Regional News

Miami-Dade Ponies Up for Transit

BRADENTON, Fla. — Miami-Dade County tomorrow is set to price $271.6 million of transit system sales-tax revenue bonds, which is shaping up to be the largest scheduled competitive sale of the week on The Bond Buyer's calendar.

Officials for Florida's largest transit system will use bond proceeds to make bus, rail, and roadway improvements as well as to refund an $86 million loan from the Sunshine State Governmental Finance Commission.

Bids for the all-or-none sale will be taken from 11:45 a.m. until noon tomorrow on Grant Street Group's MuniAuction.

The transaction is expected to be structured as serial bonds maturing from 2009 to 2038, although term bonds may be designated by bidders. Bonds maturing on or after July 1, 2019, are subject to optional redemption.

Financial Security Assurance Inc. is insuring the deal.

Miami-Dade Transit, which operates the system for the county, expects to issue approximately $1.1 billion of debt secured by the transit sales tax through 2012. The half-cent tax was approved by voters in November 2002. The tax is collected countywide and can only be spent on transit-related projects in a program called the People's Transportation Plan. The transit system serves more than 112 million passengers a year.

The bonds being sold tomorrow are rated A-plus by Fitch Ratings, A1 by Moody's Investors Service, and AA by Standard & Poor's.

Fitch placed a negative outlook on the county's transit system sales tax bonds over concern that expected state and federal revenues may not materialize to support planned capital requirements, which could pressure the county to leverage the local transit sales tax to a point that coverage may become inconsistent with the rating category, according to a report by analyst Kelly McGary.

McGary also said that although county officials conservatively budgeted for flat revenues in fiscal 2008, actual year-to-date performance was below budget by 7% at the end of the second quarter. Revenue projections assume 1.5% growth in fiscal 2009, 2% in fiscal 2010, 5% in fiscal 2011 and 2012, and 5.5% a year thereafter.

"Assuming $1.1 billion in parity issuance beyond the current financing through 2012, coverage on parity debt service would remain at least a sound 1.7 times under the county's growth projections," McGary said. "Preserving the A-plus rating will require that Miami-Dade Transit maintain sound financial metrics over the near-term and identify additional revenue sources to fund system capital and operating needs, or, alternatively, scale back capital plans to maintain adequate debt service and operating ratios."

Public Resources Advisory Group is financial adviser on the transaction. Squire, Sanders & Dempsey LLP and KnoxSeaton are co-bond counsel.



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