NEW BUSINESS  8.

COMMITTEE MEMORANDUM

HISTORY:

In November 2007, the Mayor and City Commission approved Ordinance 2007-3582 which amended the procedures that the City followed in connection with the approval of a bond issue and added the following Section to Chapter 2 of the Miami Beach City Code, entitled "Administration"; Article V entitled "Finance"; Sec. 2-278, entitled "Procedures governing the issuance of bonds”.

Sec. 2-278. Procedures governing the issuance of bonds.

1. Prior to the adoption by the city commission of the final resolution approving the issuance of any bonds by the city, the following requirements shall be complied with:

    

1. In order for the city commission and the public to be fully informed on all matters relating to the proposed issuance of bonds, the city manager shall prepare, or cause to be prepared, a fiscal analysis of the economic impact of the proposed bond issuance using the following criteria:

   1. The estimated cost of the project or projects on account of which such bonds are to be issued;

   2. The estimated annual revenues, if any, to be generated by such project or projects; and

   3. The estimated annual cost of maintaining, repairing and operating such project or projects.

2. Upon completion of the fiscal analysis in subsection (a)(1), the proposed issuance of bonds shall be first considered and reviewed by the city's finance and citywide projects committee.

3. The city commission shall hold two public hearings, each advertised not less than 15 days prior to the hearing, in order to obtain citizen input into the proposed bond issuance.

At September 30, 2016, the City had $184.5 million in outstanding Stormwater debt which was issued in 2009, 2011 and 2015.  The outstanding debts for each series are as follows: Series 2009 Refunding Bonds of $8.8 million, Series 2011A&B New and Refunding Bonds of $76.1 million and Series 2015 Bonds of $99.6 million. At the Special Finance and Citywide Projects Committee (FCWPC) meeting of May 20, 2014, the Administration presented a funding strategy for the Stormwater program recommending the issuance of three separate $100 million Stormwater bonds. The first issue would be in 2015 and the other issues would follow as funding was needed.  In 2015, the City issued the first series Stormwater bonds to provide proceeds of $100 million for projects.  In 2016, the City Commission increased the rates to support the issuance of the second series of the Stormwater bonds.

In an effort to defer issuing debt and to expedite the spend down of existing Stormwater bond proceeds and to comply with state law requirements that funds be available at the time a contract is awarded, the City obtained a Line of Credit (LOC) for $60 million to award scheduled Stormwater projects in anticipation of the new bond issue.  On July 29, 2016, the City Commission authorized the execution of the LOC agreement between the City and Wells Fargo Bank, National Associations. To date, the City has committed approximately $58 million from this line for Stormwater projects.

The issuance of the additional bonds to provide $100 million in proceeds for stormwater projects was recommended to the FCWPC on March 31, 2017.  Since that time, market conditions have made a refunding of the City’s Series 2011A&B Bonds economical.  A refinancing of approximately $59 million of the Series 2011A&B Bonds currently provides approximately $3.5 million in net present value savings, which is 6.00% of bonds refunded.

ANALYSIS:

In accordance with the provisions of Section 2-278 Procedures governing the issuance of bonds, the Administration prepared the required fiscal analysis which included the following breakdown of the proposed Stormwater issue. 

Sec. 2-278 (a) 1 (a) - estimated cost of the projects:

The Stormwater program, adopted in 2015 will design and implement the upgrade of the City's storm water drainage system to meet the new design criteria set by the City Commission with a potential estimated cost of $500 million and with a target completion timeframe of approximately 5-7 years. The estimate includes the Stormwater portion of existing and future neighborhood projects, the retrofit of some previously constructed neighborhood Stormwater systems, and miscellaneous Stormwater upgrades that have been identified by the Public Works Department. The upgrades include the installation of approximately 60 new pump stations and the conversion of 21 injection pumps. The estimated portion of the projects, for which the bonds are to be issued, is $100 million.

Sec. 2-278 (a) 1 (b) - estimated revenues to be generated by the projects:

These projects will either replace or enhance portions of the existing Stormwater system; the operation of such system is funded entirely by user fees. No additional fees are anticipated to be earned as a result of these projects and no additional increase in the user fee is required at this time.

Sec. 2-278 (a) 1 (c) - estimated annual cost of maintaining, repairing and operating the projects:

Operating and maintenance costs for these enhancements were included in the cost model that resulted in the Stormwater rate increase from $9.06 per ERU to $16.67 per ERU which became effective October 1, 2014 and from $16.67 per ERU to $23.01 per ERU which became effective October 1, 2016.   However, additional operating or maintenance costs will require future increases to user fees.

If recommended to the full City Commission today, in accordance with Sec. 2-278 (a)(3), two public hearings will be held for this proposed Stormwater Bond issue. The dates of the public hearings are to be determined and each date will be advertised at least fifteen (15) days prior to the public hearing date.