HomeMy WebLinkAboutItem #01 - Discussion Item'J I
0
e.ITY Oft MIAMI. FLORIDA
INTMOPFIDt MEMORANDUM
N
TO Mayor and Members of the cats may 211 19 81
City Commission
su9ri tt Bond Workshop
s
FROM�'t.
owar . ary}'"�
City Manager �xji`�
EFi�Lt35uAk. ', a
fit; t
z; r t
' g
I S
The City's financial advisors, James
J. Lowrey & Company
will flake a presentation to you
}
on Tuesday, May 26th at
9!00 a.m. in the Committee of the Whole regarding the y aat'
City's bonded debt plans.'`
,e a
Some of the items to be covered
will be -`
- General Obligation Bondsr
Facilities Revenue Bonds
i 4i k kk
Ii Rating Agencies
Comprehensive 5-year capital
Comprehensive
projects plan an impact',,f
on the general fund.
s j
� f �
let me know of any specific topics related to the City's
_;'lease
bonded debt that you would like
to have discussed. --�{
7 E.it
f
t�j3�b
,,:��£k -..}ur �f �a«,• Ferry„ .�tu. �°rv;-.. �, ? P �aa f�. r'i- x, � �.�� ���,:��ki�,.��'�at a,�< ,�7,!�.A:
ia.
i
MOODY'S INVESTORS SERVICE, REVIEW REPORT
Municipal Credit Report
OPINION: Statutory revenue constraints and rapidly escalating spending
demands have thus far been balanced by a period of surging economic activity,
dominated by international investment. The budgetary demands of growing
pension costs and debt service expenditures, projected to rise with
substantial future city and county borrowings, are likely to become
increasingly burdensome, especially in view of potentially destabilizing
factors in the eco.omy.
G.O. hating History
1938-40 Ba 1940-56 Baa 1956-69 A 1969-present A
SUMrAR : Miami serves as an important regional transportation, trade, and
service center for southern Florida. ThouCh still dependent on tourism, the
city has developed scme light manufacturing and a strong business services
sector. In recent years Miami has emerged as a center for international
banking and for man-: rational and international firms doing business '.'ith
Latin America. i;hile the dramatic surge in downtown building permits and
construction activity :s indicative of this development, labor market
instability and the uncertain outlook for long-term economic growth,
substantially based on international investment, offset these posit4ve
trends. Because of this economic growth, the city and county have undertaken
substantial capita: r`nancing programs, resulting in a near doubling of the
city's direct net debt and stead.,- growth in debt burden to an abc%•e-average
level.
,recent financial operations have been tight, constrained: by a statutory 10
mill operating 1 imit . Ai though a revaluation ir: 1951 al to%'ed some reduct ior.
in millage and boosted tax revenues by 27%. uncertainties a- to closing
position still exist. The city projects a return to the lUmill limit in Fl-
1982 because of expected expenditure increases resulting Crum pending union
settlements and increasing pension costs. It is evident thl:t cit',_ cl:fiLiat-
are deferring certain major costs based on expectations of sustained, large-
scale tax base growth, which may not occur. In the case of pensions, a new
method for :unding past service liabilities has been adopter:, resulting in t�-,e
THIS REPORT MAY NOT BE REPRODUCED IN WHOLE OR IN PART IN ANY FORM OR MANNER WHATEVER
C5 �: ^. eS1C ?r•.:r : ..' ):.: re C..e ST u"Cr' Ic �u�sC'ptM^ a�rPemen• •.' iJ�• r.CcS .r ;.SE 'r ^!; rn^.al.; ^ herrr n3� Det.^
Ctd ^eC f•, . _.. .r>^^e e.PC 1, tle aCa..13te d^C . _t beC3. >i . .he Dcsc'b l'ty Ca nur'•.31 a—e:ha^tC3e"^' • 3::..'3iy .: ;'re!r"ecc �S nc'
F ..3'3ntreO
..•r _ :1 •e:Jmn'enC3! . ... >t'� 3__ 'e' 3:...'3:1 �c nC fU 3.3c1eeC - 'n',r� th' w L•r .at !^rC SOIe. 34
aSfu^. 3 i 3^, . _.r' h_.r :e:..• t es : C f3! . IJ .. _ :e' :..• se ^F
. ,.r'. .' i' .. .. .._ .. J3. b. � d^.. .'r5 'r'r• ,.. .. .. .. .. _ 3• ,�' 3• .. " '. � .• ?e'. .. ...e : .. � ..n •_.r ova. ...^.� ..� n ,^, � "
M"001 s lr.eslwe Sr•. , r yti CC"_•. ^ ST-1 Ne. 1n•� N N 1000' le 55 3 J3Ci
Miathi, Floirid&
WOMeht of the bulk of pension costs to the end of the afiort zatieI
'PLIP16d. despite receht healthy tax base growth, the hUfleroas rihahtial
f5iesSureS coining to bear on the City of Miami's budget, combihed kith the
§tatotory taking 11mit., may have a negative impact on its future fihahcis1
0per9ti0h9 and service delivery structure.
Populatioh (1980) prelim 335,718 County; Dade
Area, sq. mi .: 34.3 SMSA. Miami
Density: 10,223 per so. 71 Vu1 I val per cap.. 13 225
Pers. inc. per cap. (co., 1978): Overall debt per cap.: $865
Economy: Static pop-,;iittion yrci..*1h. t.'r:ile manufact,;ring an important part of
e0ohomy, can tribUt ion has declined !,olat1ve to Dade r, utl t1, and the States.
Foreign financial influence readily- apparent. 6% unemployment rate
for calendar years 1979 and 1980 but increasing to 7.5% in January 1981.
Government: Commission -manager form since 192i, coltie^e-ltmy Dade Countv's
metropolitan government. increasinjly complex propert*y tax adrinistration
requirements resu:ting from recently enacted statewide iegis:ation.
Debt: Current debt burden above rredian for cities of similar population
size. City's projected $125 mi:lion over the next. five years and the
county's plans for a 1980-90, $150 million "Decade of Deve:opment" program
will increase debt burden even further.
Pittance: MA:;!aije constraints n'�:,dei'att'd somewhat by expanding tax base. Debt
service and ps_.rsion costs equivalent t:) 25.2of Combined revenues during FY
1980.
Recent Trends (b in 000)
14
Assess. and est. full Z'n 1 �i�.; i ,i 1.S3 $.1 330 •�ti; S� , # i� �1 fit' j . 3� t i1
Direct net de'ht 3�ri, t60 14.6d0 -2.3 -1`2•7
Debt burden
General Fundi 45,83`
Lend ra l Fund exps . :'+9 . ' 1 "� Sti , t l ; Et ,J. t� . ;i
1'r -end cast; surp.n
tdeficitl 3,075
Yr.-end fund t,a i an?e 1 . -i 7 5 664 1 . 9 5.' 0
ECONOMIC AND SOCIAL FACTORS N am is the 1 r.Iic'. �a c2ty 4. 7a��= :C`t ate•
Floi ida s iar Cyst dQunty in terms cif pop..;at ion and anIt G' :a T."ur1C:t• i .G
CGn�'e.^.ti( nct : , . ;v rE•^731n iCiporta:. comF)unents of the ec-o%omy. B t+'t'•E'n 1S6
70
and 1972. the city's iIlC.:Stria' and manufa:t.lirin0 ::55e �3fI`:u
cance bllt !':Cis s}1t•Fi: reCE'at s:gins of Si�µdcw•n S1QIi.fl
both retail 2nr- •vi.holesn1P trace cd)l:ntN• sa:t�;. 1? 7 v..d
1977, closed a rathc-r s:gnificunt ;tap in per ca,►."a sr. s : i:.t >Ised to exist
-between the county and the Citi' :f Miami. Over =1w r:' e:;ployn,e in the
city s services industIy is round in. the business stry ces s%ictor in contrasi
to the county. whict,. is Ia;riy equally alivided between `::t 4ZE—!C.eS (26 6 '
and business services (29 . 9ii) .
Because of its location and excc•1:L•nt airport and seapur
County and Mia,ni have become prominent international trade and, b.:.rning
centers, With Ntiaml as tlio gateway to the growin;, mark:,:s o: Cer.':al ant.
South Amer ica. Ttis status ha• been f .rther enYanced t;; the e...ca;iishmen,. of
a Foreign TI'ade Zolie in ::I am 1 wheI•v foreign Goods .r !• :�P st cort'd 0...* Processed
without payment of custom duties. Miami also is secona on!y to New York City
in terms of the number of Edge Act banks (banks cutrorized cr internationa!
Miami, Florida
a
banking activity only) located within its boundaries. while foreign
influence is having 8h obvious positive impact on the economic developffieft 6f
the region, it is not without drawbacks. Even though growth, resulting
mainly from South American investment, is likely to continue, a significant
amount of economic uncertainty and instability exists because development it
not under the direct control of the region or federal government.
The City of Miami's wealth characteristics are well below both state and Dade
County averages. Housing statistics are not as favorable as those for the
county or state urban areas, with only 19% of the housing stock built since
1959.
Standard Metropolitan Statistical Area (SMSA): The Miami SMSA, coterminous
with Dade County, includes the major cities of Miami, Miami Beach, and
Hialeah. Miami accounts for 24.2% of the 1978 SMSA/County population of
4,458.490 and occupies 1.7% of the SMSA land area. The rate of population
growth has been at least double that of Miami's over the past 30 years,
though slowing in recent years. U.S. Census estimates indicate a 15.0% rise
from 1970-1978. For the SMSA as a whole, tourism and agriculture (winter
vegetables, citrus and tropical fruits) have been the mainstay of the economy
but, since the early 1960s, light manufacturing, shipping, and commerce have
increased in importance. The SMSA's 1978 per capita personal income figure
was $8,567, with the average annual rate of growth in total personal income
being 10.62% from 1969 to 1978, as compared to 9.78% nationwide. The SMSA's
figure is above that for U.S. SMSAs and well above that for Florida.
Personal Income Per Capita:
S6 of U.S.
1978
1959
1969
1975
1977
1978
Dade County (Miami SMSA)
$8,567
107
109
110
108
109
Florida
7,578
91
94
96
96
97
U.S.
7,840
100
100
100
100
100
U.S. SMSA Counties
8.343
ill
108
107
107
106
Population Factors: The city's population experienced a tremendous surge of
growth in the three decades to 1950. well in excess of the state or nation.
The growth rate slowed between 1960 and 1970 but still remained above the
national rate, though considerably lower than the county's growth rate.
During the 1970s, population growth in Florida as a whole was greater than in
Dade County. In the City of Miami, population levels remained static. The
percentage of those age 65 and over is higher for Dade than for the U.S.
Migration from Cuba since the early 1960s has been an important factor in
population growth and the revitalization of the City of Miami's downtown
economy. Between 1960 and 1970, the number of Latin Americans increased from
29,572 (10% of the population) to 131,746 (39.3% of the population). Of the
latter figure, 109,108, or 82.8%, were born in Cuba. In 1970. 34.9% of
Spanish-speaking employed residents were white-collar (with over half of
these being clerical), compared with 40.2% for the entire population. The
large inflow of Cuban refugees, until recently, added a large. mostly
trained, commercial and industrial labor component. The most recent influx
of Cuban and Haitian refugees has lower educational and technical skills
levels than those who migrated in the early 1960s. In general, city
residents are less affluent and live in older housing stock than either
county residents or the state urban population. In addition, educational
levels are lower, and substantially fewer people are categorized as "white
collar" in the city.
4
1d1 1' in 1 t' ;i d r it11
Chan
o1it]l9t.ioh__ v.,.
�lieffii
bade Co,
State
Year
Miami
bade_Cts_,
225.5
138,9
42.4
21.0
1910
5,471
11.933
440.3
258.3
28.7
15.0
19w
25,5i1
42,753
274.1
234.3
51,6
1612
1930
110,63"
142,956
55.6
87.3
2012
7.8
1940
172.1712
261,139
44.8
84 .9
46,2
14 • 5
1950
249,276
495,084
17.
88.9
78.7
1815
1960
2191688
935.047
14,8
36,6
37:1
1970
334,80
1,267,792
0.3
24.1
40,J
1980•
335.71b
8429
1.572,
*C•6,
Bureau of
Census preliffiihai'' igtlres:
i_9.50
19.6U
19,+.p
19$0
tr;.
3>1,
4
3.4 2
i �-
;34 x.,'
Land
area-sq. 1t1i
7'289
8,529
g,7fi3
9,7�8A
pop.
per sq. mi.
