Miamidade County Cant Keep Putting Off Principal Payments Commissioners Say
Written by Risa Polansky on November 6, 2008
By Risa Polansky
Miami-Dade County can’t continue piling debt on the backs of future taxpayers, some commissioners said at a Budget and Finance Committee meeting Tuesday.
They threw out a request for an up-to $25 million Sunshine State Government Financing Loan to fund seaport improvements, insisting the administration draw up a restructured funding scheme that would not defer principle payments.
The arrangement commissioners nixed called for putting off principle payments for the first 10 years of the loan, paying only annual interest until then.
"Why are we pushing everything off into the future?" asked Commissioner Carlos Gimenez, rattling off a list of other county investments whose principle has yet to be paid down.
Some include: special obligation bonds issued in 1998, whose $94.48 million principle has been reduced only to $94.36 million; and 2005 general obligation bonds with $250 million in outstanding principle and a final maturity date in July of 2035.
Finance Director Rachel Baum said the county tries to amortize payments annually.
While it would be ideal to begin doing so on the seaport loan immediately, she said, "the department does not generate those kinds of revenues."
But if the county keeps putting off payments on bonds and loans, it eventually "will end up upside down," Mr. Gimenez said, whereby its debts exceed assets. "I think we need to pay as we go… I just see some troubling signs here, and I really can’t support it."
Commissioner Joe Martinez also refused to approve the deal as is.
"I would like a different financing agreement that doesn’t make my kids and my grandkids have to come and pay for it," he said.
Because only four commissioners attended the committee meeting, the two promised nay votes threatened to kill the loan altogether.
Commissioners José "Pepe" Diaz and Rebeca Sosa protested, stressing the importance of making upgrades to the port to keep it competitive.
The loan is meant to fund projects such as channel dredging, terminal improvements and security projects.
"We don’t want business to go to Fort Lauderdale," Ms. Sosa said. "We cannot sit here and allow that to happen. We cannot sit here and stop progress."
Commissioners agreed to withdraw the loan item, directing the administration to come back with a new funding scheme.
Finance director Ms. Baum noted that shaky financial markets could make it difficult to issue the loan.
In that case, she said, "we will be coming back [to the commission] with an alternate financing mechanism."
The loan agreement says that if the county loses its credit provider on the variable-rate loan and can’t secure another, it would be responsible for paying off the full loan.