Turning over a new leaf, Miami turns down cash today for debt tomorrow
By Jacquelyn Weiner
Despite $31.5 million in "cash-flow savings" a bond refinancing could generate, Miami opted last week against back-loading debt payments.
Refinancing would have saved from fiscal 2012-2015, said Finance Director Diana Gomez, but would have increased debt-service costs from 2016 to 2026.
Over the life of the bonds, she said, refinancing would raise debt $40.3 million.
"To me, this is exactly how the City of Miami and the county has gotten itself into trouble," said Commissioner Marc Sarnoff. "This commission needs to start operating this city on a cash-flow basis."
Proposed refinancing would have encompassed five series of existing debt, Ms. Gomez said, with final payments made within existing maturities in all but one series.
"This restructuring will provide cash-flow improvements in the near term to replenish general fund reserves," she said.
Under a financial integrity ordinance, she said, the city is to rebuild reserves to $94 million by Sept. 30.
Ratings agencies have also pointed to Miami's low reserves as a concern.
Francis Suarez told fellow commissioners he was "concerned about the reserve" and the city's "precarious financial position" but wasn't set on a way of rebuilding.
Commissioner Frank Carollo said he wasn't sure putting off payments "is the right vehicle."
"That kicking the can down the road is a concern to me," he said.
Mr. Sarnoff agreed, adding that he's "not that interested" in refilling reserves rapidly because the gap hasn't seemed to stifle interest in Miami bonds: "There is an appetite for our debt."
This month's $72.7 million bond sale drew orders for $222 million, officials said, and came in $9 million under the approved borrowing cap.
Ms. Gomez added that insurance backing the bonds helped boost ratings.
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