S3.8
77.4
7646
• pop. white
T6.2
22:4
22:
N/A.
• pop.
negro
bade.
state
bade
Miami Co:nt
State
l'rban
1970 Noosing
Miami
35.5
Co:
54.1
Urban
66.4
1970 Census
Med. fam. inc.
$7,304 S9.245
S�.614
11.6
4 o-uhi
4 1=unit
occ.
struc.
45.9
56.4
68.0
bel.
pov. lev.
ov. le0
16,4 - 10.9
16.4 21.5
18.3
¢ Negro
hd. hsehld. 18.9
11.6
14.5
12.4
15.1
r above
`led. sch. 5,0
12.7 12.1
18.
12.1
4 bit.
4 bit.
before 1939 14.6
since 1959 33.3
19.2
39•4
g white collar
q government
'0.9 51.1
10.2 11.9
15.7
ner occ+ mod•
Owgal.
$16,500
$19,000
s15.600
c- turina
:9.9 14.8
13.8
t
$122
S100
$97
manL., 1.2
2 Hed, cOntt. ,en
4 trade 22.53.:
sere ices 36.2 37.3 37.4
V.hile wholesale and retail employment has
Employment and Earnings:
services employment increased slightly, over the last three
decreased. and ser county earnings !�}' place of work remain concentrated
decades. almost ce
in these industries as of 1975. In contrast, even though the rates of
manufacturing employment more than doubled between 1950 WA 1970, only 11.5%
of the working population's earnings are in the manufacturing sector. In an
Selected Services Census data for the county, the hotel
analysis of the 1977 Se
industry employs 2W8% . and business services industry 29.9�. of selected
services employees. On the other hand. for the City of TIiam;, business
services dominate employment in the service industry, employing over 41`. of
the services working population. Miami has clearly become over the last
decade more business -oriented and less dominated by the hotel industry than
the county.
The number of non -agriculturally employed persons in the county increased by
only 100 between December 1979 and December 1980. Several major induusstries
posted job declines during that period. Manufacturing declined by
mostly in the durable goods sector; construction by 400; transportation and
public utilities by S00: retail trade by 2.800: and services by 1,000. In
the restaurant and hotel/mote: sectors. which are directly tourist -related, a
total job decline of 70o was registered over the course of the year.
(Florida Department of Labor and Employment Security.)
C.
Miami, Florida
The same trend is apparent in wholesale trade. While Miami is still in the
forefront of per capita wholesale sales, the gaps between the city, bounty,
and state Closed dramatically between 1972 and 1977. The state's growth ih
wholesale sales was two and half times as great as Miami's and the county's
was almost double. The city's percentage of county wholesale sales dropped
rather substantially from 36.4% in 1972 to 28.4% in 1977.
% Change
1972/1977
Wholesale trade
1977
City
12.8
Count
18.4
state
14.6
315
_
No. estabs.
1,485
13.3
-7.0
10.2
8.8
9.2
Employment (000)
$2,4,1
24.5
59_7
8i`�
Wholesale sales
1
$6,74
-
50.8
State sales per cap.
$5,952
14_2
-
_
City sales per cap.
$5,952
38.8
_
County sales per cap.
sales
28.4%
(down from
36.4% in
1972)
City's % of county
% Change
1972/77
Retail trade
1977
City
County
0.0
State
8.0
V•S,
4.2
No. estabs.
4,386
26.5
-519
-7.3
16.7
29.3
16.3
Employment (000)
$1,495.395
28.5
46.3
59.4
58.1
-
Retail sales (000)
g3�792
-
_
39.7
State sales per cap.
$4,9
17.9
-
-
City sales per cap.
$3
-
27.2
County sales per cap.
city's % of county sales
,813
26 9%
(down from
30.6in 1972)
!MANUFACTURING: Although manufacturing in the county and city exhibited
substantial growth in the 1960s and early 1970s. this sector is still not a
large contributor in terms of employment (1970) or earnings (1975). Between
1967 and 1972, manufacturing grew significantly in both the City of Miami and
Dade County, well above comparable state growth rates, but with the county's
growth percentages substantially above those of the city. More recently,
however, the city and county- figures reversed in comparison to the state.
Between 1972 and 1977, the state and U.S. percentage growth figures were well
above those of the city and county, with the City of Miami's manufacturing
section slowing even more dramatically than the county's.
The 1977 major lines of production, in decreasing order of importance, were
apparel and other textile products, electric and electronic equipment, food
and kindred products, printing and publishing, and fabricated metal
prodcts. The major areas
77 were
tric
electronic equipment. gfood hand between 9
kindred products. and apparel andcotherand
textile products.
Census of Manufactures Data % Change 1972/77
City of Miami 1967 1972 1977 Citv State U.S.
No. establishments 745 997 11085 8.8 20.7 12.3
20.5 25.6 20.7 -19.1 4.3 3.7
All employees (000)
value added by mfg. (000) $203,100 $378,500 $460,600 21.7 59.9 65.5
Dade County
No. establishments
All employees (000)
Val. added by mfg.
(000)
Census
of Manufactures
Data
% Change
1972/77
U.S.
1967
1972
1977
3,412
gglLnty
18.0
State
20.7 12.3
2,094
58.3
2,890
85.9
86.3
-1.0
4.3 3.7
$589.400
2, i 1",,r�'�h� pg�xGhSij'v'�n} ) •k7 �T }u}�
t i'�
$1,219.000
$1.765,000 47.5 59.9 65.6
014%
t
Miami, Platida ,
f tLv
Di§tr1butian of Employment of Civilian Residents
1950 1960 197.0
� L.S. Cft1. Co. U.S.
8h0 8.A 7.8% 25.9% 12.5% 11.6% 27.114 19.9% 19,81 24.4%
(6�.1�b191�
goods) (2.9) (3.1) (13.8) (5.3) (5.4) (15.2) (7.7) (5.3) (14.4)
(Nnh-durable
goods)
(5.1)
(4.7)
(11.9)
(7.2)
(6.2)
(11.9)
(12.2) (8.4)
0 0.0)
Mihing
0.1
O.i
1.7
0.1
0.1
1.0
0.1 -
0.8
Agriculture
1.0
2.7
12.5
1.1
2.3
6.6
1,2 1.8
3.5
Construction
9.3
10.6
6.1
5,6
6.7
5.9
8.3 6.9
5.5
Transport, Comm.
Utils.
11.0
9.8
7.8
8.8
10.8
7.0
8.7 11.0
6.3
Wholesal-. and
retail trade
29.4
27.8
18.8
22.3
22.2
18.2
22.5 23.4
18.9
Service indus.
35.6
34.3
21.4
36.1
34.5
25.1
38.2 37.8
29.2
(FIRE)
(5.1)
(5.3)
(3,4)
(5.1)
(6,2)
(4.2)
(5.6) (6.6)
(4.7)
Public Admin.
4.4
4.1
4.4
4.1
4.4
5.0
3.1 4.2
5.2
All other
1.2
1.3
1.4
9.4
7.5
4.1
0.0 0.1
6.2
Empl. persons
108.784
126,025
149,435
County Non -farm Earnings by
Place
of Work
- 1975
Dade County
U.S.
Manufacturing
11.5%
26.54E
Wholesale and retail trade
20.6
17,4
Services
23.4
16.6
Finance, insurance, real estate
7.8
5.5
Government
15.8
18.9
Other
20.9
15.1
Unemployment: The Florida Department of Labor and Employment Security
reported a January 1981 unemployment rate of 7.54E for the City of Miami, 6.5%
for Dade County, 6.4% for the state, and 8.2% (7.4% seasonally adjusted) for
the U.S. Unemployment rates for January 1980 were 6.4%. 5.5%. 5.7% and 6.89E
(6.2% seasonally adjusted) respectively. The 12-month annual average rate of
unemployment has declined steadily in the city from a high of 14.4% in 1975,
mainly a result of a major decline in construction -related employment, to a
two-year stable rate of 6.0% in 1979 and 1980. However, the first month in
1981 showed a fairly large increase in the unemployment rate to 7.5%.
Not included in the above statistics is the unemployment among the most
recent Caribbean immigrants. The Florida Department of Labor is attempting
to modify its unemployment rate methodology to include unemployment persons
among this group. The current methodology, based on unemployment insurance
claims, does not include immigrants who cannot receive unemployment
insurance. The proposed methodological changes are subject to federal
government approval.
TRADE: While Miami had stronger retail sales per capita figures than either
the county or state in 1972 and 1977, the gap closed considerably between the
three units during this period, with the city experiencing a substantially
lower per capita sales growth rate than either the county or state. In
addition, city 1972/77 percent changes in number of establishments,
employment, and sales were well below county, state, and U.S. rates. The
city's percentage of county retail sales was 26.99E in 1977. dropping from
30.69E in 1972.
-
''�
3�Q3
}A
) s } try[r,3F
to
he couriLY
In terms of the number ofvisitors
the proportion entering by air as
1979 through the third
from a high of 82.99� in the first quarter of 198t at
opposed to auto rang quarter of 1980. The numbers of visitors peaked
low of 76.4% in the third q
dropped by almost 305E between the
quarter of 1980, However, between the
1,066,100 in the third quarter of 1979 and
fourth quarter of art and the first q
first and third quarters of 1980- the number of domestic visitors to Dade
fir over 35`�.
County i.:creased by
ward trend, even factoring
County The most recent statistics show
resort tax collections show a favorable up
in cyclical changes in the tourist industry.
that
$381.640 were collected in December 1980 as compared to $285,780 n
December 1979. 1980 A V.
Ten Largest City
Southern Bell
Equitable Life Insurance
Florida Power and Light
Miami Herald N.V.
One Biscayne Tower,
Massachusetts Mutual
New York Life Insurance
Ball Point Development
DuPont Plaza
Taxpayers,
Largest Employers
Emp_1over
Eastern Airlines
southern Bell and Tel.
Pan American world Airways
f Miami
$254,326.733
152,639,509
75,265,731
49,233.339
45,429.880
35,530,838
26.442.198
23.885-130
20,372,176
(Private)•
No Employees
13,854
11,204
6,900
6,500
University o 6,115
Burdines Department Store 4,000
er and Light 4 000
Florida Pow {,�
The Miami Her 3,575
Corp. ,..
Southeast Banking 3,000
Winn Dixie 2,960
Sears
*Greater Miami area
Building Permits: The City
of Miami's building permit data indicate steady
growth until 1972, a steady decline of 300�b until 1975,
then a turnaround#
n in s dramatic 200% jump in valuations between 1978 anacti�9tiy This
resulting and highly visible, building
increase reflects Miami's strong,
its central business district. s in 000):
1964
1965
1966
1967
1968
1969
Trend of
Building
Permit Valuations1976
$ 83,993
g 74.946
88.563
$47,794
1970
1971
156,239
197?
90.831
62,308
53,308
1972
241,967
1978
1978
270.402
53,525
1973
1974
190.004
113,619
1979
(9 mos) 172.785
172.785
60.564
1975
60,749
1980
(9 mos)
87,550
8 Miami, Florida
Gb'VtRM*NTAL FA 18 : The City of Miami, incorporated in 1896, has operated
under the commission -Manager form of government since 1921. The Citymissioh
strative officer, is appointed by ,
manager, as the chief admini
five-
which also is empowered to pass ordinances and adopt regulations. The five- �
member commission includes a separately elected mayor. Elections are held in
November every two years at which time the mayor is elected for a two-year
term. Also at each election two commission members are elected for four-year
terms. The terms of the mayor and two commissioners will expire in November,
1981. The city manager is responsible for the proper administration of city
affairs and is authorized to appoint or remove department heads, prepare the
budget, reorganize administrative structure and recommend policies to the
commission. The fiscal year begins October 1.
Services: Public service enterprises include the Orange Bowl, 87 parks, two
golf courses, yachting facilities, an auditorium, exposition buildings, a
modern incinerator, Marine Stadium, Miami Stadium, warehouse property and
off-street parking facilities. Schools are administered by the Dade County
Board of Public instruction, the governing authority of the debt issuing
county -wide school district No. 1. The city is responsible for police, fire
and sanitation functions, though they are complemented bya county-wide
er and police.
fire and sanitation departments. The Miami -Dade County
Authority has the responsibility for operating a county -wide consolidated
water and sewer system. Welfare is a county obligation.
