BRADENTON, Fla. – The city of Tamarac brings a small deal to market this week that officials believe is only the third public green bond offering from Florida.
Tamarac will price into a heavy muni primary slate nearly $30 million of wastewater utility revenue and refunding bonds, with RBC Capital Markets as the book-runner and senior managing underwriter.
The bonds, slated to price Wednesday, are rated AA by Fitch Ratings and Aa2 by Moody's Investors Service.
The city designated the deal as a green bond transaction based on the environmental benefits of the projects being financed, according to bond documents.
Financial Services Director Mark Mason said he expects that the green label will help differentiate Tamarac's issue from other double-A-rated credits pricing this week.
"It is important to recognize the work being done with these funds helps to support a healthy environment," he said. "I expect the designation to help provide another reason for some institutional bondholders to have an interest" in the city's deal.
Bond proceeds will provide $11 million to continue rehabilitation projects that reduce wastewater inflows and infiltration into the sanitary sewer collection system.
The remaining bonds will refund debt issued in 2009, which financed and refinanced improvements to the city's utility system.
The bonds will be issued as $21.76 million of tax-exempt revenue and refunding bonds and $4.1 million of taxable refunding debt with final maturities in 2039 and 2046.
On a combined basis, it is estimated that the tax-exempt and taxable refundings will provide $1.15 million in future value savings, or 5.94% of present value savings, Mason said.
"Our main goal is to lock in savings and yields on new money, which remains extremely attractive from a historical context," he said.
Tamarac is a largely residential community in western Broward County, and has been certified as a Florida Green Local Government since May 2008 by the nonprofit Florida Green Building Coalition, Mason said.
The statewide coalition was founded in 2000 to help builders, developers, contractors, local governments, and consumers "achieve a healthier and more environmentally sustainable future," according to its website.
The coalition said it has 800 members.
Mason said that the city maintains "solid debt service coverage" on the bonds and has healthy reserves to finance the majority of its capital improvement plan with cash flow.
According to Fitch, Tamarac's utility debt service coverage finished fiscal 2015 at a "very strong" 11.6 times, with 660 days' cash-on-hand.
The city is also amending the master bond resolution to allow for limited transfers to the general fund, which are not to exceed 10% of the prior year's gross revenues, said Fitch analyst Major Parkhurst.
"Fitch believes these changes could result in lower free cash and/or liquidity balances," Parkhurst said. "However, given the system's strong financial profile and liquidity, we do not believe these changes will create any negative credit implications."
The deal's co-managers are Stifel, Nicolaus & Co. and Raymond James and Associates Inc.
Larson Consulting Services LLC is the city's financial advisor.
Bryant Miller Olive is bond counsel.
Akerman LLP is disclosure counsel.
Last year, the city of Venice issued $15.4 million of green water and sewer utility system revenue bonds.
In 2014, the East Central Regional Wastewater Facilities Operation in Palm Beach County issued $88 million of green wastewater treatment facility revenue bonds.