Miami-Dade Aviation refunding bonds to save $43 million

In a move that will save nearly $43 million, Miami-Dade lawmakers last week OK’d a massive flight of aviation revenue refunding bonds to repay bonds issued a decade ago.

The refunding bonds, approved unanimously, can total up to $600 million, a memo from Deputy Mayor Ed Marquez said. Issuing them will cost an extra $3.3 million now but save 10.5% over their lifetime, the memo said, saving $66.2 million on debt service – a net present value of $42.8 million.

Documents from Hilltop Securities, an advisor to the Aviation Department, show the refunding bonds fully repaid by Oct. 1, 2041. Based on $368.84 million principal and about $220.71 million interest, debt service through the bonds’ lifetime is roughly $589.55 million. Debt service for the prior bonds exceeded $660.84 million.

The 10.5% saving is characteristic of a “historically low-interest-rate environment” that last month saw the county issue refunds totaling more than $1 billion for an initial estimated savings of almost $160 million.

“We’re operating in a historically low-rate environment,” said Arlesa Wood, county Bond Administration Division director, who will manage the refunding bonds. “We were like, ‘Oh my God, we have to take advantage of some of this.’”

Aviation Department CFO Sergio San Miguel will manage debt service payments and monitor debt compliance, Mr. Marquez wrote.

Ms. Wood told Miami Today the high savings rates for these bonds and the ones commissioners OK’d last month preceded the current pandemic.

“If you look at the market back when the pandemic took place, everybody across the county was running to the market to refund bonds because rates were so great,” she said. “Almost every municipality in the county, prior to Covid-19, were in a position to go to the market to take advantage of [this], and when the market stabilizes, we plan to close on these items.”