Property Tax Administration: Valuations on real and personal property are
determined as of January
1landeach
haveyear
a hearing Dade
beforeuthe County Boardnty assessor. roferty
owners may file
Equalization. Thehe roll is certified upon completion of the hearing of al
Taxes are due on November ber 1 or as soon thereafter as the assessment
roll is certified and delivered to the county tax collector. Discounts of 4%
aid in December, 2% in
are provided for bills paid in November, 3% if p
January and 1% in February. Unpaid taxes become delinquent on April 1 of the
calendar year following the year in which the taxes were levied. The county
collects taxes for the city. Delinquent real property taxes bear interest at
the rate of 18`b per year from April 1 until a tax sale occurs. (See section
on TRIM Bill for further description).
State Regulation of Property Taxation: For more than 100 years, the fair
market value standard has been the rule in Florida, and since the 1940s, the
state has intermittently had in effect laws regulating the fixing of millage
rates, which have incluued the setting of a "rolled back" or base millage
(recalculated each year) and, since 1973. the requirement of public notice
= and hearings on proposed rates. In 1963, the legislature enacted the Just
value Act, which replaced the earlier "full cash value" standard with seven
criteria to be used by appraisors to establish the constitutionally required
"just valuation of property." Constitutional millage limits have also been
in place for each taxing authority (exclusive of voted bonded debt millage):
ten mills for counties, ten mills for Since 1968C1aastateslawnd one prohibitslstatefor tad
atatP nn intangible property.
Miami, Florida
fn additibh, sbe'dtgl districts have their own limits. The five multicouhty
water Wagemeht districts in the state have one mill limits, except one in
northwest Florida with an 0.35 millage limit. Two other special taxing
districts, one referred to as dependent and the other as independent, have
different millage requirements. The millage for dependent districts, defined
as those set up by a county or municipality, is included in the millage rate
of the oversight taxing authority, while independent taxing districts are
considered to be outside these millage limits. (Currently, some legislative
disagreement exists as to the distinction between independent and dependent
special taxing districts, and the legislature is in the process of trying to
get more control over the independent districts. This past year Dade County
reduced its millage by establishing an independent fire district within its
boundaries, claiming that taxing for it does not come within the county's
millage " mit.) In 1973, the Truth in Taxation Act was enacted, specifying _=
again the process of fixing millage rates in more detail, of equalizing
assessments, and of conducting public hearings on proposed tax bills.
In 1978. through the governor's initiative after his election on a campaign
of tax reform, the legislature began reevaluating the state's role in
property assessment administration, in an attempt to make the process of
property assessment and the establishment of rates of taxation uniform on a
statewide basis. The legislature found that three major obstacles existed in
achieving uniformity: Cl) taxpayer resistance; (2) the state's inadequacy in
supervising the assessment process; and (3) state funding formulas for both
education and revenue sharing which subsidized underassessment. For fiscal
year (FY) 1979-1980, the legislature additionally voted, to be i.i effect one
year only, a 5% property tax revenue increase cap. Finally, in the last
several years. a number of tax reduction efforts have occurred throughout the
state and in Dade County in particular. However, in 1979, a taxpayer attempt
to lower significantly the Dade County tax rate by referendum failed after
the Florida Supreme Court ruled that the setting of the millage rate by voter
initiative violates the state constitution; a new state law, effective July
1, 1980. specifies that only legislature bodies may fix the millage rate.
"Truth in Millage' (TRIM) Bill: Because many legislature members felt that
the Truth in Taxation Act did not go far ^nough in protecting taxpayers and
ensuring uniform and fair standards of prcpe.rty appraisal and taxation, the
Florida Legislature enacted the "Truth in Millage" (TRIM) Bill in 1980, to go
into effect across the state in FY 1980-81.
In essence, the TRIM Bill has provided the state with tools to assure that
property assessments done by taxing authorities are uniform across the state.
equalizing any previous discrepancies in tax burdens resulting from different
assessment and millage rate -fixing practices. The property assessment
review process has been improved, state supervision of assessment procedures
strengthened, and a procedure for equalizing state educational funding across
school districts adopted. In addition, individual taxpayers, through full
disclosure requirements. are now able to track when, why, how much, and for
what purposes property taxes are raised through millage rate increases rather
than through property reappraisals. This could not be done in the past.
This legislation has not affected or limited voted bonded debt millage.
10 Miami, Florida
the t§tM hill was designed to smooth the transition *1to 100% full Valuation,
Which, UJ) until this point, had not been rigorously enforced, while at the
satfie tide protect individual taxpayers. In reaffirming the already-th-effect
100% full valuation requirement, the legislation emphasizes full disclosure
to individual taxpayers of all taxes to be levied within a taxing
Jurisdiction, part of the purpose being to reduce potential taxpayer
resistance to 100% assessment. The disclosure process is complex, with
several different stages of review of both proposed millage rates and budgets
for all taxing authorities within a political jurisdiction. The TRIM Bill
also reaffirms the already -in -place statewide millage limits. The bill
features an 8% property tax revenue increase cap, which is in effect for f'Y
1980-81 only, unless the state legislature votes otherwise during the current
session. Exempted from the cap is millage for mandated functions, court -
ordered capital outlays, debt service and on new construction. In addition,
the 8% cap can be overridden by an affirmative vote of at least a majority
plus one or two thirds, whichever is less, of the full membership of the
governing body of the taxing authority. The Miami City Commission overrode
the 8% cap and increased property taxes by 27% for FY 1980-81, Since the
Department of Revenue projected a statewide average assessment increase of
47% in 1980, the one-year, 8% cap was intended to force local governments to
examine carefully the impact of dramatically increased assessments during the
year full valuation went into effect prior to making their taxing and budget
decisions. The TRIM legislation maintains a "rolled back" millage concept,
computed by dividing the current year assessed full value by the prior year's
actual taxes, before the application of the 8% cap for FY 1980-81. The bill
also allows municipalities to increase occupational license taxes, frozen by
state law since 1971. The new limits will bring the City of Miami an
estimated additional $1.7 million revenue in FY 1981. Starting in FY 1982,
TRIM has set up in depth property reassessment procedures every two years to
keep property value current at 100%.
School district millage rates are even more stringently controlled because of
the State Equal Education Law. Under this law, in order to ensure equal
education for all students, the state -mandated "local effort" millage
requirements is a uniform, statewide millage, determined by the legislature
and the State Department of Education. The legislature determines the total
state amount of revenue allocated per pupil, and then the State Department of
Education sets the percentage it will pay each school district of this total
amount. The state then translates this percentage into the millage rate a
school district must levy in order to make up the required balance of
revenues per pupil. The school district must levy this amount if it is to
receive the state monies under this formula. The constitutional total school
district millage limit is set at ten mills but the TRIM Bill has reduced it
further to eight mills (again, exclusive of voted bonded debt millage).
Within this eight mills, school districts must levy the state -mandated
millage (this year set at 4.2 mills) and are, then, allowed to levy an
additional, non -voted "discretionary" millage of not more than 25% of the
state -mandated revenues (but in no event to exceed 1.6 mills). Thus, in
effect, the outside millage limit for school districts this year is actually
set at 5.8 mills (4.2 mandated mills plus a possible 1.6 discretionary
mills). This is designed to reduce the possibility of unequal education
across the state and wide discrepancies in the amount of monies spent per
pupil in different school districts. The state is currently being sued on
this, with the legal papers arguing that, because of stringent state control,
the millage rate has effectively become a state millage rate on personal and
rnfli an n^t iw cf ntn 1 n■,
I +
it llli r 1i1 t•:l1n f 3
l:un;estead
exempt wmk dt,4igh0 `t + fii-duce th i1u: <:n Of i.nc.�r:sed takes or, ir.diiicival
t ak 0 aYe t s A lWihuiekempt ion exists for all residents Under
Ourrtnt ;aA ►lie `RI. 0 11 1 has, i ne"'iition ,?iveh fi •e-yetis for Mote)
I-esIdents ui euutnties, ti,: nidipp.lities, and special taking districts
adtiit: ohal e,.xeiptinns on a *phase-ih `iasis: S15.000 in FY 1980. $20,000 ih PY
19S 1 , Ahd t2'), 000 i h F Y 15,42 . As Wi i rid i t• 1 1ilti l a1<bai•e: becoMes a f it•e-year,
} ident . he wi 11 rece it'N t 11:; :'u 1 Is exei- pt ,or! a 1 lowed it; t hat year . P ive-year
v siddt!ts of school districts have beer, git•en a $25,000 exec,*.pt-on . starting
:mriodinteiy in PY 1981. with residen`s of under f t•e years allowed the northal
s5.000-a-yeni exemption. The state i= '.)eing sued on the £iVe-year residetiCy
requirement, though unit, fri the court%, mur!icipa ity, and special district
phase -in exelpt i--)ns. 'lot ff_,r the sci;, o :1i:tricts. The Titll`1 bill permits all
units to Rise their aii1ligje' it, order `() preverit any tax revenue loss
resulting frog, this increastA hotneslcad es:(,,m!1)t4on.
Pensiont: Three types of niiblic retirement systetiq �i2v? been established in
Florida; (1) state -sponsored progr'a;s; (2; local blahs, established by
cities and special d,strict+i: and (3• Jointly` xil-dedstate-local plans for
police officers and fire £i<;ntel,.
The largest sinple retirement pro(ji'am is the Plo''ida Ret iremer.t System, with
over 360,000 active members. 'rhe system provides pension benefits integrated
with social security coverage for about 96.000 state workers and employees
for all school boards and community co l l ecle:-s . 66 counties. 91 cities. and 145
special districts, The Florida system was established in 1970 to reduce
administrati%,e difficulties stemming fror•, ei;j^.t separate state -sponsored
plans. These s� stems were closed to ne'.. :-,o ,ibe`'s it that time, and members of
the old plan have been given four opportunities to transfer
voluntarily tc: the new system. l ..er 'bait; I0,000 active members remain in
the old systems, The F:Orida Retirement System has an unfunded liability of
$3.5 billion• according to the most recent actuarial review, and current
contributions are expected W amortize the total unfunded liability within
thirty years.
In contrast to this statewide unifota' ,� -cment program, which mandates
membership of all state employees and c,.*r.ries, local pension plans offer a
variety of funding and benefit combinations. 192 cities and 47 special
districts operate their own retirement systems. Local plans are established
pursuant :o ordinance or special legislative act, wit;i municipalities not
being required to be members of the statti plan under state law. However,
because of rece::t c+:ncern over escalat°ng costs of public pension systems
across the country, Florida enacted the "Local Government Financial Emergency
and Aecounta')ility .act" .r•. 1979 to ar�,lress t� a issues or' pension plan funding
and disclosure in a coind-ehensive tr,r.nrc Bas:caily s.:^.e statute is
attempting to set standards of actu<:r.a:l repor::ng and to monitor local plans
to ensure actuarial soundness according to these standards. Actuarial
valuations are now required every three years, with a specific funding
schedule for amortizing past service liabilities within a 40-year period. If
a locality already had a schedule at the date or enactment, it had to
continue to stay within the established amortization period, as was the case
with the City of Miami. All local retirement plans {and any proposed change
in th93MI M11Ct he nfill rnelnri tier fk� Crain I'%-w*wane ^r A.,t r..: ..,o�w.•�:.-,w
2 Mihhi . Florida
thL, 'city of t1itrifii fUht two SepArate cunt ributc ry pens, ion plans, one (ttfetred
to tit the "plate") colleting general employees Since 1956 and the other
(reielre6 to as the "system") covering police and firemen since 1940. the
city dohttibution rate to the plans is determined annually by actuarial
At:alysis. Per t:ie above, local pension plans such as Miami's must be on an
actUAfiall', sound basis, must be amortizing unfunded liabilities; and have
total cost estimates, with related payment plans, approved by the State of
Florida Department of Administration. Division of Retirement. In FY 1916.
Miami began amortizing its past service 'liability on both systems through
evL,n payments over a 35-year period. In 1980, the City Commission adopted a
new method for amortizing the unfunded liability: starting in FY 1980,
amortization payments will be calculated to increase 5q each year, rather
than to stay even annually. reflecting the expectation that tax revenues
available to the two plans will increase annually by at least that rate.
Currently, the plans art managed by two separate nine -member boards, not
under the direct control of the city. The City Commission, in an effort to
bring the plans under the city's control, voted an amendment to the city
charter to chance the Ylans' management. This ruling is currently being
litigated.
