Information On Bond Rates Marlins Stadium Financing Comes In Tuesday
Written by Risa Polansky on June 25, 2009
By Risa Polansky
A Marlins ballpark meeting planned for Tuesday is to not only reveal the price and outcome of planned bond sales but also allow county commission discussion and public comment on what administrators call a technical change to a deal for a stadium.
At a meeting Friday, commissioners gave an initial thumbs-up to the change: amending financing plans to allow county administrators to pay fees to Wachovia, which is providing an up-to $100 million letter of credit, at the same time they pay other expenses such as debt service and reserve payments.
Administrative fees, including letter of credit fees, were last in line in the original cash flow that commissioners approved months ago when they agreed to allow the administration to issue up to $563 million in bonds to back the planned ballpark.
The county plans to sell about $454.6 million in new and refunding bonds.
The bank, which is to provide the letter to cover the variable rate bonds the county hopes to sell as part of the issuance next week, requested the change.
It passed with no questions at a special meeting Friday, a Miami-Dade procedural rule keeping commissioners and administrators from discussing ordinances during their initial reading.
Tuesday’s scheduled follow-up is to allow for a final vote and both commission and public comment.
There, administrators are also to share the outcome of planned June 29 and June 30 bond pricings.
After last week’s county vote, County Manager George Burgess in an interview called the Wachovia change "technical."
The bank wants its fees paid at the same time the county makes debt service payments, "which doesn’t matter to us," he said.
The county has already budgeted the fees, so the payment order is of no consequence, Mr. Burgess said.
In an interview before the meeting, Commission Chairman Dennis Moss called the bank’s request justifiable, especially in uncertain economic times.
"These are some technical issues that we have to deal with, and I think it’s justifiable… the bank wants to have protection in the process," Mr. Moss said.
Stadium opponents — who voted against the amendment — see it differently.
"I think it speaks to a rushed deal that wasn’t thought out, and we’re seeing the first of what will be many changes," Commissioner Sally Heyman predicted in an interview before the meeting.
Carlos Gimenez, another commissioner against the stadium deal, said after the meeting that "it’s interesting to me, all the back flips we’re doing to get this bad deal done."
The county needs the letter of credit to support the portion of the bonds to be sold as variable rate.
Variable-rate bonds are frequently resold at different interest rates. If no one buys, the letter of credit acts as the life vest.
The county is only issuing variable rate bonds in the first place to secure low interest rates on the front end of the stadium deal, Mr. Gimenez said.
County Finance Director Carter Hammer said via e-mail that "Variable rate bonds allow the county to take advantage of optimal debt structures which utilize a combination of bonds to reduce the cost to the county. Variable rate bonds currently have a lower interest rate than fixed rate bonds."
But variable rate bonds are a risk, said Mr. Gimenez, a vocal critic of the ballooning bond payments that have the county repaying the bulk of the stadium debt years down the line.
As the name "variable rate" suggests, rates vary, and they may not be low later, Mr. Gimenez fears.
The commission-approved 7.5% cap on interest rates for tax-exempt bonds doesn’t apply to the variable rate bonds.
He worries also that, though tourist taxes are meant to cover the bulk of stadium costs, the county could end up using non-ad-valorem revenues to pay off the ballpark.
The county pledged that stream — which helps fund county services — only as a backup to the tourist tax dollars, a factor in securing favorable stadium bond ratings.
Administrators say it’s unlikely it will ever be tapped.
Mr. Gimenez is skeptical.
"I still believe sooner rather than later we’re going to be touching the general fund," he said.
Miami city commissioners discussed and OK’d changes at their own special meeting last week.
They voted 3-2 Thursday to amend the financing timeline to accommodate the county, with Tomás Regalado and Marc Sarnoff voting no, citing continued opposition to the project.
Like Mr. Gimenez, Mr. Sarnoff said: "This baseball deal is financed on the back of your grandchildren."
He argued also that moving forward with the stadium later would be even worse with the inevitable fiscal strains the city is facing.
"There’s a crisis looming in the City of Miami, and that’s our budget," Mr. Sarnoff said. "We all know it."
The city has budgeted $105 million toward the stadium and accompanying parking, none of which will affect the general fund, said Larry Spring, the city’s chief financial officer.
Other commissioners spoke in favor of moving forward with stadium plans.
"We have been moving forward in this process," said Chairman Joe Sanchez. "There’s money already invested."
Miami Today staff writer Jacquelyn Weiner contributed to this report.