Value Of Proposed County Bond Issue Could Hit 2 Billion
Written by Shannon Pettypiece on March 18, 2004
By Shannon Pettypiece
The value of Miami-Dade County’s proposed general obligation bond issue could hit $2 billion if interest rates stay low and growth in property values continue rising.
Officials originally said $1.6 billion would be available for infrastructure improvements before taxes rise if voters approve the bond in November. But that could increase 25% if economic factors fall into place.
The county’s budget and finance departments have based their calculations on an expected 5.5% interest rate over 10 years as most of the funds were issued.
But that interest rate could be lower, freeing more money, said the county’s finance director, Rachel Baum.
"For planning purposes, we have been using a 5.5% interest rate, but obviously the rate will be what it will be at the time we issue the bonds," Ms. Baum said. "It will probably be lower."
The bond underwriter, expected to be selected through competitive bidding, would set the interest rate. The underwriter that can offer the lowest interest rate would win the bid, Ms. Baum said.
The competitive bidding process "is as secure as you can get, and the marketplace is very well aware of general obligation bonds, and there is always a good market for those," she said.
The bond, if passed, would pay for a variety of projects from prison improvements to new parks.
The amount of property taxes collected will affect the county’s ability to issue bonds, she said, because the county must have a substantial growth rate to be able to pay back the debt.
The finance department is basing its assumptions on the growth rate of property-tax collections from the past 10 to 30 years – which has been about 6%. But it has been higher than that for the past few years, Ms. Baum said.
The variables must be settled on by July, when the Board of County Commissioners will determine a dollar value for capital improvements that can be made without raising tax rates.
If voters approve the bond, the millage rate would stay at 3.9% because the new bond would replace debt now being paid off by the county from the 30-year-old Decade of Progress Bond, which is almost completely retired.
But if voters reject the new bond, property taxes would fall 50 cents a week for the next 40 years on the average home, assessed at $127,000, said public involvement officer Marlene Preston.
County officials are soliciting feedback to determine what projects should be included in the bond issue. The county hopes to have a final list of projects in July for county commissioners to approve and put on the ballot.
Projects would be financed as the county has sufficient revenue to begin paying off the debt, Ms. Baum said. She said most bonds would be issued over 10 years – a few at the beginning of the process, most in the middle and a few at the end.
"We are going to be issuing the bonds as we anticipate we are able to spend the proceeds," Ms. Baum said. "It is going to be like a bell curve, where at the beginning, we issue less, and near the end, it starts to taper off."