Orange County, Fla., Plans $86.5 Million Refunding for Debt-Service Savings

BRADENTON, Fla. — Orange County, Fla., Tuesday hopes to competitively sell $86.5 million of tourist development tax refunding bonds for debt-service savings.

The Series 2009 bonds mature from 2011 to 2018, to match the 1998 bonds being refunded, and are noncallable.

“The short nature of the deal and the fact that it’s noncallable should make it very attractive for retail investors,” said Fred Winterkamp, manager of Orange County’s Fiscal and Business Services Division.

The county’s bond resolution requires the deal to obtain a minimum of 4% present-value savings. The deal pricing next week is estimated to receive net present-value savings of $4.3 million, or 4.5%, of the refunded bonds.

The TDT deal is bolstered by affirmed ratings of A-plus from Fitch Ratings and Standard & Poor’s, and A2 from Moody’s Investors Service, all of which maintained stable outlooks despite the recession’s impact on volatile tourist taxes.

Insurance is at bidders’ option, so if the TDT deal closes without enhancement it would be the first stand alone transaction of its kind from the county in several decades, said Winterkamp, who added, “We’re fortunate that the credit ratings are strong and our outlook is stable so maybe investors will be happy to keep that yield for themselves.”

Analysts said there have been sharp declines in pledged revenues and noted that collections are down 16.3% in the last eight months. They also pointed to additional bondholder protections such as a fully cash-funded debt-service reserve fund at $75 million and a well-funded renewal and replacement reserve at $54 million, which can be used to pay debt service.

“Moody’s believes that the declines in pledged TDT revenues in fiscal 2001, fiscal 2002, and thus far in fiscal 2009 are indicative of the vulnerability and narrow pledge of this revenue source supporting nearly $1 billion of debt, although coverage levels remain favorable,” the agency said.

“While we’ve had the decline, we still have 1.5 times coverage,” Winterkamp said, noting that the county took advantage of the good years between the last recession and the current one. “We did a lot of work to build up reserves and strengthen coverage throughout these last five or six years. That’s standing us in good stead.”

The tourist taxes are largely collected on hotels and motels in an area considered the number-one tourist destination in the country and home to mega-theme parks such as Disney World, Universal Studios Orlando, and Sea World, as well as the county-operated Orange County Convention Center, which is the second-largest such facility in the country.

Public Financial Management Inc. and M2 Management Inc. are the county’s financial advisers. Nabors, Giblin & Nickerson PA and Ruye H. Hawkins PA are bond counsel. Greenberg Traurig PA and Liebler, Gonzalez & Portuondo PA are disclosure counsel.

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