The Administration recommends adoption of the resolution.
BACKGROUND
At the Finance & Citywide Projects Committee meeting on July 21, 2017, the Committee provided direction to move forward with a proposed G.O. Bond program and set a goal of the voter referendum date for the general election on November 6, 2018.
On January 17, 2018, the City Commission directed staff to formalize the process to develop the proposed 2018 G.O. Bond program including creating a timeline, dedicating necessary staff resources, and creating standing items on the agendas for upcoming City Commission and Finance & Citywide Projects Committee meetings through the planned voter referendum date of November 6, 2018.
During February and March 2018, an initial project list totaling $1.1 billion was compiled from various sources. Sources included input from the City Commission, over a dozen City master plans (ex. North Beach Master Plan), over 40 City boards and committees (ex. Parks & Recreation Advisory Board), and staff recommendations.
On April 5, 2018, the City Commission held a G.O. Bond workshop to review and prioritize the unfiltered list of projects. By the end of the meeting, $1.1 million list of projects was reduced to about $700 million. At that time, the City Commission directed staff to solicit community input to help rank and prioritize the project list.
During May and June, four community meetings were held in North, Mid, and South Beach. Flyers encouraging public participation in the meetings were sent to all registered voters in Miami Beach. At the community meetings, approximately 150 participants had the opportunity to learn about the proposed 2018 G.O. Bond program, the proposed projects, and the overall process. Most importantly, participants were able to provide valuable input regarding the proposed projects by reviewing project boards with descriptions of the projects, asking questions of key staff, providing verbal and written comments, and rating the proposed projects on a 5 point scale. An on-line project prioritization survey was also created to reach residents that were unable to attend one of the community meetings. The survey was available on-line through mid-July and included input from 540 residents, including the surveys from the four community meetings. Numerous presentations were also given to neighborhood associations and community groups and information was also distributed to numerous residents at several pop-up events.
In May 2018, Mayor Dan Gelber created a Mayor’s G.O. Bond Advisory Panel consisting of eleven Miami Beach residents to serve through November 30, 2018. The charge of the Advisory Panel was to evaluate projects and make advisory, non-binding recommendations regarding the prioritization of proposed G.O. Bond projects. The Mayor’s G.O. Bond Advisory Panel met six times during June and July for over 25 hours. The Advisory Panel reviewed the work to date including results of the City Commission’s April 5th G.O. Bond workshop. The Panel analyzed and prioritized the proposed project list, which included presentations from City department directors and the City Manager, reviewed results of public input from the project prioritization surveys, and developed various prioritization criteria for the projects.
On July 17, 2018, the Mayor’s G.O. Bond Advisory Panel shared its recommendations to the City Commission. The Advisory Panel began with a proposed project list totaling about $700 million and 90 projects and prioritized the project list at three levels:
- $444 million; 37 projects
- $398 million; 35 projects
- $353 million; 32 projects
The meetings of the Advisory Panel were open to the public and information such as meeting schedules, meeting minutes, audio, and video of the meetings are available at www.GOMB2018.com.
The City Commission held an all-day workshop at a special meeting on July 20, 2018, to finalize the proposed project list, set the amount of the overall bond program, and determine the number and amounts for each ballot measure.
At their July 25, 2018, meeting, the City Commission set the overall G.O. bond program amount, including estimated debt issuance costs at $439 million which includes $169 million for parks, recreation facilities, and cultural facilities; $198 million for neighborhoods and infrastructure; and $72 million for police, fire, and public safety.
On November 6, 2018, the electorate of the City of Miami Beach overwhelming approved the general obligation bonds as follows:
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69% approval for parks, recreation facilities, and cultural facilities ($169 million)
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73% approval for neighborhoods and infrastructure ($198 million)
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70% approval for police, fire, and public safety ($72 million)
On December 12, 2018, the Mayor and City Commission approved the selection of investment banking firms to provide underwriting services for the Miami Beach Series 2019 General Obligation Bonds. It is recommended that the Mayor and City Commission approve the issuance of the 2019 G.O. bonds through a negotiated sale with J.P. Morgan as Senior Manager and Bank of America Merrill Lynch, Jeffries, and PNC as Co-Managers. It is further recommended that the Commission delegate, as provided in the attached Resolution, the determination of various terms of the Bonds, the final award of the Bonds, including execution of a Bond Purchase Agreement, and whether to obtain bond insurance with respect to the Bonds, subject to the limitations contained within the Resolution. It is expected that the Bonds will be closed by the end of April 2019.
