referendum on a special ballot. (1) After the election, the citizens went home victorious. Their campaign lived on as it was shifted to the county to complete.

Statutory Basis

Municipalities are creatures of the state and, as such, are created end may be abolished by the legislature. (2) Fla. Const. art. VIII, [section]2(a) provides that "municipalities may be established or abolished and their charters amended pursuant to general or special law; however, when a municipality is abolished, provision shall be made for the protection of its creditors." (3)

F.S. Ch. 165 addresses the formation, merger, and dissolution of municipalities. (4) With regard to dissolution, the statute provides that the "charter of any existing municipality may be revoked and the municipal corporation dissolved" by either a special act of the legislature, or by an "ordinance of the governing body of the municipality, approved by a vote of the qualified voters." (5) When the ordinance is adopted, the local government must set a date of the election for "the next regularly scheduled election or a special election." (6) The statute provides that if the local municipal body fails to act, the county "shall" schedule the election. (7) In any case, the election cannot be scheduled until at least 30 days after the adoption of the dissolution ordinance. Notice has to be published "at least once each week for [two] consecutive weeks prior to the election." (8)

There is surprisingly little guidance provided in the statute on the dissolution process. The law is more focused on how municipalities are created or merged. There is, however, mention of certain "standards" and "conditions" for dissolution. (9) The statute requires that the municipality "must not be substantially surrounded by other municipalities. . . [t]he county or another municipality must be demonstrably able to provide necessary services to the municipal area proposed for dissolution" and "an equitable arrangement must be made in relation to bonded indebtedness and vested rights of employees of the municipality to be dissolved." (10)

When a municipality is dissolved, the county gets assets and debts. At dissolution, "title to all property owned by the preexisting municipal government" is transferred to the county. (11) Counties have some undefined flexibility regarding the assumption of debt. The law states counties "shall also assume all indebtedness of the preexisting municipality, unless otherwise provided in the dissolution plan." (12) There is no other discussion of a "dissolution plan" in the statute. Presumably, provisions could be included in the plan dealing with debt as long as the constitutional requirement to protect "creditors" was maintained. (13)

Finally, the statute anticipates the potential problem caused by a drop in gross tax revenues. Obviously, when a municipality is dissolved, its tax base disappears. This may leave the county with insufficient revenue to pay municipal debts. In such a situation, the successor county may levy and collect additional "ad valorem taxes ... for repayment of any assumed indebtedness through a special district created for such purpose in accordance with chapter 189." (14)

The Dissolution Ordinance

On August 28, 2008, by a 3-2 vote, the commission adopted an ordinance titled "Ordinance Dissolving the Town of Cedar Grove, Florida Municipal Corporation and Dissolving its Charter." (15) Pursuant to the statutory process for dissolution, this ordinance was subject to approval by the town's electorate. The charter did not contain provisions for a citizen-initiated referendum for dissolution, which are included in some municipal charters. Initially proponents thought it was necessary to amend the charter to provide for dissolution. This obviously would have overly complicated, delayed, and perhaps even doomed the process. They later correctly concluded that the dissolution process was governed by Ch. 165, not the charter, through the statute's express preemption of the procedures for formation and dissolution of municipalities. (16)

The dissolution ordinance contained findings that tracked the statutory conditions precedent for dissolution. These included an analysis that "58 [percent] of the...