The following chart sets out the relevant financial data for the two -City,
retirement plans:
Plan as of 1/1/80
Pension Costs*
FY 1978
FY 1979
FY 1980
FY 1981 (budgeted)
Unfunded liability
Contributions as
of payroll:
current service
35-year amortization.
Total con *:•ibut:or.
Empl. contrib. as a
% of payroll
S
3,831.056
4,581,905
4,666.467
7.097,001
System as of 10/1/79
Total
$10,579,152
8 14.410,208
11.165,724
15.747.629
10.631.369
15,297,836
10.343.290
17A40.297
S85,907,774
°'4166,330.089
24.59%
12.32%
22.25
28. 03% `
46.848:
8.50%r
16.50%
'Includes administrative costs and expenses.
Amortization Schedule of Unfunded
F1' Ending 9/30 Plan (Projected)
1980 S 3.316
1985 4,233
1990 5.402
i995 6,895
Liabilities (Selected Years) (S in'000):
S_N•stem (Projected) Total (Projected)
S 3,563 S 6.879
4,547 8,780
5.804 11,206
7,407 14.302
�9i ► i , plot. Ida
Pi§Cal Aid, .\s it i+erc O:it of" tr?tr i rfolern Fund P e� etttte. 'i ite:`0�,1`err.irt+ntal
sotft �lt'ts d l:i 2 , ".,::r in 19_0. A lArcge decrease
O,? L 1 1 �ti't 'L.• . goon t l 1 is
bett�•pt;t'i FY l h",4 cold i e1't9 was tt?LA i t i;. a res,u ; t o° `he' .rss r. !l;3 i' l ion Ant i-
ReO_es,F i l n Pitt:r.ls . r Y 1. 1 6 Federal Fet'ehUe tihF i 1'ilt`Cl� t of A 1't' $8 . 2
tri 1 i `. �:� tt1 "c�. $A.t1 mi 1 : ion .tt r1' l:)78, t�et`e transferred to the
Gehertll fund 44,11* CUI'ret`t t�I)vrift ,,:_ :1f'.t .her t`OdUct i'Oh t?t' $���r,��� n�C� ed
bctt.eeh FY 19119 anti 19si), Pedel-n! Stinvinft Ias ?OS recently beeh
rxt�'ndei by Congress t'l;ragh FY
Che Citi' of `tir,mi's Fy 19S1 allocatidti
is S.A.? :pillion, and it is projuc,.ted that ;he cite' will receive this same
amount ir, VY 198'2 or n largei allocOlt ion based (�n :�.Opuiation ad ustments
relating to the influx of Caribbean refugees to the city.
Additional intergovernmental revenue rece1ved by the General Fund in FY 1978
.i
in the fc �n of federa': tl.,i state tit ;ats totalled S15.2 mi,:ion, in 1919,
$15.5 million was receivei, alrrOst 'nti:'e1�' il-01 sate teveilue sources.
`conies obtained from sta't� t'eVentt(-, �t'•a' t;l'rtn�lG ::uCtuate from year to year
base;: on information ob:.a:i?ed and anal ed t)y the state bepartmeht of Finance
and Accounting. The city projects that these funds will either remain
constant or increase slightly.
the Trust _.nd Agency Fund. including C.1:.T.A. , Community
Development. Economic L)O%elopment Administration ,FDA), Law Enforcement
Agency it.EAA), and Otncr programs, had revenues of .S26.1 million in 1978 and
omi,~,t7 from C.E.T.A. and
$23.3 million in 1979. ai:h 90% of the total c
Com[:'un i ty Development Funds.
DEBT FACTORS: Miami's overall debt has incl'cased significantly in recent
years. Debt t.;•[rden is at.�,ve :he t<e,?tan for .,ities of similar population
517.E but has 't?ec'n moderated to .c.me extunt b;' yrJwtn it. the tali base, a
pc,rtion res'tlting from property :•(-assessment and revaluation from 75% to 100%
of market suit i value. effect i` e F1' 19SI . Over.apping debt, pat•ticularly that of
Dade County, has grog, dramatically and nf�w accounts or over 50% of overall
net debt- Bonds are �ch,2d-iled for : apid rE't :rem(-^t , peak principal ,naturity
being reached in 1982, decl inir, steadi'_y through 2008. The city rarely
uses short-term barrow ' n,,; as a debt
The city is planning to issue approximate'.;' s20 million per year in G.O.
hnnris for the next five years, excluding this fiscal year's expectedA$23�
14
debt Statemebt tie of i/ai/$i Coo
General Obligation:
Sanitary sewers
Police headquarters
Storm sewers
Highway improvements
Public park and recreation
Refunding sewage disposal
Firefighting facilities
Housing
Pollution control'
Recreation facilities
Convention center <;
Marina
Land acquisition
Incinerator
Bayfront recreation facilities
Total
Special Obligation:
Orange Bowl special obligation;-1
Utilities service tax Series A
Total
Revenue:
incinerator revenue
Warehouse revenue
Off-street parking revenue
Convention Center revenue bonds uF�, 60,000
Total s $_74,952 �a
Gross bonded debt $202
, 947
Unfunded debt N.R.
Gross direct debt $202,947
Less: revenue bonds 74.952 r
Direct net debt $127.995
Overlapping debt: Net Debt %
Dade County $724.910 _22,4 162,380
Overa;l net debt $290,375
Debt Structure: Gross bonded debt of $202,947,000 at 12/31/80 can be divided
into three categories: (1) general obligations supported by property taxes,
unlimited as to rate or amount, (2) special obligations, supported by taxes
other than property taxes, and (3) revenue bonds paid for from system
revenues.
The Orange Bowl special obligation 1967 bonds are payable from franchise
revenues received by the city from Florida Power and Light Company under the
conditions of its 30-year franchise (from March 31, 1954). The franchise
payment is 6% of revenues received by the company from gross sales to
residential and commercial customers in the city for 12 months through March
31, less taxes, licenses, and so on (except assessments) levied on company
property. Available fund balance exceeds remaining debt service
requirements. Final maturity is in 1982.
The utilities service tax bonds are secured by the 10% .:tilities service tax
imposed by the city on the sale of electricity, gas, water, and local
telephone and telegraph service. Franchise and utilities taxes for the bonds
yielded $23.5 million in FY 1980 with debt service of $150.000. In the past,
the city had put all collected franchise and utility taxes directly into the
Debt Service Fund, transferring excess revenues into the General Fund. Since
these revenues are substantial, the city decided, beginning in FY 1979. to
place the monies directly into the General Fund and then transfer only those
monies required to cover debt service payments.
19
plorida
The otltstsiiding special obligation capital improvement revenue
payableby
betwe A 1954 and 1966, and paid for from franchise ry on evenue p Y
power & Light Co., were called in their entiretquently been remove
1, 19'7
d nd the rating has
issued
plotidd
All
are now retire a
Last year the city issued Convention Center revenue bonds arena .foand r the
of a major downtown conventioambitious project, basednter,
constructionIt is an
marketing and business complex. No debt service
cit 's projections of continueds°centralebusinessadastrictnati�.:��:1 us
y articularly in
development. p
issued to develop a downtown parking
a ments were scheduled in FYwere0• in conjunction with these bonds,
rkingth parking
P y parking revenue bonds problems
street p After some major p
complex near the convention center. -resistant." has increased revenues
meter va
n�alith the convention
center. Department Off-street Parking has rePkinedlot
e
meters with those designed to be
lots, and has sold its one par
through rate increases in its p
revenu
e loser. The department had a solid record of financial operations h
FY 1979. with no
Between 1949 and 1971 the City Of Miami However, onissued rDecember 6. 1972, the
G.O. pledge, for its water operations.
created the Miami -Dade water
sand Sewer
Board of Commissioners pose ofdestablishing an agency countywide
Authority for the purpose
onsibility to furnish water and sewer seweresystemsoffMiamilandofDade�
the resp debt
Currently outstanding
all properties of the waterworks and sanitary the City of Miami are all
County were transferred to the authority.
approximately $14.9 milon the solelyboro issued by
equally secured, and payable
from the net revenue of the authority's
water system.
G.O.
Bond Principal Maturities (000):
9/30
9/30
1999
�I,620
9/30
$ 6,790
1990
$6,795
6,135
2000
555
555
1981
1982
10,735
1991
1992
5,435
2001
2002
555
1983
9,740
9,305
1993
5.045
4,720
2003
555
75
1984
1985
9,290
1994
1995
4.760
2004
2005
95
1986
9,160
8,355
1996
4,220
3,960
2007
95
100
1987
1988
7,950
1997
1998
2,765
2007
2008
110
1989
, 90
G.O.
Bonds Maturing after
1/1/81 (000)Amount
%
36.2
$45,860
63 3
7
Due in 5 years 92.010
Due in 10 years principal and
of P royal.
Adequacy of Taxing Power: Taxes are unlimited far payment ct
interest on general obligation bonds, which
are
slimitedttovl0emills.
operating purposes on property tax revenue
Ad valorem taxes for city Pone into effect for FY 80-81
However, an additional limitation ear'sflevyghasag
increases from the preceding Y
See Government Factors section under TRIM.) ,
only. (�
y
16 Miami, Florida '
DOW Limit: The city charter limits voted bonds of the city to 159E of
Assessed valuation of all real and personal property within the city limits.
bonds for street, sewer, sidewalk and other public improvements paid from
Special assessments are not subject to this limitation. The city estimates
that as of December 30, 1980 its debt limit is $981,407,349 and its legal
debt margin $859,851,860.
Debt Load: Debt ratios
werer calculated
using the 1980 U.S. Census
estimate
of population of 335,718.
fiscal year 1980-81
net assessed
valuation
of
$6,542.715,660 with an
assessment ratio
of 100%.
Ratio to Net
Ratio to
Grout)
Median! ....... .
Net Debt Per Capita
Assess. Val.
Est. Full Val.
Per Cab.
%-EFV
Direct $381.26
2.0%
2.0%
$304,34
119%
Overall 864.94
4.4
4.4
514.54
3.3
*Cities 300.000-500,000 population.
Debt History and Trend: Default in the early 1930s was cured by refunding
operations in 1934. 1940. and 1944. All original and refunded debt was
retired by 1960. Since the early 1970s, the city has significantly expanded
its G.O. borrowing almost entirely for capital improvements, rather than new
construction, but has not issued debt since the fall of 1979. Its most
recent G.O. issues, both in 1978, were for $14,040,000 and $18,250,000. A
sale of $6,750,000 G.O. bonds scheduled for October 30, 1979 was cancelled
because of a Securities and Exchange Commission complaint involving
disclosure violations in the city's official statement. The complaint,
concerning pension litigation, was later resolved in the city's favor. The
city is planning to issue $23 million G.O. debt in July 1981 for capital
improvement purposes and projects annual issuances of $20 million for the
next five years. While the city has a capital improvements plan, it has not
yet worked out fully the funding mechanisms and security arrangements it will
use for the proposed projects. The city currently has about $102.5 million
in authorized, but unissued, debt. (Several of the issues have not yet been
validated, or have interest limited to 7 1/2%.)
The city is also planning several special obligation issues in FY 1981.
including $17 million for parking garages, $10.000.000 for the Miami Marina,
and $55.000,000 for the development of a theme park on Watson Island.
Although these latter bonds have not been scheduled for definite sale because
of unresolved legal, environmental, and financial issues, the city intends to
sell them before January 1982. It has not been determined if a pledge of
other revenues would be necessary to facilitate the sale of these bonds.
Trend of Direct Net Debt (000):
9/30 9/30
1956 (6/30) $50,360 1969 $ 64,488
1960 (6/30) 53.542 1971 66,877
1961 (12131) 46,185 1972 74,058
1962 47,907 1973 129#146
1964 41,294 1976 131:827
1966 43,184 1977 141,048
1967 50.199 1978 150,060
1968 54.319 1979 146.650
1980 (12/31) 127,995
t
:g.��,7rt
1c -. � �4 i t � r s�r _ r sr<7lit �.�;;a• s zy . � siY.r ur �^ ' a Y -t s � ,y P w �
Fiiatlli, Florida
Floi'id8
FIIVAP1CfAL Atfi(iAS: City financial operations are constrained by al adopted
for general
statutes establishing a maximimum malit esillaqe `land0(2)m'llsFlorida'sgreCently _.
tax revenue increase cap for fiscal year
^� operations for counties and titunicip This revenue cap
1 TRIM Bill which set an 84 prope:ty
1f181 only unless the legislature votes to extend it. Capital
Refer rt section entitled
cxempt.s taxation required for mcedsiedctuontio(s, court -ordered a s`ps milla�e
outlays, debt service, and newThe city re
able to decrease it lfrom thelbecause of a
implementation of
"Truth in `tillage Bill" for more information.)
limit in FY 1977 and was only The city
from about 75� in FY 1980.
dramatic increase in assessed valuations resulting
10o4 full valuation in et rnt up mill The City Commission ovwill errode
'acts that it will return to the
ndeof'initelyimit in FY t982 tndtaxes by 2796
prod
t o et
continue to operate at the lima $2 million
the 8� cap as allowed by the TRIM Bill. and increased p' P -
civic -related budget increases; (2) a 7% expenditure
for 8% 1981. The voted override stipulates for FY 1982 ) a freeze
reserve for police and such a decrease is set, a hiring
decrease (until the budget reflecting ear's budget.
in effect, except for police �nctttlin the currentxyeptions vote on
will be and (3) a 1
by the City Commission.); number of
is entering FY 1982 with a
act on the budget.
