Miami-Dade County sells $ 622 million for water and sewage
Miami-Dade County, Florida is selling $ 622 million in revenue bonds this week to fund improvements to the largest water and sewer system in the Southeastern United States.
The deal comes with a boost from Fitch Ratings, which prior to the deal revised its outlook to positive from stable on the county’s water and sewer revenue obligations, and confirmed $ 3.2 billion in funding. bonds outstanding at A-plus.
The Miami-Dade Water and Sewerage Department manages the service of a growing population. It already serves nearly 2.8 million residents of the county as well as several thousand visitors each year.
“The area continues to grow, and given the tax increases that are going to be implemented in New York, it is reasonable to expect that the area will continue to grow,” said John Hallacy, founder of John Hallacy Consulting LLC.
“The Miami-Dade Water and Sewerage Department has made significant progress in executing its multibillion-dollar capital improvement plan – the largest in Miami-Dade County history – which provide system-wide capacity, help the department meet state and federal requirements. requirements, as well as strengthening infrastructure for better resilience, ”Acting Director Josenrique Cueto, PE, told The Bond Buyer. “The current bond sale will ensure that the ministry will continue to meet these long-term goals and meet its commitments to taxpayers.
BofA Securities is expected to price around $ 622 million in Series 2021 Water and Sewer System Revenue Bonds on Thursday. Rice Financial Products Co., UMB Financial Services Inc., Loop Capital Markets, Morgan Stanley, PNC Capital Markets LLC, Stern Brothers & Co. and Stifel are co-managers.
The Public Resources Advisory Group is the municipal councilor. Squire Patton Boggs LLP and D. Seaton and Associates PA are the surety advisers while Nabors, Giblin & Nickerson PA and Manuel Alonso-Poch PA are the disclosure counsel.
Thursday’s deal is tentatively structured as $ 272.635 million in serials maturing 2030 to 2041 and $ 158.355 million in 2046 terms and $ 191.275 million in 2051 term bonds.
The proceeds will be used to finance various improvements to water and wastewater treatment facilities and to make a deposit to the reserve account.
“The change in outlook from positive to stable is driven by expectations that leverage will only slightly exceed 10 times over the next five years due to a stronger FADS (funds available for debt service) than expected starting in fiscal 2021, compared to earlier expectations that suggested more than 11 times higher leverage, “said Fitch.
The bonds are rated Aa3 by Moody’s Investors Service and AA-less by S&P Global Ratings; both attribute stable prospects.
Moody’s said its rating reflects a “substantial, albeit significantly reduced” $ 7.5 billion capital plan and future borrowing plans, largely driven by complying with existing consent decrees with the agency. American environmental protection.
“The large debt plans are offset by the system’s substantial customer base, low rates and good management,” Moody’s said.
In 2014, the county agreed to resolve allegations by the EPA and the State Department of Environmental Protection that it violated federal and state water pollution control laws at three factories in Wastewater. The county has agreed to make improvements to the wastewater collection and treatment system totaling $ 1.6 billion over 15 years. The county says more than 50% of necessary upgrades have already been completed.
Moody’s added that its stable outlook reflects “management’s commitment to gradually increase existing low rates relative to its peers on its very large client base will allow the system to maintain its levels of debt service coverage and its satisfactory financial situation.
The average water bill that a county resident pays each month is $ 50.50, according to the outlet, one of the lowest in the state. This compares to $ 95.79 per month for residents of St. Petersburg and $ 53.70 for those living in Tampa.
The Capital Improvement Program will upgrade thousands of kilometers of pipes, pumping stations, and water and wastewater treatment plants over the next 20 years using new technologies.
The ministry says the plan is expected to create around 17,000 jobs over the next 10 years, increase service capacity, improve system reliability and durability, and generate economic output estimated at $ 24.9 billion.
“In terms of bonding, they have a lot more to do on the wastewater side of the business,” Hallacy said, adding that “they have all of these projects scheduled so that they fully comply with the consent decrees.”
Later this year, the county plans to issue approximately $ 262 million in Series 2021 subordinated bonds for matching funds required for existing federal loans under the Water Infrastructure Funding and Innovation Act and for costs of upcoming projects, according to the preliminary official release.
In March, County Mayor Daniella Levine Cava inaugurated a new $ 7.5 million drinking water laboratory at the Alexander Orr Water Treatment Plant in Sunset to increase the size of the current laboratory of nearly three times and allow the water department to expand the sampling and testing of the county’s drinking water supply.
The new lab will meet state building code criteria and be able to withstand severe hurricanes to ensure uninterrupted operation.
The building will be LEED certified and the construction company will use durable and resilient building components. The project is expected to be completed by June 2022.
Last week, the ministry released its water quality report for 2020, also known as the Consumer Confidence Report.
The EPA requires all water utilities to produce a Annual CCR which provides an overview of the quality of drinking water based on the results of analyzes from the previous year.
“Safe and reliable drinking water has never been more at the forefront of people’s concerns than the past 13 months throughout the pandemic,” Cueto said. “Not only is it necessary for drinking and cooking, but also as an essential part of cleaning, sanitizing and helping to contain the spread of communicable diseases, including COVID.”
As of April 4, the county had 451,000 cases of COVID-19 and 5,917 reported deaths.
WASD reported that fiscal 2020 year-end revenue was slightly higher than forecast.
Still, Hallacy noted that one of the potential challenges WASD faced was that total accounts receivable had increased by around $ 30 million, with $ 20 million of those unpaid bills over 90 days past due.
Under the COVID-19 state of emergency, water service disconnection and late fees due to non-payment are suspended.
“They attribute this to the impact of COVID-19,” Hallacy said. “So it will be interesting to see that as the economy recovers, whether the debt backlog improves.”
The Water Authority wasn’t the only Florida agency in the market this week.
On Tuesday, the Central Florida Expressway Authority issued $ 548 million in Series 2021 Senior Lien Income Redemption Bonds priced at Wells Fargo Securities. Operation CSX was handled by Assured Guaranty Municipal Corp. and was to be rated AA by S&P based on the Assured Guaranty.
The state-created CSX in 2014 took control of the former Orlando-Orange County Expressway. It is an independent authority responsible for the operation of toll roads as well as the construction and maintenance of roads in Seminole, Lake, Osceola, Orange and Brevard counties.
CFX is also responsible for operating the CFX road network, which was established in 1963 and serves approximately 4 million residents.