Found this press release online. I assume this is good news and that they are going to start selling these on June 9th bodes well for a July groundbreaking. Perhaps someone who understands this better then me can explain this and how the bond market is looking these days.

 

 

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20090520006338&newsLang=en

 

Fitch Rates Miami-Dade County, Florida $99.3MM Subordinate Special Obligation Bonds 'A'

TAMPA, Fla.--(BUSINESS WIRE)--Fitch Ratings assigns an 'A' rating to Miami-Dade County, FL's $99.3 million in subordinate special obligation bonds, series 2009. The bonds are scheduled to be sold via negotiation on June 9, 2009. Bond proceeds will be used to finance a portion of a new baseball stadium to be constructed in the county for the Florida Marlins. The Rating Outlook is Stable.

 

In addition, Fitch has affirmed the following ratings:

 

--Outstanding subordinate special obligation and refunding bonds at 'A';

 

--General obligation (GO) bonds at 'AA-';

 

--Public service tax revenue bonds at 'AA-';

 

--Special obligation and refunding bonds at 'A';

 

--Special obligation bonds (courthouse center project) at 'A+'.

 

The Rating Outlook on all bonds listed is Stable.

 

The 'A' rating on the subordinate special obligation bonds is based on satisfactory coverage of annual debt service provided by pledged convention development taxes (CDTs) and, if needed, the county's share of the local government one-half-cent sales tax. The rating also considers the characteristics of the county's mature tourism sector including its favorable climate, facilities and amenities. Although the rating relies on the secondary pledge of the half-cent sales tax, the county expects the debt to be repaid from CDT revenues, and the debt is heavily backloaded to make this possible. CDT revenues are subject to fluctuation and are down 10.7% year-to-date for fiscal (FY) 2009 relative to FY 2008 with a 21% decline in April 2009 from April 2008, the most recent monthly data available. CDT revenues must stabilize over the next several years to keep pace with ascending debt service payments. The city maintains a surplus of approximately $26 million in CDT revenues that it would use to support debt service before utilizing the secondary sales tax source.

 

The CDT is levied at a rate of 3% on rentals of transient facilities for a term of six months or less. It is collected throughout Miami-Dade County, except in Bal Harbour and Surfside. Over the last 10 fiscal years through FY 2008, CDT revenues have grown at the annual average rate of 7.4% which includes a 17.3% decline in FY 2002. Going back 20 years, the only other decline was in FY 1994, following Hurricane Andrew and a number of highly publicized attacks on tourists. In both cases, recovery occurred within three years. Fitch believes that the recent deterioration in revenue will continue through at least the current fiscal year. Sales tax growth has been less volatile but slower; in the last five fiscal years it grew at an annual average of 4.2%. Year-to-date receipts for FY 2009 are down approximately 8.5% relative to FY 2008. Fiscal 2008 pledged revenues, including sales taxes, cover maximum annual debt service (MADS) on prior payments made from pledged revenues, parity and senior lien series 1996 bonds (also rated 'A' by Fitch), which occurs in 2037, by 1.5 times (x). If the CDT revenue declines accelerate or fail to stabilize over the next three to four years, that source is unlikely to yield sufficient revenues to pay debt service without the sales tax, which the county uses for operations. The sales tax made up 8.6% of FY 2008 general fund revenues. Fitch believes the medium- to long-term prospects for the county's tourism sector are sound and expects tourism-related revenues to stabilize in the next several years.

 

Miami-Dade County's general credit characteristics include a broad, internationally focused economy, adequate financial flexibility and moderate debt levels. The county faces many pressures as it finances its large capital improvement plan which includes a significant portion of the capital costs to construct the new stadium for the Florida Marlins. The weakening economy, reflective of the greater global recession, is evidenced by growing unemployment (which remains below state and national levels) and slowing taxable assessed value (TAV) growth. TAV grew at an average annual rate of 13.3% from FY 2003 through FY 2008 but slowed to just 0.1% for FY 2009. Officials expect TAV to decline by approximately 13% for FY 2010 and Fitch believes that declines may occur over several years despite some ongoing development. Housing data obtained by Fitch suggests that the region's residential real estate market is heavily exposed to non-traditional mortgage products, and that the foreclosure problem is more serious in Miami-Dade County than in other regions of the country.

 

With an adequate financial position the county faces limited financial flexibility resulting from a slow-down in economically sensitive revenue streams as well as greater state-imposed restrictions on ad valorem revenue-raising capabilities. A sizeable $41 million net deficit at the close of FY 2008 (unaudited) reduced the unreserved general fund balance to $125 million, equal to 5.7% of expenditures and other uses. The county maintains an emergency reserve within its general fund which was approximately $71 million of the $125 million in FY 2008. Year-to-date performance in the general fund for FY 2009 indicates that the county will add several million to the emergency reserve but reduce the unreserved general fund balance by approximately $25 million. County officials will be challenged to meet all financial obligations in FY 2010 given the expectation that economically sensitive revenues, such as sales taxes, will decline further and that TAV will likely decline. Fitch views favorably that county officials were able to generate additional ad valorem revenue for operations with a super majority vote of the commission to raise the ad valorem millage rate beyond the roll-back rate for FY 2009.

