The Florida Cabinet authorized the issuance of $1.78 billion of new money and refunding bonds, some of which may be sold as taxable debt with advance tax-exempt refundings no longer possible.
Florida typically borrows on a tax-exempt basis, but $1.46 billion of the borrowings approved by the Cabinet Tuesday may be sold as taxable refunding debt, said Ben Watkins, director of the Division of Bond Finance.
"We're looking for the authorization to do it on a taxable or a tax-exempt basis," Watkins said. We may be "doing it on a taxable basis to avoid the federal restrictions on advance refundings so we can go ahead and lock in today's interest rates and not have to wait until the loans are pre-payable.
"That's a little bit unusual for us to execute on a taxable basis but rates are so low and the differential between tax exempt and taxable [is] de minimis, so we're looking at doing it on a taxable basis to avoid the restrictions on advance refundings," he added.
The total amount of the loans will be sold in 11 different bond issues, an unusually large slate for a meeting of Gov. Ron DeSantis and three of the state's other top elected state officials, Attorney General Ashley Moody, Agricultural Commissioner Nicole “Nikki” Fried, and Chief Financial Officer Jimmy Patronis.
DeSantis asked Watkins about the status of current interest rates and how the state has capitalized on potential savings.
"A lot has transpired in our world since March," Watkins said, outlining actions taken by the Federal Reserve to keep interest rates low that he said helped pave the way for "a very quick rebound" by investors who kept money flowing into the muni market.
Watkins also told the panel that the state's triple-A credit ratings were recently reaffirmed by Fitch Ratings, Moody's Investors Service, and S&P Global Ratings.
Cabinet members also briefly discussed how well the state has weathered the pandemic and expenses it has caused.
"The next step is to make adjustments to live within our means," Watkins advised.
Watkins received approval to issue $950 million of public education capital outlay refunding bonds; $425 million of Department of Transportation right-of-way acquisition and bridge construction refunding bonds; $205 million of new tax-exempt DOT right-of-way acquisition and bridge bonds; and $90 million of Turnpike Enterprise refunding bonds.
The refunding bonds may be issued in one or more series, according to documents submitted by Watkins.
The Florida Housing Finance Corp. received approval to issue $109.75 million for seven different bond-financed multifamily housing projects.
The large number of bond issues receiving approval Tuesday may be due to the fact that the Cabinet hasn't met since May 28 while DeSantis focused on measures to contain the coronavirus pandemic. The panel usually convenes once a month.
On Tuesday, the Florida Department of Health reported 607,909 confirmed cases of COVID-19. There were 13,579 deaths, the fourth-highest in the country, according to Johns Hopkins University of Medicine's tracking project.