Besides these limitations• the city cutbacks in the funding of social
other financial problems which will have considerable imp fire, and Aal
Among the most important are the county for police,
or debt
services programs; impending ear -end
employees; p problematic areas; and a negative trend in Y
pension costs; enterprise systems' fund deficits; ma
issuing plans, some in
cash position. art of an
social services program cuts as p
Dade County has be instituting and large a county
plan. Since social services are by programs
($1 million
overall cost cutting P only $2 million wort development funds), these
function • with the city funding because of
general revenue sharing and $1 million in comm' particularly
cuts may put extra pressures on the City ofyiami. p
increasing demand for services in the city. September 30, 1981, and
otiations. while the city is
Police, fire and AFSC`tE union contracts r•ir. out as of
the city has already started contract nag increase for union
City
an approximate lo% across-the-board salary figures.
projecting actions have been under actual settleached aentini 1982
employees, past prof11
FY
officials state that
fthe
i10reasedlrevenuelto pay eunion settlements.
because of the n et and have been
or expenditure item in years1throughami g1980. In
Pension costs are a major n. the CiCommission adopted for 1980
increasing at 15-25�b annual rate for the five Y amortization payments
response to this rapid cost astaserv�ice liabilities: the city's
a new method of amortizing P ear, reflecting stems would
are now calculated to increase Sib each y two pension systems
The chart of amortization payments
expectation that tax revenues available to the shows that magnitude of these
increase by at least that rate annually.
in the pensions section of this report clearlyshows
to be eliminated according
if the unfunded liability
increasing payments is hoping to reduce future payments
to statutory requirements. The city ending
b instituting a new plan with reduced benefits for a
new
considerably Y or area for discussion irk
ksthehip pin ending
employees. This problem will be
was considering since that
union negotiations. The city package than the
state plan but the unions wconservativee not oiniits tbenefitapackage
plan is substantially more
city'$•
is 'bt s
�p� yNy d
s,
X
T
Miami. Florida
ditY oWhs And operates a number of major enterprises. Four of the seven
11COUthUlated
Rind deficits at September 30, 1980 and required General Fund
�xr
teVehUp support. the FY 1980 Marina deficit was set at $475,000, the 1981
deficit at $672,000 and the 1982 deficit is projected to be $1 million. An
ihereasing operating deficit is estimated in spite of major fee increases for
the Marina, one of the big revenue losers for the city.
The city is planning significant issuing. One proposed issue of $55 million
for the development of a theme p park on Watson Island is problematic in terms
of the use of public financing for such projects. While studies have
projected substantial revenue generation for the city from the park, the
establishment of another enterprise system, funded through tax-exempt bonds,
and dependent on a tourist trade subject to cyclical fluctuations at best,
could lace an added burden on the city's p financial resources.
fry
General Fund trends have been mixed. While expenditures rate increases have
been held below revenue rate increases, the fund's year-end current position
has gone from a cash surplus of $3.075,000 in FY 1978 to a cash deficit
position of $764.000 in FY 1980. Even though the millage was reduced for FY
81. because of a tremendous increase in property taxes, strains in the budget
are apparent, and the above described problems will have a negative impact on
the FY 1982 budget. The FY 1981 budget has a $14.8 million, or 14%, increase
over 1980's, with a 27% increase in property taxes. Close to 90% of this
increase results from contractual agreements, mandatory increases, and the
addition of 150 positions to the police department, 64% of it being
attributable by function to police, fire, and sanitation. Besides property
taxes. the only other major revenue increases resulted from the
implementation of a solid waste disposal fee (generating about $2.8 million
additional revenue) and from legislative changes (See section on TRIM Bill)
in the fee schedules for occupational licenses (generating approximately $1.7
million in additional revenue). However, the city's ability to locate new
revenue sources, raise existing fees, or increase property taxes is limited
by statutory constraints.
General Fund Revenues and Expenditures ($ in 000)
Fiscal Year Ending 9/30
% Change % of
Revenues 1976 1979 1980• 1979 1980 19806
General prop. taxes $37.223 $39,462 $ 42,427 6.0 7.5 40.6
Bus. & excise taxes 714 20.050 23,529 - 17.4 22.5
Licenses & permits 4,477 •1,793 5.660 7.1 18.1 5.4
Interest on investments 1,049 945 1,202 -9.9 27.2 0.9
Federal grants 3,053 - 410 - 410.0 0.4
State grants 12,102 12,650 12,637 4.5 -0.1 12.1-:,
Other 7,072 8,763 10,813 23.9 23.4 10.3
Trans. from other fds. 29,997 9,173 7,822 -227.1 -14.7 7.5
r
Total $95,667 $95,835 $104.500 0.2 9.0 100.0
,
Expenditures:
Police $21,660 $28,587 $29,865 32.0 4.5 30.1
r�
Fire 15,232 21,619 23,131 41.9 7.0 23.3
Jx..
Sanitation 12,022 14.312 14.460 19.1 1.0 14.6
Parks & recreation 5,104 6.870 6,996 34.6 1.8 7.0
Public improvements 9,149 10,637 11.422 16.3 7.4 11.5:
Pensions" 14,410 - - -
Finance 1,179 1,472 1,487 24.9 1.0 5.1
,
Other 13,152 11,512 5,079 -12.5 -55.9 -
Transfer to other funds 1,804 1,808 1.870 0.2 3.4 1.9
'
Total $93,712 $96,817 $99,259 3.3 2.5 100.0
5
Year-end fd. bal. $ 1.475 $ 664 $ 1.918
•Preliminary, unaudited figures.}if
-Starting in FY 1979, pension costs are reported in the city's Trust and
Agency Fund. ,�
Miami, Florida
1 8fld 0 t energl
i�und Revenues and
Expenditures (000)
5xcee (811t9�A1) j
!e�
Revenues
6xaendi tures
1tei(082 b,
�i;032
A
i96(1
$ 19,900
$18,868
23,589
(1,104)
1
21,856
23,631
23,529
467
1966
1J6'
26,656
25,189
(422)
1968
26,903
27�325
30,986
'.' 20
1969i,006
32,620
33,490
(870)
(872)
1970
1971
37,088
31.960
44,529
1978
46,043
91,398
51,470
���`s (72)
�t, (4076)
19 4
1975
55,202
60,178
61.308
1976
65,778
72,852
`r2,917
(95)
1,975
1977
1978
95,687
93.712
96,817
(582)
1g79
95,835
99.259
5,241
1980
104,500
General Fund Year -End Current
Position-
(O6O)
1980•
Current
Liabilities
1978
199
Accrued liabilities
51,O2O',�.4j
$1,063
$1,613
(including
salaries)
& encubs .
1
1 , 242
Accts .
outstanding
payable
3 , 110
$4.130
•877
52,94O
$2,855
Total
Cash and
Investments
7 , 205
4 . 664
$1, 124
2
$(064)
' }
a {ry"t
Cash surplus
(deficit)
$3,075
$1,145
$1,174
Si,737
t
Current
receivables
•Preliminary, unaudited figures.
Debt
Service Fund operations
(S in 00979
1980•
Revenues
$11.820
$17,547
$16,783
General property taxes
& utilities service
tax 15 .443
-
1 522
2,675
Franchise
843
$19.458
Other
$28,127
$1
380
Total
Transfers - other funds
192
$28,319
560
$19,630
$19,838
Total
Expenditures:
$ 6,710
$ 7,295
$ 7,312
Bond interest
8,726
10,326
10,639
Bond principal
96
170
256
Other
$15,532
$17.790
$18_207
Total 15,240
Transfers to other funds $30,772
21
$17,811
$18.207
Total
$ 5,576
S 3,108
S 4.927
6.558
Fund balance - beg. year
3,108
4.927
Fund balance - year-end
i3 fi
a
_. ... -
� ,RO �.+ri ry 1
_
Miami, Florida,
x r
'd1`
r c f 31
lvet A§Se�Sed iEilU�tibii t�1bC1) :
T
i83b
812i.423 196a 81,512. 22
104
10,87� i9�f_E 1.538;500 196.5ti,�#
:
`.950
3u�3,779 1C) 1,903,96(3 19ii
3"39, 12
195o
A-86,036 19i2 2,019;660 1916
,
8 898 183
19G1
81 i , 11,Z 19 3 2,222 1979
4,0H�81
364 1944 22, 503 468 1980
4 , 48036 �
101
6;542,716� +,�r
rlhe"d11.y
went fhot-: to t60ct fUl1 i•aluat-i0h i1t PN` 1J81
,
At'efa§b 6nhual
k tjtowth: 1980-1980: 7.41
19`C�=1980 : 1 1 C T d�
4711.
s4.J
TAX Ratt/41.000
PtOPertt• tlik RAttt L@Vits, end Ct�iit ti+b i
Rate Per to .id,1. t0t'a Ne,t
ri:�tit
Year
81 00 Lev, 00� i eC"lions
to;l l eeii 4_6 hs
1972
S14 8,80h a29,04
97,43
193
12.6-,3 28,106 27,449
97:66
1474
13.43c 83,638 32,736
97.32
1916
10. 88C) , 923 ;33, 83
56.88
19"6
i0.83G '38;50b 37,281
96,81
1977
1].903 43,8542,969
97,99
198
13,200 00,5C#29.095
97i16
1979
1d.-i8r`' S8,3 C 57,389
98.18
1980
13.960 G0,954 5k.790;
96<•10
1981
i1:422
N/A
*includes
debt sere ce mtltcp...
Ge ;e^�t]
bebt
r iscal Year Oaera; i n q� 1.iy'�t ifi t itit�11 '1 t�� Pen -ion
—
-'
Service Total
1973
8 c 152 S' 66 S 1,01 Sf2 77Q
: •
$2.673 Sl2 673
197�i
5 n..
t 503 �13 2 .'89�
3.781 13.436
1975
?:959 ;242 ,10 3.06#
2.311 10.880
]976
fi,503 374 .1:1 2521
2.317 10.830
1977
5:683 O•11 y3n 3 129
2.311 11.903
1978'
10. 70_
3.200 13.200
i979
10.000
}•487 14.18
i980
10.000 _n_. .p -0-
3.960 13.960
1981**
8.610 -0
2.b12 11.422
*`tillage for
pub] icitt•, pensions, end lighctr,� were consolidated
into the
General Fund
as of FY 1975. E
**Estimated
a �"r�ai's�+►ii�*�i ♦� �'��5`�"� 4,� , fix^' ai r ' ( ¢� o ��,tf, ,;
HdVt
tRti'q'.
a
iticaaaoacrEo
itft ttAtF-T
NtWv yb(4K, N.Y
.WALL
,
t
los F. Garcia �a �af� �s
e Director
ityof Miami gyp, q P
500 Pan American Dtii3e s T FU
N
Miami, FL 33133
Dear Carlos:
In addition to answering the specific q
uial
estions of Moody's, I
would suggest that the City emphasize other areas of financ
strength, for example, the tremendous economic growth and
'the billions of dollars of construction activity. This may
offset any concerns they may have regarding the City.
I have attached an outline on General Obligation Bond Ratings
helpful in meeting with Moodyis, particularly
which I feel may be help
as to the "Economic Base Analysis''.
issues is contained in the outline:
in
formation on three topicalsJ
Factors Used for Evaluation of G.O. Bonds (Section Ito V)
Documentation to be Provided by the Issuer (Section VI)
Rating Symbols and Definitions
(Section VII)
and we are prepared
We hope you will find this information
usefas�well as other t
to'further discuss the specific questions,
factors involved in the rating process.:°
Sincerely yours,
cDonald
W. Ma
Robert Iw _
Executive Vice President
l (t
w� � �t5i'Id �tablttg�-
5
-
yj�
�yyF y�y� or Evaluation
f x�
conotfiic Base ,
l Analysis
Vinanciadebt Factors
• �'✓
i '�.�,�� t�xfii - k
AdS inistrative Factors Agffl
rxks�t9r
FConomic Base Analysis c.
