Bank of America, Royal Bank of Canada win Miami-Dade County bond bids
By Ashley Hopkins
After months of anticipation and hours of countywide discussions, a $346 million bond sale has made its way down Miami-Dade's financial pipeline, with Bank of America Merrill Lynch and Royal Bank of Canada winning the bidding.
According to county documents, while the county was to sell $200 million in general obligation bonds to finance projects through the Building Better Communities program, during the May 17 sale Bank of America Merrill Lynch bought the bonds for $196.7 million. It also bought a series of general obligation refunding bonds, originally issued to fund park and recreation projects, for $37.9 million. The county had priced the refunding bonds at $42 million.
The Royal Bank of Canada was the lowest bidder on $125 million in general obligation refunding bonds, originally issued to fund seaport capital projects. The bank paid $111.4 million.
The county is to finance the $196.7 million sale through 2041 at 4.672% interest. According to county documents, the projected net debt service on the bonds is to average $12.5 million a year.
The $37.9 million sale is to be financed at 3.293% interest and should average $3.263 million annually. When market conditions are taken into account, the refunds should save the county about $4.7 million.
The $111.4 million sale is to be financed at 3.486% interest and should average $10.1 million a year. The refunds should save the county about $13.7 million.
The county applied for ratings from Moody's and Standard & Poor's credit agencies. According to county documents, it received a rating of Aa2 from Moody's and AA- from Standard & Poor's, with negative outlook signifying that the agencies will continue to monitor Miami-Dade's financial strength as it works through recent economic pressures.
The agencies expect to reevaluate the county once it begins make financial gains.
In the meantime, county documents said both agencies will continue to watch the situation at county-owned, cash-strapped Jackson Memorial Hospital, which "weighed heavily in their evaluation of the county's financial risk profile."
According to Standard & Poor's report, "Miami-Dade County's finances have been under significant revenue and expenditure pressures due to decreasing taxable values and a weakened local economy."
Moody's report said, "The county health care system's critical financial condition could further strain county finances."
As in years past, the sales were conducted through internet bidding. According to Lidia Monzon-Aguirre, director of bond administration for the Finance Department, all bids were received electronically via i-Deal LLC's competitive bidding system, and only registered brokers and municipal issuers could view the sales' website.
While local law firms Greenberg Traurig PA and Edwards & Associates PA oversaw the transaction, according to Ms. Monzon-Aguirre, Carter Hammer, county finance director, monitored all sales and accepted, negotiated and awarded bond bids. George Navarette, director of the Office of Capital Improvements, is to monitor all Building Better Communities projects.
Voters approved the $2.93 billion Building Better Communities program in 2004. Under the program the county has put more than $750 million toward various projects, leaving nearly $1.98 billion remaining to be funded under the program after this year's sale.
Last year the county commission voted to increase the county's property tax rate from .39 mils to .445 to repay bonded debt.
Jennifer Glazer-Moon, county budget director, said in a previous interview that while the county established a .39 mil ceiling on such debt in 2004, tough economic times affected the program. Facing tax-roll reductions, the county commission raised millage to keep the general obligation bond spending program from slowing.
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