Bond payments could force taxes up in growth slows, analyst says
By Suzy Valentine
The rate of growth in tax revenue will affect the distribution of Miami-Dade County's nearly $3 billion in bond money.
The $2.925 billion in general obligation bonds authorized in November for improvements across the county is pegged to predictions of growth in tax rolls during the next 45 years, an analyst for the county said Tuesday, which if unfulfilled could lead to higher tax rates or frustrated projects.
Voters approved the bond issue Nov. 2, 2004, on the basis of a 0.39 millage rate, which would produce the almost $3 billion plus interest on the bonds if tax rolls grow at a rate of 5.5% per year. There is a 13-year timeframe for distribution of funds.
"We consider that a conservative growth rate," bond analyst Frank Hinton of the county's Division of Bond Administration told the general obligation bond program subcommittee. "We've averaged in excess of 6% since 1990 and in the last five years, we've averaged greater than 8%, so we felt 5.5% was a conservative estimate in the growth of our tax roll."
Anxious that unmet growth could lead to a rise in the millage rate, County Commissioner Carlos Gimenez asked that a blanket ordinance, to be invoked at each stage of the distribution process, be amended to state an intent to tax at the 0.39 rate. The subcommittee approved the revision.
"The accelerated growth concerns me," Mr. Gimenez said, "because everything averages out. If you have accelerated growth for three or four years, where you really have a lot of building, eventually that has to stop and you have to come back down."
Mr. Hinton said that if the county didn't see the growth in tax rolls, it "wouldn't issue as many bonds" or "could end up having to raise the millage rate greater than 0.39 mills to make our payments."
That would mean that taxpayers were liable for more than voters had bargained for, Mr. Gimenez said.
"We sold the bond to the people saying that we weren't going to raise that millage rate above 0.39," he said. "How can we legally raise it past the 0.39 mills?"
Technically, the bond issue was silent on the question of millage rates, entitling the county to revise the rate as required. Limiting a general obligation bond to a fixed millage presents its own problem - higher interest rates.
The subcommittee comprising commissioners Dorrin Rolle, Carlos Gimenez, Katy Sorenson and chair Bruno Barreiro approved another resolution and recommendation on the bonds issue Tuesday.
The subcommittee approved a resolution requesting that County Manager George Burgess provide within 60 days a report timetabling payments to beneficiaries. The late April deadline doesn't itself signal the start of the distribution. Any schedule has to be approved by the commission.
But at least one commissioner asked that the matter be expedited.
"Don't feel that you need to hold yourselves to 60 days," urged Ms. Sorenson, "because I really do want it to get started. I feel like this is just getting started today."
At the request of Mr. Rolle, the resolution was amended to reflect which districts as well as which projects are to receive funds first.
The county is to distribute $250 million, less than 1% of total authorized funds, in the first round, though it isn't yet determined when or to whom.
"We are anticipating $250 million in first year," said Mr. Hinton, "and approximately $200 million thereafter through the 13th year to pay for projects."
Commissioners also approved a proposed ordinance for adoption by the entire commission to create an advisory committee, to the general obligation bond program subcommittee, that is to meet quarterly.
Ms. Sorenson recommended that a duty "to perform such other functions as are requested by the mayor, the County Commission and/or county manager" should be struck out for being too broad - a suggestion the subcommittee approved.