Projects funded by the General Obligation Bond (GOB) program will be implemented over a period of approximately 10 to 12 years, and rather than issuing all the bonds at once, the City anticipates issuing tranches every 3 years. At this time, 4 tranches are anticipated as follows: $150 million in FY 2019, $100 million in FY 2022, $100 million in FY 2025, and $89 million in FY 2028. As such, the necessary millage rate increases will be gradually phased in after the initial issuance to cover the debt service costs associated with the bond issuances.
ANALYSIS
Following approval of the $439 million bond program in November 2018, the City Manager transitioned Maria Hernandez and her team from project management of the Miami Beach Convention Center campus project to the program management of the General Obligation Bond program. To help create a proposed project implementation plan, a G.O. Bond working group was created on December 10th comprised of Maria Hernandez, G.O. Bond Program Director, Eric Carpenter, Assistant City Manager, John Woodruff, CFO, and Alex Denis, Procurement Director. This team met several times with implementing departments to program the 57 projects over a 10 to 12 year time frame using various criteria. A final draft of the proposed project implementation plan was developed and shared with the G.O. Bond Oversight Committee for its review.
In January 2019, the Mayor and City Commission created a G.O. Bond Oversight Committee consisting of 11 residents to make advisory recommendations from a macro-perspective regarding the timely progress, overall goals, costs, including financial efficiencies, and the timely completion of the GOB projects. The G.O. Bond Oversight Committee is holding weekly meetings between January and February primarily to review and validate the proposed project implementation plan. This plan divides the $439 million in bonds and 57 projects between the 4 tranches of $150 million in FY 2019, $100 million in FY 2022, $100 million in FY 2025, and $89 million in FY 2028. The Mayor and City Commission will review the G.O. Bond Oversight Committee recommendations at a G.O. Bond workshop scheduled for March 4, 2019. At the City Commission meeting on March 13, 2019, final decisions regarding the projects anticipated to be funded by the first tranche of $150 million will need to be made in order to issue bonds as planned in April 2019.
In conjunction with the issuance of the Series 2019 General Obligation Bonds, the City may have the opportunity to refinance $28,080,000 in outstanding Series 2003 General Obligation Bonds. The interest rates on the outstanding Series 2003 Bonds range from 4.25% - 4.50% in 2024 - 2033. Based on market conditions as of January 25, 2019, a refinancing of the Series 2003 Bonds would have an all-inclusive true interest cost of 2.72% and provide net present value savings of $3.8 million, which is over 13% of bonds refunded. The total savings over the life of the bonds would be $6.2 million as of January 25, 2019, with the final principal amortization on the Series 2003 Bonds shortened from 2033 to 2032 to maximize total savings. While the savings from this refinancing are subject to market conditions at the time of pricing, combining the refinancing with the issuance for new projects creates economies of scale.
The first tranche of bonds to provide approximately $150 million in project funds will be issued for the three categories (parks, recreational facilities, and cultural facilities; neighborhoods and infrastructure; and police, fire, public safety, and security improvements). The specific amounts for each category are dependent on the proposed project implementation plan that will be finalized at the March 13, 2019 City Commission meeting.
The Bonds will be repaid through the assessment, levy, and collection of ad valorem tax on all taxable property within the City and the full faith, credit, and taxing power of the City will be pledged to the payment of the principal and interest of the bonds. Issuance costs and expenses will be paid from Bond proceeds. A portion of the proceeds will be also be used to reimburse the City for funds advanced by it for expenses incurred and to be incurred with respect to certain projects. The form of the Preliminary Official Statement, Bond Purchase Agreement and the Continuing Disclosure Commitment, are included with the attached Resolution.