19 ixl+Tx4 fir„
t A', General
Single most critical of •the four evaluatiott factol'a -
listed above in Standard & Door's ratings
2.' Emphasis on high income levels and diverseecocsc�nit�
trends
F� 3, Emphasis on long-term Income Levels and Rate of Income Growth
Per capita income levels
z
Per household income levels arison with
�t `t
.,r 3, Income level and rate of income growth comp
region, Standard lletropolitan Statistical Area, state,
���• and nation
a
}, Employment Base Analysis
1 Areas of potential vulnerability nation
2, Employment base comparison with region, state and
? 3. Long-term trends of emp
to -ment
nk
ft3 s. f 4. Trends of labor force growth
and trends of labor
5, Emphasis is on trends of emp -emphasized.
�M
{ force growth. t5nem loyment figures are de
4
l 1
t i d I'
k b. Population Growth Analysis
Oat
Four decade trends
a, Include recent estimates
'` b. Evaluate impact of annexations and deannexations
groups are
j�.., 2; Age of population (under 18 and over 65 age
services)
�... considered "dependent groups requiring capacity
�,_... 3. Comparison of educational levels with wage earning p
Residential verso, ---- activity
2 Effects of economic condition on building
and values
3, Building permit values reviewedcautio
rr, ,e rt_�
related to exO^�pt } 1
t 4 yx
� at
rc � cif
.rtr`� ,� y r�� 7 .ti�� ..�y
'� t1C�1R � W
,i k gF Yf
�ge
<Rw-
toipositic+n�x
5, i Ftt t Tt 1�j
v din i° iCr -a ��xl.
etail Sales Actiitity, �W� s
ri
dt stational center}
y�; (
gatk Deposits
M t
Ifl dial Analysis
, dner
1, Emphasis on revenue structure „ `pFx��.
i C F kY�
I 'g hko `»
y' a. Balanced Composition t a{x
1
b. fiesponse to economic change
c; Not overly dependent on one or two revenue gotsrde iris
����
Emphasis on trends and direction of trends
firy,
" ti Vinancial Reports r
2'
1, Issuer provides all reports, audited and unaudited
Prefer audits by independent CPA
i
audited by State Auditor or Chief Financial OftioeTf��f
C '}E 1
reports should be certified by same�w
5,`2 Reorts must be adequate and timely'{`
4 , p
i,+ 3.7 Jfe 4k
5. Methodof accounting reviewed w,Oilk
.
°t a. v.
"ethod changes from prior periods ,u
r .
g ��.
b. Impact of method changes on operatin statements �
. j.
, Footnotes must he complete
°. 7 Should submit management letter if one prepared bye
1
independent auditor.
r
# x it'd fir-
/1 Current Account Analysis
1.= Size of current budget
" 2. Budget growth trends
a. Relation to population growth
f
b. Relation to tax base growth
�
Histrical revenue and expenditure balance or imbalance
VIM
3. oya, Major revenue sources �n r
i �3�
a. Review trend of size versus total revenues
s i
' b. Suitability of sources considering economic base
5. Major expenditure categories ai
a. Review trend of size versus total expenditures a
b. Suitability of expenditures considering economic base s
` orison of budget versus actual operating results ,s
6. Comp g
a. Indicator of financial strength t
f t
il
b, Indicator of managerial strength
7; Emphasis is on funds used for operating, rather than 4 F
capital, purposes.
Use of Short-term Financing for Operating Costs „roe
Reliance on untimely outside fiscal aid ��,� F'
Coordination of tax calendar and expenditure streams
3. Cash !r.inagement sophistication
'"� y, I^plicati��ns
'aye 3
piston t idbilities
Relation of benefit payouts t6 asset aeeut ulition
funding of liabilities should not be defetted or 'postponed
gu
�k Issuer should provide current and ongoing actuarial valuations
4+ Manager of pension plans should have solid knowledge of
.. a.. plans and future cost implications
Emphasis is on rate of asset accumulation versus rate of
�r accruing benefits. Aggregate "unfunded pension liabilities"
is de-emphasized. Focus is on trends.
6, Suitability of funding formula and adequacy of related
assumptions.
' t)ebt factors (single most critical of the four major evaluation
factors in Moody's ratings)
A. Nature of Security being Pledged Y
1. Secured by limited ad valorem tax? rt
2. Secured by unlimited ad valorem taxi
3. True general obligation of issuer?
Debt Issuance Trends
a A� l t F
"4 F r ,
rx-Jfi 15Y�:_Debt History ry,s�t�.SJg'3'iv4�iA a:
,x b+ Debt Burden
�t 1. Comparison with total budget resources and income indicates'
current ability to pay
26 Debt limitations
�y 4,,.,,, ` a. Limitations should be realistic
'°k b. Issuer should be able to -operate within limitations
and meet ongoing needs
fct c. Unused margin of limitations is important indicator
3. Overlapping and underlying debt
4. Lease related debt and obligations
5. Pension related liabilities'
` g gG.O. debt not supported
`i �Ee t `fin
NJ
Se re at ion of amount of (;.
by earmarked revenues �L
7. Moral obligation debt;T .
E. Debt Payout Schedule '34
1. Should relate to useful life of facilities
F Projected Debt Requirements N�
s
1. Evaluated
it 2. Issuer should demonstrate evidence of r''Qgu'a��cap
improvement planning
C FO.. History of Past Voter -Approved Bond Aut':h`
Indicator of Willingness to Pay h�
�i
- Page !4 -
Ditbt Related Ratios in G, 0. Bond Analysis*
J;
Net 6,0. debt per capita
Not 6,Oi and overlapping/underlying debt per capita
'
1,4tt 0.0, debt as percentage of full teat estate valuatid
derlying debt as petCOMU"d
diet G.O. and overlapping/underlying
of full real estate valuation
P;
5, Net G.O. debt as percentage of personal frit6md r11.11111
6 G.0, debt payout in ten years
'M
V.
Xd*ftittlisttative Factors
Governmental 'Form and Structure
lly preferred .,C� V�
1, Strong executive genera
a, Four year term preferred with unlimited reelection
Control of budget preparation; line item budget
veto power; control budget implemeritation including
award of contracts
Ability to Appoint and remove personnel
Rome rule powers
ah Restrictions or limitations on tax rates, levies
bases of assesment
Range and level of
services versus ability to provide
nsibility with
s of resDo
Oetermination of shared area
M
overlapping or underlying government units
toperty Valuation
s and Assessments
Trends
2
in assessment ratios
Changes
0
3: Assessment procedures
4. Analysis of valuation categories
a. Application of assessment ratios to different
property categories fzu
tM
5. Ten year review of tax rates, levies, collectionS
Ai delinquencies and procedures
Cash flow impact of tax due dates and delinquency rat omr,
4
Viscal Impact of Potential Litigation
management Strength
1 Budget'firs z
techniques
tual operating results
�2. Budget versus ac
3. Labor relations
4. Management controls
5. Long range planning
VI. Documentation to be Provided by the Issuer for General Obl ion,'
Bond RatingsA-*(much of this material is normally included in
the Official Statement)
A. Description of the economy
character of development, t
and the -.?-j!ue of homes (for
f the area, including the
e level of building activity,
residential areas)
Comprohonsive
'"Municipal Bonds;
and nub!i,: Finance", rage 111.
& Poor's RaLirls4-3 G:Iille%
Revie,.w of Tax -Exempt
P.Ir_10 397.
LC&LCbL ouaget
z
�j Tax collection statement for 10 years, including amounts
levied for each vear and the amounts actually collected
in such vear, and the amount collected to a recent date;
1f 1 + ,
„gi
r statement of this unit's tax rate and the overall tax rc,£
kf. rate for the last 10 vears
W�;3
+- .
Five vear proposed capital improvement program
T
r'`fll. Future borrowing plans by this unit and overlapping units r
t,MA �i., Statement regarding status of employee pension funds
tC� Statement regarding pending litigation and potential impact
' -thereof
a 1.: School enrollment for the past 10 years (where applicable)
Zoning map
h
VIZ.` Rating Symbols and Definitions*
02
}tz
S h . f
Standard
Moody's & Poor's
art Aaa AAA Bonds rated AAA have the highest rating
assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and
repay principal is extremely strong
* Source: Standard & Poor's definitions are from "Municipal and International
age i �.
Wage 6 -
k tif►E �d[ds tgted AA have a veto sttahg eapa�fty
FTC s
{ Y to pay interest and repay and differ
`t T", feat the Highest -rated issues only tb a small
y 11 Pr>Tn.{,3
r
degree.
i iX�r t
N $"
Bonds rated A have a strong capacity to pay
interest and repay principal, although they
t•"r�?�f �'..'
are somewhat more susceptible to the adverse
a' effects of changes in circumstances and economic
conditions than bonds in higher -rated categories
781
59$$ Bonds rated BBB are regarded as having an
t adequate capacity to pay interest and repay
principal. k'hile they normally exhibit
�j
adequate protection parameters, adverse
economic conditions or changing circumstances
are more likely to lead to a weakened capacity
daeew to pay interest and repay principal for bonds
frv�
'tier, in this category than for bonds in higher-
rated categories.
i
$, CCC, and CC are regarded,
Bonds rated BB,
on balance, as predominantly speculative with
3MOP, ACC respect to capacity to pay interest and repay
�` CC principal in accordance with the terms of the
•r` „ Y`' ` obligation. BB indicates the lowest degree
of speculation and CC the highest degree of
s eculation. While such bonds are likely
p
to have some quality and protective
k. characteristics, these are outweighed by
large uncertainties or major risk exposures
<. to adverse conditions.
44v�
, fltl 1'
The rating C is reserve for income bonds on
which no interest is being paid.
f �
I{ 'yI
r t •i k t Y ^n r _
WEDNESDAY, DECEMBER 10, 1980
(i�ht 1_ Iw,t he Ntw YoA l`tneA
BusinessDay
' bcXcwl
ork Wilco
Miami Drawing World's Banks
MW
S7 0*�
sew S6.5
'78 177 '78 179 80
Influx Changes
City's Image
And Skyline
By GEORGE VOLSKY
Spec jai to The New York Times
MIAMI, Dec. 9 — For years, local
business leaders have been trying to
live down what they call an inaccurate,
and outdated, image of Miami as a sun-
tan way station to nowhere.
But they believe that, of late, strong
winds of economic change here have
urcovered both here and abroad a new
definition of Miami, one that is much
different from the sunshine -and -coco-
nut -oil version portrayed in the tourism
promotions.
"For years, our principal problem
teas been that of perception," said
Charles J. Zwick, president and chief
executive officer of the Southeast
-gawk. k. .s►
'76 '77 170 7A 80 73 '77 18 79 1"
Miami's Largest
Bank Holding Companics
Southeast banking Corp . ...... $2,020
Flagship Banks ....................... 505
BamettBanks ........................ 422
k 374 b #
Florida National Ban s ...........
Pan American Bancshares ......
355
First State Banking Corp. .......
341
City National Bank Corp. ........
340
Sun Banks of Florida ..............
299
Intercontinental Bank .............
270
Republic National Bank ..........
234
A model of the 55-story build-
ing that the Southeast Bank-
ing Corporation plans to build
in downtown Miami,
Tin ti..w } .rt T -.rs - Fra6k bilge
am' Drawing World 4s Banks
BahklYtk'C'.tli`j'Yotatiitn, thr- tv.ldi ! cc,m-
pahy ib"r i71ohda's largt_•st bank, in a re-
cent intee view, "In the nation's finan-
cial circles, Miami has not been re-
gardei as a serious place to do busi-
tless."
