BRADENTON, Fla. - While acknowledging that selling debt for the Florida Marlins' new baseball stadium might be tough in the current market, Miami-Dade County commissioners yesterday authorized $405.9 million of revenue bonds plus $105 million for a refunding as part of a complex finance plan.
The financing will be used to build a 37,000-seat, retractable-roof stadium on public land that will be owned by the county and operated by the Marlins.
Commissioners approved issuing up to $351 million of bonds with 40-year maturities secured by various taxes on short-term accommodations, also known as bed taxes. Those revenues are composed of a professional sports franchise facilities tax, or PST, a tourist development tax, or TDT, and a convention development tax, or CDT.
The debt is expected to be sold within several months. Another $55 million of 30-year general obligation debt also was approved yesterday. It is expected to be sold in May or June.
Approval to issue the debt came only after some commissioners expressed concern about bed tax collections, which have declined, as well as a plan to pledge some general fund revenues as a backstop. Through the current fiscal year, PST and TDT revenue is down about 13.3% compared to the same period a year ago, while CDT revenue is down about 8.9%, according to county manager George Burgess.
The plan calls for bonds backed primarily by the PST to have a secondary pledge of TDT revenue and a covenant to budget and appropriate non ad-valorem revenue from the county's general fund. The CDT-backed bonds will include a secondary pledge of sales tax revenue.
"The secondary pledge is required to strengthen the creditworthiness of the financing," Burgess said. "In the history of the county, we have never accessed the secondary pledge, but if we had to this would be the source of revenues to make debt service payments."
The county also plans to fund an internal shortfall reserve of at least $45 million.
"To secure bond insurance, we think, is important to the success of selling this transaction," Burgess said, adding that presentations to rating agencies and bond insurers would occur this month.
Although the exact structure of the financings is not yet known, the county anticipates back-loading some of the debt, using capital appreciation bonds, variable-rate demand bonds, and subordinate bonds.
"We tried to be cognizant of the near-term dip in tourism and that is to structure the financing so we're pushing some of the payments out ... so revenues can improve," Burgess said.
In addition to those measures, the county also 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 financing structure is based on projected revenue streams over 40 years, with interest costs factored in, explained Sergio Masvidal, senior managing consultant with the county's financial adviser, Public Financial Management Inc.
If the deal priced tomorrow and investors demanded interest rates so high that the revenue streams were insufficient, "that's the walk-away point for the deal," Masvidal said.
The ballpark contract contains two deadlines at which the county can walk away for any reason, including if the bonds cannot be sold. But if the deal terminates by June 1, Miami-Dade still must pay the team $4 million. If it terminates by July 1, the penalty would be $7 million.
"The termination for convenience allows us the opportunity to see how the market responds, which is essential, but we won't know until we get to the market," Burgess said, noting that the extra time also allows the county to monitor bed tax performance.