Miami-Dade County commissioners today will be asked to implement a $400 million commercial paper program and authorize up to $800 million of revenue bonds for its water and sewer system.
The commercial paper program will provide temporary financing for certain improvements in anticipation of issuing revenue bonds in the future, according to county documents.
“The CP program enables the county to have immediate access to construction funds at short-term interest rates, which are usually less costly than long-term rates,” a staff recommendation said. “On an average, the short-term rates based on historical experience are between 2% and 3%, whereas the long-term rates are between 5% and 6%. Aside from lower interest rates, the CP program benefits the county because it is similar to a line of credit, allowing the county to only pay interest on what is drawn.”
Commissioners will be asked to pass an ordinance instituting the new CP program and authorizing $800 million of revenue bonds, most likely to be sold in several series to reimburse the CP program.
“The utilization of commercial paper notes during construction is less costly than financing projects initially with long term bonds, which will in return have a lesser impact on the water and sewer rates charged to customers,” the staff recommendation said. “This financing mechanism has been very successful in reducing the cost of borrowing for the Aviation Department’s capital improvement plan.”