`Great Potential for Growth'
"But now, at long last," he added,
"Miami has begun to be seen as a town
that is financially sophisticated and
has a great potential for growth."
htr. Zwick's view is corroborated
both by the dramatic growth of interna-
tional banking here and by interviews
with other American and foreign bank-
!n thr )ast twn years v iiv.,ally.
hankers r,nid, thr• rnultinati"n,tl f,nan-
r::ti Community that has crowded int t
thr; Miami ama has N-gun ch.inlnng th-
C,tv'.,;-kyline' and its Image.
forty-tlm-» banks from all over thi.
world now have branch office!; here, in-
C!uding the Swigs Cref;t Bark, i3nr-
chys Hank of Lonulon and the i,nr.m
Bank of Switzerland, Another 20 — in-
-titutions from 5wit7erland, 1;ritain,
tr'r:t Germany and France -- arc
scheduled to open branches in the next
few months.
Miami has more foreign -trade -ori-
ented banking offices than any other
American city except New York, if its
29 Edge Act batiks are counted. Edge
Act operations are subsidiaries of out-
of-state American banks that are lim-
ited to offshore operations.
International Units Set Up
Prodded by the sophisticated new
competition in their own backyard,
most large Florida banks have also es-
tablished well -staffed international
divisions in Miami.
All are vying for a piece of Florida's
prowling export-import business to
Latin and Central Amtenca, which this
year is expected to surpass $15 billion,
20 percent higher than in 1979. Also at
stake are another $4 billion in foreign
deposits that are estimated to be held
by Miami banks on any given day,
funds largely earmarked for direct in-
vestment in south Florida in the form
of tourism, export sales or real estate
purchases.
"We have tried for years to attract
international banks to our area," said
Harry Hood Bassett, Southeast's chair-
man. "Our views were not very popu-
lar among our colleagues, but we have
always believed that it's better to have
10 percent of a large market than 50
percent of a small one.
"There are stilt many people who
think about Florida in terms of orange
juice and all that," said Edward Hoyt
of Morgan Guaranty Trust, who was
president of its Miami Edge Act opera-
tion until this spring. "But there is a
growing interest in Miami as a finan-
cial center."
Influx of Headquarters
One important element in the devel-
opment of the banking and trade sector
has been an influx of headquarters for
Latin American and Caribbean opera-
tions of more than 100 American corpo-
rations, including such multinational
giants as E• xy.on, Ti-xac o, i ntc r-national
Y'etr phoru• and 7'tcltraph and Ihrw
c li,,nttcal. Sntnr exl)erts predict that.
by the end of !hc. arcade, tnurc• than 5+X1
c,trlt,tratiun- wil! have relocated their
Latin American 1—adqu trte•rs here.
Anoth"-i- r^;tson ctt-d for the- tncrtrase
,n foreign hankine activity here was it
nectrnt decision by the Frdetal Reserve
enabling, Edge Act banks to consoli-
date. The decision was aimed at in-
creasing the lending potential of the
Edge institutions •— which by law can-
not exceed 10 percent of capital — and,
in turn, served to increase the potential
and attractiveness of such lending.
Citibank in Miami, for example, al-
most quadrupled its capital to about $60
million, and raised its legal lending
limit to $6 million, by consolidating its
Edge operations earlier this year.
The perennial political unrest in
Latin America has also helped under-
write Miami's growth as a financial
center. In the face of political Instabfl-
ity and upheaval at home, analysts
said, more and more Latin American
wealth was finding its way into the per.
ceived safety of a United States bank
account.
Mo%ing to Loan Syndicatlon
••j'c-ate ago, only limited personal
funds were deposited here," said Raul
Masvidal, chairman of the Biscayne
Bank of Miami, which is partly owned
by a Swiss and Latin American group.
"Now, most Latin American entrepre-
neurs do all their banking and invest-
ments here, and we are now moving
into the stage of loan syndication."
So heavy is the foreign cash on de-
posit in Miami banks, in fact, that the
Comptroller of the Currency and Con-
gress late last year initiated an investi-
gation into possible links between the
city's financial institutions and inter-
national drug trafficking.
Foreign bankers view Miami as a
springboard to successhd Win Anief -
can trade,
"For someone who has never done
business in Latin America, it Is easier
to start from Miami than, say, from
Caracas, Bogota, or Sao Paulo," said
Fernando Capablanca, an executive of
the Bank of Tokyo, newly established in
Miami.
In what is believed to be the first
large country -to -country syndication
arranged here, the Miami office of the
Banco Exterior de Espana acted as an
agent for a $25 million loan in Eurodol-
lar deposits to finance Costa Rican cof-
fee exports in the coming season.
Twelve other foreign banks partici-
hatmt in the loan to the Panama office
of the Go-.-ernment-nwnc47 Banco Inter-
nactunal de Costa Rica.
Pro-$uslness Attitude Cited
Bankers also praise what they call
the States Legislature's new pro-busi-
ress attitude, as directed by Gov. Bob
Graham and his Cabinet. Under a new
state law that took effect in June, for
example, international banking trans-
actions are exempted from both the
state's tangible and documentary
taxes, a measure that lowers the cost of
conducting offshore financial opera-
tions for companies working through
Florida banks.
Despite the rapid growth of foreign -
oriented banking here, however, some
local exporters complain that they still
have to fly to New York to arrange for
quick financing. And complaints that
area banks are still primarily oriented
toward the real estate sector, and lack
the required expertise to service the
growth in International trade here, are
commonplace.
As the international banks and multi-
nationals move in, the pace of develop
ment in downtown Miami continues to
accelerate, apparentiv unaffected by
hest summer's riots in Liberty City or
by social and economic problems
caused by the arrival of tens of thou-
sands of new Cuban and Haitian refu-
gees.
County officials estimate that, within
a 10-block radius of the downtown cen-
ter, more than $2 billion worth of new
construction will be completed by 1985.
Adjacent to downtown, the Port of
Miami, already the largest cruise port
in the world, is undergoing expansion
to deal with a growing crush of contain-
erized cargo on its piers. Across tom,
near the busy International Airport, a
new free tr tde zone has established
linkE t ith mare th:,on 60 countries.
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► Updated Proposed Master financing Pint
Special Revenue $ond Projects
�,.
hackground
Special projects developed by the City, such as the Convention Center -
Garage and the proposed parking structure for the Downtown Government
Center, are usually intended to be financially self-supporting. These
projects do not become general obligations of the City, but are
financed through the sale of revenue bonds after their revenue -
generating capacity has been established through feasibility study
projections.
Such revenue projections are based on assumptions of the feasibility
consultant, and the actual level of revenues realized from the
project may vary from the projections due to subsequent events.
In order to sell such revenue bonds at reasonable interest rates,
it has'been necessary to provide additional security to assure
bondholders of timely pavments of principal and interest. This
has traditionally been accomplished for City projects by providing
bondholders with a pledge of a specific source of non -ad valorem City;
revenues, such as a portion of the Utilities Service Tax, to make
debt service payments in the event of revenue shortfalls. So long
as project revenues are sufficient to meet debt service payments,
these additionally pledged revenues may be used for other City
purposes.
Current Situation
Although it is g quite common throughout Florida and the country, Ll
the current method of providing additional security for revenue
bonds imposes artifically low limitations on the City's bonding
capacity.
,
«'.
ti�'r r
if6Jf eytt� v— m
9K tf �f t
�.
1 F,
At each project is financed, a different source of non -ad valorft
revenues is irrevocably pledged to secure only that project for
tWettty years or more. The pledged revenue source trust be adequate,
(On an historical basis, to meet all debt service payments on the
new bonds, assuming that the project totally fails to produce
revenues. In practice, the pledged non -ad valorem revenues are
likely to grow significantly over the years due to inflation and
other factors while the debt service requirements remain fixed.
Unfortunately, the pledged revenue source is irrevocably dedicated
to securing that single project, even though the amount of those
revenues is likely to become excessive.
Eventually, all such revenue sources are pledged and the City's
ability to finance new projects is restricted, even though it is
generating excessive collateral (the pledged revenues) and even
though its projects may have proven to be self-supporting.
Once all significant revenue sources have been pledged, new projects
would have to be financed through the issuance of bonds secured by
a subordinated, or junior, lien on non -ad valorem revenues previously
pledged. Such bonds would be less credit -worthy than other City
revenue bonds, would be less attractive to potential investors
and more difficult to sell, and would have significantly higher
interest costs than similar, but non -subordinated bonds.
t
r
The Proposed Master Financing Plan
I f At
Self-supporting City projects should be secured in a manner which:.
minimizes borrowing costs; protects the underlying strength of
fj
the City's credit; does not over-collateralize projects; does
not impose artifically low limitations on borrowing capacity; and,
which allows the City's borrowing capacity to expand within
reasonable limits.
The Proposed Master Financing Plan accomplishes these objectives
while closely paralleling current City practices in most respects.
The City Commission would subsequently approve all revenue bond project
in advance after completion of a feasibility study. In conformance
with current City practices, the City would sell bonds in an
amount sufficient to: (i) pay all costs of construction; (ii) pay
interest on the bonds during the construction period; (iii) pay
all costs and fees associated with the sale of the bonds and,
(iv) fund a reserve fund equal to one year's debt service on the
bonds which would be used to pay bond principal and/or interest
in the event revenues from the project were insufficient to make
such payment.
All project revenues will be used first to pay operation and
maintenance expenses associated with the project. The remaining
project revenues will flow to the Debt Service Fund to be used to
pay interest on the bonds semi-annually and to pay principal on
the bonds annually. After such payments, any excess revenues will
,
f
be deposited Into a Debt Service Reserve Fund to the emtenf that
such fund has previously been drawn upon to pay a prior years debt
service, Remaining revenues then flow to a Contingency Fund to be
used to repay the City in the event any advances have been made from
City contributions (see "Designated Non -Ad Valorem Revenues" below))
to be transferred to the General Fund, or to accumulate to provide
for future cash flow deficiencies. This flow of funds which
corresponds to current practices, is illustrated in Exhibit 1.
Rather than unconditionally pledging a specific non -ad valorem
revenue source for a specific project, the Commission would
designate or earmark certain non -ad valorem revenues to provide,„
the required additional security for all revenue bond projects.
Designated Non -Ad Valorem Revenues
The City Commission would initially pass a master ordinance establish-
ing the terms and conditions of the financing plan, At the time of
approval of the initial project under the plan, the Commission would
designate a portion of a specific and dependable source of non -ad
valorem revenues to provide the necessary additional security to
bondholders The desi ated revenues would flow directly to the
• $n
_ _
General Fund to be used for general City purposes unless the Trustee
certified to the City that there was a short -fall in project revenues,
(A. short -fall in project revenues would be made up from the Debt
Service Reserve Fund. The designated revenues would, in turn,
make up deficiencies in the Debt Service Reserve Fund. This would
be accomplished by the City agreeing to budget in the following
,f
fiscal year, a sufficient amount of the non -ad valorem revenues=a
r'
on a priority basis to make up the deficiency.) In practice, if
�R
only one project were involved, this would be identical to thelu,,F"
current method of securing revenue bonds.
However, under the proposed plan, as subsequent projects are approved
by the Commission to be secured on a parity, the amount of and
quality of additional non -ad valorem revenues to be dedicated would
be determined by a test. The test would require that the combined
total of non -ad valorem revenues dedicated, or proposed to be dedicated,
exceeded debt service requirements on all bonds (including the
new bonds) on an historical basis by a specific amount over a
specified time span. Compliance with the test would be calculated
zf
by an independent firm of certified public accountants known toSx
the investing public, such as the City's current accountants,
Peat, Marwick, Mitchell & Co.
-r
The
excess of non -ad valorem and project revenues might rangeUr
I,,�'.,
from 1.25 to 1.50 times debt service expense, while the times°'
3
span might be each of the last two years or any twelve consecutive
f`+
F�kE
months of the past fifteen months. It might be possible to
�.
include in the test 50% to 80% of proven revenues from projects
s 'H
previously financed on a parity. Both the coverage factor, the
percentage of proven project revenues, and time period will
be determined shortly, based on market acceptance.
t
)-
i v
j� 41
S
t6 dka-thple, if revenues pteviously dedicated to secure old bonds had
p Von just sufficient to provide the required level of coverage ott
those bonds, and no revenues had vet been generated by existing
projects, new revenues would have to be dedicated to secure a new
project. If, instead, total revenues had been in excess of debt
service coverage requirements, all of the excess could be used as F`
full or partial security for the new project, depending on its
4 t'
size.