 

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Well if you were to believe some of the ppl on this board then you would think that either A) these bonds won't be sold or B) aren't good. I have argued that these bonds are very good to much disagreement. Because they are good these bonds will sell. But I know many will continue to say that these bonds MIGHT not sell. If they are good then they will sell. If they are average bonds they probably will sell. OK. I'm done.

Basically, an "A" rating means that is the lower side of quality investments. Fluctuations in the economy can affect a company's (or in thsi case, city/county) ability to meet its obligations when it comes to repayign the bond at maturity at this level. Really, we shouldn't be as concerned with the fact they gave it an A rating over an AA (I contend there's little difference) in terms of sellign the bonds as the fact they gave it a stable outlook.

 

Generally, new bonds have a + outlook which means there's a high probability for return on investment. When you consider many of the other So. FL bonds have negative outlooks, investors might look at the stadium bonds and figure there's a high chance their outlook will turn to negative (which is a precursor for a ratings downgrade to B). Since the stadium bonds are tied to hotel bed taxes and not the general obligationn fund (property taxes), they will be more volatile.

 

I believe the timing of the offering was purely strategic, as they will be sold as the torusit season is beginning. I believe it is their hope that the initial bump in occupancy rates tourist destinations see at the beginning of summer (even in turbulant recessionary economies) will serve as good news to investors and as an incentive to buy.

Wall St. endorses ballpark bonds

 

On Tuesday, the answer became clearer: All three Wall Street credit rating agencies announced favorable assessments of the county's plan to sell more than $300 million in bonds -- which will be repaid with tourist taxes -- before groundbreaking on the former Orange Bowl site in July.

 

The bonds received ratings ranging from ''A+'' from Standard & Poor's to an ''A'' grade from Fitch Ratings and ''A2'' from Moody's Investor Services.

 

All of the ratings put the bonds in the middle of the pack for investment-grade bonds.

 

''That should be enough to get it done,'' said Leo Guzman, president of securities firm Guzman & Co. in Coral Gables. ``The county should be pleased.''

 

http://www.miamiherald.com/news/miami-dade/story/1066916.html

Wall St. endorses ballpark bonds

 

On Tuesday, the answer became clearer: All three Wall Street credit rating agencies announced favorable assessments of the county's plan to sell more than $300 million in bonds -- which will be repaid with tourist taxes -- before groundbreaking on the former Orange Bowl site in July.

 

The bonds received ratings ranging from ''A+'' from Standard & Poor's to an ''A'' grade from Fitch Ratings and ''A2'' from Moody's Investor Services.

 

All of the ratings put the bonds in the middle of the pack for investment-grade bonds.

 

''That should be enough to get it done,'' said Leo Guzman, president of securities firm Guzman & Co. in Coral Gables. ``The county should be pleased.''

 

http://www.miamiherald.com/news/miami-dade/story/1066916.html

 

Nice! Thanks for posting this update.

Here are some other articles on this topic:

 

http://www.bizjournals.com/southflorida/stories/2009/05/25/daily22.html

Wednesday, May 27, 2009, 11:15am EDT

Stadium bonds maintain high ratingSouth Florida Business Journal

 

Miami-Dade County's general obligation bonds kept their rating at the bottom of the high-grade investment category in advance of construction of the new Florida Marlins stadium.

 

Ratings for other tax streams associated with the $640 million stadium were in the next tier down, upper-medium investment grade.

 

The county plans to begin sales of bonds associated with the Professional Sports Franchise Tax, Tourist Development Tax and Convention Development Tax in early June.

 

Solid ratings are important to get construction of the 37,000-seat retractable-roof stadium accomplished because higher ratings come with lower interest rates. Backers of the stadium have promoted it as a local stimulus for jobs, especially in the hard-hit construction sector.

 

?We are pleased with the outcome,? Miami-Dade County Mayor Carlos Alvarez said in a news release. ?The ratings are solid and demonstrate the county?s financial strength."

 

Miami-Dade County Manager George Burgess said: ?The favorable ratings reinforce our commitment to acting responsibly and conservatively every step of the way as we push forward with a Marlins stadium paid for by tourist tax dollars.?

 

Fitch Ratings and Standard & Poor's affirmed the county's general obligation bond rating unchanged at AA-.

 

This is significant, because bond ratings are under scrutiny because of global economic weakness.

 

S&P assigned an A+ to the sports tax, while Fitch gave it an A and Moody's Investors Services assigned it an A2, which is similar. All are in the upper-medium investment grade category.

 

S&P and Fitch gave the convention tax an A, which is also upper-medium investment grade.

 

http://www.miamitodaynews.com/news/090528/story2.shtml

 

Trio of ratings signals favorable Marlins stadium interest rate

 

 

By Risa Polansky

Newly announced bond ratings could set Miami-Dade up to score in the bond markets early next month when officials set out to finance a Marlins ballpark, Finance Director Carter Hammer says.

Ratings from major agencies "would place those particular financings well within" the 7.5% interest rate cap set by commissioners, he said Tuesday.

