BRADENTON, Fla. — Fitch Ratings on Wednesday assigned an A rating to Miami-Dade County’s $100 million of special obligation bonds that will be the first round of financing for the Florida Marlins’ $515 million ballpark.
Miami-Dade is funding the majority of the stadium’s cost, which is being shared to a much lesser extent with the city of Miami and the Marlins. The county will own the stadium.
The Series 2009 bonds are scheduled to be sold by negotiation on June 9, according to a report by Fitch analyst Kelly McGary.
Proceeds will be used to finance a portion of a new 37,000-seat ballpark with a retractable roof on the former site of a football stadium about two miles away from downtown Miami.
Fitch’s A rating on the subordinate special obligation bonds is based on satisfactory coverage of annual debt service provided by pledged convention development tax proceeds, or CDT, and a backup pledge of the county’s local government half-cent sales tax. Although the rating relies on the secondary pledge of the half-cent tax, the county expects the debt to be repaid from CDT revenue, and the debt is heavily backloaded to make this possible, according to McGary.
“The rating is based on the support of the sales tax,” McGary said in an interview yesterday. “Given the deterioration of the [CDT] revenue stream, we considered the possibility of the county actually having to use the sales tax to support debt service. This risk is incorporated into the county’s AA-minus/stable general obligation rating that we also affirmed.”
CDT revenue is down 10.7% year-to-date for fiscal 2009, compared to the same period in 2008, McGary said. There was a 21% decline in April 2009, compared with April 2008, the most recent monthly data available.
Although CDT revenue must stabilize over the next several years to keep pace with ascending debt service payments, McGary said, the city maintains a surplus of approximately $26 million in CDT revenue that it would use to support debt service before utilizing the secondary sales tax source.
Fitch’s rating is the first of what is expected to be several ratings for financings supporting stadium construction. County officials could not be reached for comment by press time.
Miami-Dade’s preliminary plan of finance for the stadium called for the CDT bonds and a future sale of $236.5 million of professional sports franchise facility tax, or PST, revenue bonds to be sold as capital appreciation bonds. The county’s portion of stadium costs also will include $50 million of GOs. Some or all of the debt is expected to have maturities up to 40 years.
In approving the stadium recently, Miami-Dade officials recognized there could be difficulties with financing the project, given problems in the bond market. In the contract for the stadium, the county imposed interest rate caps of 7.5% on tax-exempt PST and CDT bonds, and an 8% cap on taxable bonds secured by those tax revenues. The interest rate cap on the GO bonds is 6.25%.
The contract also contains two deadlines in which the county can walk away from the deal for any reason, including if the bonds cannot be sold. However, it still must pay the team $4 million if the deal terminates by June 1 and $7 million if it terminates by July 1.
JPMorgan will be the senior manager on the upcoming CDT deal. Squire Sanders & Dempsey and KnoxSeaton are co-bond counsel. Edwards Angell Palmer & Dodge and Rasco Klock Reininger Vigil & Nieto are co-disclosure counsel. Public Financial Management Inc. is financial adviser.