The dedicated non -ad valorem revenues become, in effect, a pool of
collateral. As inflation or other events causes the pool to grow,
and as the projects generate revenues, the excess can be used toAE
secure new projects on a parity with other projects. jy
„ �aa
ixdi s
The flow of funds for all City revenues under the proposed "plan, u
including project revenues, non -ad valorem revenues and other
revenues, is illustrated as Exhibit 2.};
I
Y,
Advantages of Establishing a Special
Revenue Bond Pledge Fund f ,,"` ����`
w ' 3 xfi
1.Expanded Bonding Capacity
The various potential sources of non -ad valorem revenues which could be
used to provide additional security for projects, includes the Utilities
Service Tax (excluding, the Telephone/Telegraph portion which has been
pledged to the Convention Center) and State Revenue Sharing. These two
tax sources alone aggregate 52" million in 1081. These revenues could today'
secure $125 million bonds assuming a 1.50 times coverage factor
(assuming bonds are amortized over 25 years at 11% interest). Based
on revenue projections provided by the City Finance Department, if
such sources were dedicated to the Pledge Fund, the City could sell
an additional $93 million bonds from 1982 through 1990 (assuming
the sane amortization period and interest rate).
Assuming a 1.25 times coverage factor, the amount of bonds that could
he sold today is $150 million. Under the proposed financing; plan, the
City could sell an additional Sill million of bonds from 1962 through
1990.
If specific revenues are pledged to specific projects, this bonding
capacity either cannot grow, or can grow only to a limited extent.
The following table illustrates the growth of the City's bonding
capacity under the proposed Master Financing Flan based on non -ad
valore.:. revenue projections prepared by the City's Finance
Department. This growth in bonding capacity is before taking
into account any project revenues which would further ea-pand
bonding capacity.
,
,xir iAS t•@ 2ftGr
J
Annual Total
htluaj Total ■
Growth Growth
C,t6Wth Growth ■
A t tual ti Bonding in Bonding
in Bonding in Bonding
Cabacit (2) Capacity(2)
r.. veiitlp (1) Capacity(2) Cabacitv(2)
(000) (0 00)
(000) (000)
(000)
1982 $ 23,600 S 9,100 $ 9,100 $ 7,600 $ 7,600
8,800 17,900 7,300 14,900
1983 24,900 28 000 8,400 23,300 _
1984 26,400 10,100 �. 9,000 52,300
1985 28,000 10,800 38,800 43,000
1986 29,900 12,800 51,600 10,700
12 800 64,400 10,700 53,700
1987 31,800 , 12 400 66,100
19834,000 14,800 79,200 s 79000
1988 00 15,500 94,700 12,900
199 336,,300 16,800 111,500 14,000 05,000
(1)r utilities Service Tax (excluding Telephone/Telegraph portion) and
State Revenue Sharing as projected by City Finance Department.
C2 Assumes bonds amortized over 25 years at 11% interest.
By pooling potential collateral, the City is able to take advantage of
increases in project and non -ad valorem revenues to e�-pand its bonding
capacity.
2. Flexibility in Perking Long-term Commitments
Presently, the Commission must irrevocably commit specific revenue sources
tc secure specific projects, irrespective of how that revenue and project
revenues may grow. Under the proposed plan, the projects will be secured
by all dedicated non -ad valorem revenues and project revenues rather than
specific revenue sources. All excess revenues generated by�these revenue
ih
sources will be available to secure new projects on a parit}
�
previous projects.
The City Commission can dedicate specific streams of non -ad valorem+,
a project -by -project basis. Thus,
revenues, as may be reouired, on
if the Commission wishes to diverge from the proposed plan at some art
time in the future, it would be free to do so with respect to all
uncommitted revenue sources. x',
,rAN�
► 5ibility itt Financial Platihibg 'k H
V
While a cohesive method of securing revenue bond projects will
improve perceptions of the City's credit among rating agency ''r
and institutional analysts, it will also improve the City'sR�s
flexibility in planning its capital projects.
Revenue sources rarely correspond dollar -for -dollar to the debt
service requirements of specific projects. Thus, since investors
are reluctant to accept a less than adequate security, a tendancy
develops to necessarily pledge a slightly larger stream of dollars
than actually necessary when specific revenue sources are tied to
specific projects. In addition, large and dependable revenue
5
sources have to be reserved for large projects.
Ql7
Under the proposed plan, the Commission would have the option of
r '
dedicating a relatively large and stable source of revenues tzs
to secure a relatively small project. All excess revenues �f
lMl u
above the actual requirements for that project would still
be available to secure larger projects down the road on r
a parity basis.
4. Lower Long-term Borrowing Costss
s
The proposed plan will ultimately strengthen the City's credit
allowing it to maintain uniform strength in the security for it
�bz ,
revenue bonds. This stronger credit position will allow the
City to minimize its cost of long-term borrowing.
S. Avoiding Junion-Lien Bonds
While one of the advantages of the proposed plan is the greater 3t''
ability of the City to avoid issuance of junior -lien bonds which_
have significantly higher interest costs and weaken the City's
".
credit, the proposed plan would not foreclose the City's ability-'
to issue such bonds in the unlikely event that such an issue
was desirable, or its ability to secure new projects under present Kf"
Yh�w
methods.,
/mp,
,,.;
C
-1T1 bF `'i:L'I FI
Project I�Lve.nues
Flnl: of Funds
PROJF..CT RFVENUFS
b
OPERATION AND
MINTENANU FL -ND
MIM
A,
DEBT SERVICE FUND
b
DEBT SERVICE
RESERVF FUND
b
CONTINGENCY FUND I —v I GENERAL FUND
PROJECT REVENUES
N
OPERATION AND
MAINTE":ANCE FUND
DEBT SERVICE
FUND
DEE: SERVICE
RESERVE FUND
N
CONTINCENCY FUND
First available funds
must repay General Fund
for any revenue divert-
ed for Project debt
service. Surplus may
he held or transferred
to the General Fund
SPECIFICALLY
DESIGNATED
NON -AD VALOREM;
REVENUES
Revenues flow directly
to General Fund unless
Debt Service- Feserve
Fund is deficient.
Cite would budget and
transfer required
amount from next
available designated
non -ad valorem
revenues.
i
AD VALOREM
AND
OTHER REVENUES
t-Z�l"1��/r�; `.�1�•f�/rl•f'I� �i; 7II''lllfil7i'1 J�
G
100 WALL STREET NEW YORK, NY 10005 (212) 363-2000
The City of Miami
Ptoposed Financing Schedule
April 8, 1981
opni 1981 may 1981 June 1981 July 1981 ougust 4081
spotember 1oe1 october 1951
r) :... e G ). v )i r. G ) i r. a ii • �)
:G . 7• . • 70 )� . • 7. 7t r .1 }G
) )... ;< • ) .. .
) r :G .. .- 71 -
Participants
Rev
Project Manager
PM
Finance Director
FD
Citv Officials
CO
Bond Counsel
BC
Financial Advisor
FA
City Commission
CC
Feasithility Consultants
FC
Date
April 13
April 22
April 23
April 24
Financing
Action Taken
ParticipantF
G.O.
Preliminary meeting, to discuss Official
BC, FA
Statement and Notice of Sale.
Parking
Meeting to discuss master ordinance
and
BC, FD, FA, i
Parking financing.
Parking
Discuss and revise as necessary the
timetable.->,
TANS
Meeting to discuss Tay: Anticipation
Notes
BC, FD, FA
private placement.
TANS
Report to Citv *tanager prepared on
private
FA
placement; revise schedule if necessary.
Parking
Initiate preparation of Ordinances
(for
BC
parking) .
G.O.
,T,TL distrihute comments on draft of
Official
FA
Statement and Notice of Sale to all parties.
Y
�-
!
,
7'YE(b�
I 4 l f i Yt7
� t
Date
FiRait�ti
:4ay
1
'Parking
,may
5
Gt,
� tfjF
4
d R
ri llRlt.}
May
83ir'
June
1
Week
of
June
8
June
11
June 12
June 16
.Tune 17
Act idn Taketi_,
k6tolve first draft of ordinance.
Meeting to discuss revised draft of OfiLc���y $�y V$, PA
Statement and Notice of Sale.
Receive audited financials.
All matters on G.O. issue resolved
Notify rating agencies.
?
of Official Statement to all parties=
$5
PA
.Draft
. FA received definitive description of facility.
. Meeting to discuss and finalize draft of
BC; f'b,
FA
Official Statement and Notice of Sale;
send drafts to rating agencies.
Meeting to discuss Master Financing Plan.
$Cy$i
FA, CO
. Meeting with rating agencies.
t'
Final comments on Ordinance for Parking.
:Distribute first draft of Official Statement toA� =
all parties.
. City Commission authorizes release of Official
BC
Statement and Notice of Sale.
Meeting to discuss and finalize Ordinance and
pM, BC,
FA, FC,
feasibility report, and discuss Official
Statement.
Set rating agencies meeting date.
FA
Mail preliminary Official Statement.
$C, FD,
FA
a I
Publish Notice of Sale.
BC, FD
{
Distribute second draft of Official Statement
FA
I'
to all parties.
xr x
Information meetings with bidding syndicates
and institutional investors (if necessary).
;.
A1 t --.
Sale date; City Commission approves terms
BC, FA,
CO, CC
„r
and conditions of sale and award of bonds.
FD`
t
Ordinance submitted to City Commission for
BC,PM,
CO
approval.
. Update Official Statement with sale results.
BC FA
FD
Commence preparation of closing documents.
9
Submit ordinance to Validation Court; 60 days
BC t
to effective date.
Parking Meeting to discuss second draft of Official PM, FA, BC, FD
Statement and 'notice of Sale.
Date
r ina LgAng
_.
'pfepai�e and distribute Notice of Sale to all tc
June 19itl
,
patties,
bisttibute third draft of Official Statement, VA
Parking
,-Meeting to discuss and finalize Official PM3 BC, FA, FD
June 25
Statement and Notice of Sale; send draft
to rating agencies.
Distribute final draft of Official Statetent r
June 29
kit$.,
June 30Ci,
Ordinance effective date,
ai t4 e r''
11
Pre -closing.
July 1
Closing '
arlg
'Meeting with rating agencies.
Cite Commission approves release of offBC, FD,
July 9
kin gM
Statement and Notice of Sale.
parking
� Mail preliminary Official Statement, VA
July 10
Publish Notice of Sale.
M Yifia
Draft of proposed financing plan prepared, '
Report to City Commission and Feasibility tt
}
Report prepared.
"' rCPM
�4,�
Citv Commission author44
izes PM to proceed
July 16
I4sYin
with financing. a,l'
r
Week of
Parking
Information meeting with bidding syndicates
July 20
and institutional investors (if necessary).
Parking
. Sale date; City Commission approves terms and FA, FD
CC�'PM,
July 23
conditions of sale and award 6f bonds.
Parking.
. Update Official Statement with results of sale. FA
July 23
Marina
Distribute first draft of Official Statement FA:`
to all parties.
. Distribute Ordinance (if necessary). BC`
Meeting to finalize Ordinance and Feasibility PM, BC, FD, FC,
July 29
Marina,
Report and to discuss Official Statement. FA
Marina
Distribute sec ond draft of Official Statement FA
July 31
to all parties.
Marina
Submit Ordinance to City Commission for approval PM, BC, CO
August
13
August
15
Parking
.Ordinance effective date.
18
Parking
Pre -closing. Lt'b k
August
Marina
Submit Ordinance to Validation Court;60 days $'
z,g
to effective date.
August
19
Parking
Closing.
d draft of Official BC, FA, PM, Fh
Marina Meeting to discuss secon
Statement and !notice of Sale.
Date —
August 20
August 26
�11$
Bs
=4'6
t
g
S �.z;jaja
li.�id K
�
o'
III'
�G
1ke,.
� %jf 1,
:j'�ll iill4. ill
distribuf�
VA
prepare and
dra oftOfficialaStatement,
Distribute
third
Bet 'M� � FA
Official
Statement and
August 28
September 2
September 10
September 11
September 18
September 24
September 25
October 10
October 14
Meeting to finalize
Marina
Notice of Sale.
VA
Distribute final draft of Official Statement,
Marina
Marina
i
. eagencies.
Meting with ratingl
$C, PM, FD
City Commission authorizes release of Officia
Marina
Statement and Notice of Sale.
VA
Mail preliminary Official Statement.
Marina
Publish Notice of Sale.
Information meeting with bidding syndicates
(if necessary).
Marina
and institutional investors
$C, PM, FA, FD,
Sale date; City Commission app roves terms and
CO, CC
Marina
.
conditions of sale and award of Bonds
Update Official Statement with results of sale,
FA
Marina
Ordinance effective date.
Marina
Marina
srsfl
Pre -closing.
N�.fh.,,
October 15 Marine