Fitch gives Miami-Dade County negative outlook on bonds
By Ashley Hopkins
Our now-dissipating housing crisis has left Miami-Dade a negative outlook from Fitch Ratings, leaving county officials counting coins and adjusting services in an effort to pull out of financial limbo.
As negative ratings indicate that doing business with the county could be a financial risk and could affect Miami-Dade's ability to secure bonds, last week's report recommended that the county drastically reduce its spending before public improvement projects come to a halt.
County spokespersons were unable to produce officials to discuss the report over a two-day period.
When considering the county's tax-supported initiatives, with AAA being the highest score available, Fitch rated:
n$1 billion general obligation bonds at AA.
n$151 million public service tax revenue bonds connected with county unincorporated areas' public improvements at AA.
n$29 million special obligation bonds connected with the county's Courthouse Center project at AA-.
n$368 million public facilities revenue bonds connected with Jackson Health System at AA-.
n$319 million professional sports franchise facilities tax revenue bonds at A+.
Special obligation bonds are supported by the county's full faith and credit and are payable from ad valorem taxes.
Public service tax revenue bonds are secured by a public service tax pledge levied on the sale of electricity, gas, coal, fuel, oil, water service and telecommunications in unincorporated Miami-Dade.
Bonds associated with the Courthouse Center project are payable from a $15 traffic surcharge and, if necessary, from a county covenant to annually budget and appropriate from legally available non-ad valorem revenues.
Bonds associated with Jackson are secured by the gross revenues of the Public Health Trust and the county's commitment to budget and appropriate non-ad valorem revenues to replenish draws from the debt service reserve fund.
Professional sports franchise facilities tax revenue bonds are secured by a 1% professional sports franchise facilities tax and a 2% tourist development tax on the rental of hotels, motels and apartments.
According to the report, the county's housing market may be largely to blame for the negative ratings.
"Miami-Dade County has a strong and diverse economy with sound long-term prospects despite recent weakness resulting largely from an unusually weak housing market. Financial flexibility remains modest and budget balance in an environment of both strong taxpayer resistance and strong union presence will be challenging."
According to the report, while the housing market's decline impacted the county's economy, taxable assessed property values didn't suffer as much as the rest of the state.
The county has seen an increase in single-family home and condo sales and an apparent stabilization of prices. Foreclosures are down significantly since 2010, and positive year-to-date sales tax figures indicate that the improvements may offer a boost to the local economy, the Fitch report says.
As Mayor Carlos Gimenez and the county commission consider a budget that reduces property tax rates to fiscal 2010 levels and presents a number of service adjustments, including the closing of county facilities and the consolidation of departments, the Fitch report indicates that "management is committed to implementing a balanced budget without revenue increases."
It states that "additional service reductions would be needed if concessions are not accepted and could be difficult to implement."
While economic indicators are showing "signs of slow recovery," the report states that county general fund reserve levels are modest and leave little leeway if spending reductions don't meet county goals.
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