There's no way to predict a rate until the county attempts to sell the bonds June 9 and June 10, he noted, but he called the ratings positive signs.

Moody's Tuesday announced an "A2" rating for the county's planned stadium bond issues backed by professional sports franchise tax revenue and has yet to issue one for bonds backed by convention development taxes.

A2 is the sixth highest of the agency's 21 ratings.

Fitch announced Friday an A rating, the third highest on the agency's 11-rating scale.

A memo from County Manager George Burgess late Tuesday indicates Standard & Poor's, the third major rating agency, issued an A+ rating to bonds backed by professional sports tax revenue and an A to those backed by convention development taxes.

The agency itself had yet to announce the ratings Tuesday, but Mr. Hammer said that in general an A+ is higher than the ratings from the other agencies.

To assign bond ratings, the agencies considered the funding stream for the $633 million-plus stadium project ? mainly tourism tax revenues ? and the ballpark deal itself.

Though sports and tourist tax collections are down 17.6% from this time last year, with a 26% decline in May alone, Fitch says, "Fitch believes the medium- to long-term prospects for the county's tourism sector are sound and expects tourism-related revenues to stabilize in the next several years."

Moody's pointed out that drops in tourist tax collections now and during past economic crises are "indicative of the vulnerability and narrow pledge of this revenue source."

As far as the ballpark deal itself, "Fitch reviewed the key stadium agreements and generally views them as adequate, and risks associated with the project are viewed as equitably shared between the parties."

Both agencies note ratings are based in part on the county's pledge of non-ad valorem revenue as a backup funding source.

The agencies point out also that the financing plan is "heavily back loaded" to allow the county to cover payments with tourism revenues.

In general, the market now is good for municipal bond issuers, said Thomas Doe, CEO of Concord, MA-based Municipal Market Advisors.

But it's tough to predict the interest rate an A rated bond might yield, he said Tuesday, before Moody's announced its rating and the county revealed Standard & Poor's.

Mr. Doe said he's seen some "A" bonds clinch favorable interest rates, but others end up with "higher than expected interest rates because the deal itself had questions, or financing for the deal was not sound."

It depends on the deal, he said, but predicted the county's 7.5% cap "should be" achievable in today's market.

Manager Mr. Burgess cautions in his memo that "certain hurdles remain," including a bond insurance commitment for the sports tax-backed financing and a letter of credit related to a portion of the sports tax financing that's variable rate ? "anticipated late this week."

Well, the rating agencies have done a lousy job overall with their "ratings" the last few years. That's part of the reason the world's economy is in the crapper.

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I know that if I was considering investing in these bonds, and with what I've seen of baseball crowds since 1993 in South Florida, I wouldn't assign such a high rating to the revenue stream on a 30 year bond. I wouldn't consider investing in the bonds unless they were returning 15% plus(junk, junk bond like rates). Thank goodness(unless you're a Dade County taxpayer) they managed to slip in the added backing of the general fund. The general fund will be tapped to pay off these bonds in part, imo.

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As the ratings stand, unless something very unexpected happens to the world's economy in the next few days, these bonds should have no problem selling, if the cap is 7.5%. I'd think they'd sell easily in the 6% range. Not with my money, though.

I'm by no means an expert on this subject, but I think you are wrong about attendance impacting the bond ratings. These bonds are tied to the Miami-Dade tourism industry, not attendance at the stadium. Revenue generated by tourist taxes pay off these bonds, not revenue generated from the stadium or the team. Investors would have no reason to be concerned about the Marlins or their attendance problems since 1993, so long as tourism in Miami recovers as the economy does.

I'm by no means an expert on this subject, but I think you are wrong about attendance impacting the bond ratings. These bonds are tied to the Miami-Dade tourism industry, not attendance at the stadium. Revenue generated by tourist taxes pay off these bonds, not revenue generated from the stadium or the team. Investors would have no reason to be concerned about the Marlins or their attendance problems since 1993, so long as tourism in Miami recovers as the economy does.

 

You're right. And that's an important point.

Now, how often do you see a straight acceptance of a mistake....and good karma immediately returns as UGGLA hits a HOME RUN!

I'm by no means an expert on this subject, but I think you are wrong about attendance impacting the bond ratings. These bonds are tied to the Miami-Dade tourism industry, not attendance at the stadium. Revenue generated by tourist taxes pay off these bonds, not revenue generated from the stadium or the team. Investors would have no reason to be concerned about the Marlins or their attendance problems since 1993, so long as tourism in Miami recovers as the economy does.

 

You're right. And that's an important point.

Now, how often do you see a straight acceptance of a mistake....and good karma immediately returns as UGGLA hits a HOME RUN!

 

LOL. Thanks. If only Fredi and the front office would admit mistakes as easily and get Bonifacio out of the leadoff spot(or out of the lineup altogether)...but that is an issue for another thread.

 

OK...back to the stadium bonds topic....

Here is a link to the memo that County Manager Burgess sent to the commissioners updating the progress on the stadium bonds:

 

http://www.miamidade.gov/manager/library/update_stadium_project_financing.pdf