Week of July 2, 2009
| Wachovia seals deal as Miami-Dade banker indefinitely By Risa Polansky Miami-Dade County could be bound to Wachovia as its primary bank for the next few decades after wrapping up terms Tuesday for a letter of credit to back a portion of the financing for a new Marlins ballpark. Wachovia is to provide an up-to $100 million letter of credit to cover the variable rate bonds the county is selling as part of about $448.4 million in new and refunding bonds to finance the $644 million-plus stadium. In agreeing to provide the letter, the bank requested the county pay administrative fees — including letter of credit fees — the same time as other expenses such as debt service and reserve payments. Commissioners gave initial approval last month and the final OK Tuesday, solidifying the deal for the letter. In doing so, the county agreed also to use Wachovia for its primary depository and operating accounts — as it does already — for the life of the letter. The life of the bonds is up to 40 years. The county has the option at any time to convert from variable-rate to fixed-rate bonds, negating the need for the letter. Should the county choose to switch primary banks, Wachovia would have the right to change the cost of the letter. "In today's environment… we've been seeing this provision," said Frank Hinton of the county's finance department. But Miami-Dade is already seeking bids for a new primary depository, Commissioner Carlos Gimenez, a stadium opponent, said. "If we don't come up with Wachovia [as the bid winner]…Wachovia then can change the rate they're charging for this letter of credit," he said. Mr. Hinton confirmed, but noted that the county could terminate the letter at no cost. Then, however, Miami-Dade would have to find another bank to provide a letter of credit to cover the bonds. In that case, the county couldn't guarantee the letter's cost would be the same or lower, Mr. Gimenez pointed out. "It's almost like a roundabout way to go to a no-bid" contract with Wachovia to provide banking services, he said. Commissioner Sally Heyman, another vocal stadium credit, protested amending an already approved bond measure to accommodate Wachovia's fee schedule requirements. It sets precedent, she said, for "changing the rules to just accommodate what you want." The county Tuesday fell short $6.2 million in its planned bond sale, selling only about $80 million in bonds backed by convention development taxes rather than a planned $86 million. At the same time, interest rates on that portion of the bonds exceeded the commission-approved 7.5% cap, hitting about 8.16%. However, rates on the balance of the bonds — funded by professional sports taxes — fell below the cap, meaning the combined interest rate would sit at about 7.06% should the sale go through. Late Tuesday, commissioners were still debating the issue. If the county agrees to pay the higher rate on the convention development tax bonds and accept the $6.2 million shortfall, the Marlins would cover any extra needed to get the stadium built, team President David Samson pledged. "The team will put in what is required to finish this building." If commissioners are unwilling to make the tweaks, they could kill the stadium deal before July 17 and walk away penalty free. |
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