Frequently Asked Questions

What is a general obligation bond?

A general obligation bond (G.O. bond) is a form of debt obligation that, when issued, provides local government with funds to finance large capital improvements, such as those currently proposed for enhanced parks and recreational facilities, neighborhood and infrastructure improvements, and public safety.

General Obligation Bonds are backed by the full faith and credit of the City of Miami Beach, which means that the City is obligated to pay back the bonds plus interest by pledging its ad valorem taxing power. As such, the City uses a portion of its property tax revenues to repay the General Obligation Bonds in the form of annual principal and interest payments. General Obligation Bonds require approval by a majority of the voters voting in a Citywide referendum.

What can general obligation bonds be used for?

General Obligation Bonds allow the City to pay for major capital investments having a public purpose, such as quality of life enhancements related to parks, community recreation, and cultural facilities; neighborhood and infrastructure improvements, such as renovation of streets and sidewalks, flood control, landscaping and lighting; and police, fire and public safety projects, for improved security throughout the City. 

Bonds are sold to investors and the proceeds from the sale of these bonds are used to pay for capital projects. Bond funds cannot be used for everyday operating costs, such as salaries for police officers, fire fighters, or City employees (other than those working directly on capital projects). Such operating expenses are paid for by annual revenue that support the City’s General Fund, such as property tax revenue, resort tax revenue, and other revenue.

How large is the proposed General Obligation Bond Program?

The City is proposing a $439 million Bond Program consisting of:

  • Parks, Recreational Facilities, and Cultural Facilities projects totaling $169 million
  • Neighborhoods and Infrastructure projects totaling $198 million
  • Police, Fire, and Public Safety projects totaling $72 million

How does the City propose to finance the Bond Program?

The City dedicates a portion of its property tax revenues to repay debt incurred for bond-funded improvements. The proposed Bond Program would be funded by a City property tax rate increase for debt service. The City plans to borrow the $439 million over approximately 10 years, rather than all at once, allowing the increase to be gradually phased in over time.

Does the proposed Bond Program anticipate an increase in the City property tax rate?

Yes. The City’s tax rate for debt service is a component of the City’s overall tax rate.  For each individual property owner, the tax increase is estimated to be $82 per every $100,000 of a property’s taxable value, once all the bonds have been issued.

As the overall $439 million Bond Program will be implemented over a period of approximately 10 years, rather than all at once, the associated tax rate will be adjusted annually, with the debt service tax rate gradually phased in. 

By way of example, assuming that the City, as anticipated, issues four tranches of approximately $100 million every three years, the chart below demonstrates how the estimated $82 tax impact (per every $100,000 of a property’s taxable value) would be phased in incrementally over the next 12 years, with the total estimated $82 impact (per every $100,000 of a property’s taxable value) in place by Year 12, and continuing each year thereafter, until the 30 year bonds are paid off:

FY2019

FY2020

FY2021

FY2022

FY2023

FY2024

FY2025

FY2026

FY2027

FY2028

FY2029

FY2030

$0

$3

$31

$23

$26

$44

$44

$53

$65

$65

$73

$82

 

Has the City recently increased its property tax rate?

The City’s current tax rate (referred to as the “millage rate”) is the lowest in effect in at least five decades.

Why does the City issue bonds to pay for City projects rather than pay for projects with cash?

The Bond Program includes many planned and recommended large-scale projects throughout the City.  Current funding for capital projects in the City’s operating budget is very limited, compared to the number and costs of capital requests.  Using bond financing to fund large-scale projects, in a period of relatively low interest rates and lower costs of borrowing (especially given the City’s favorable AA+ credit rating), allows the annual City operating budget to be allocated toward annual and ongoing costs such as maintenance, personnel, operations and public service programs.

What is the City’s credit rating and why is it important?

The City of Miami Beach’s financial strength and stability has been recognized by independent credit rating agencies (Moody’s and Standard and Poor) that have rated the City’s bond program.  The City’s credit rating from Standard & Poor is AA+, and its Moody’s credit rating is AA2, each reflecting the City’s track record of prudent fiscal management.  The AA+/AA2 credit ratings mean that the City pays lower interest costs when bonds are sold, compared to municipalities whose credit ratings are not as strong as the City’s.

To put the value of the City’s “AA+” rating in perspective, for the proposed G.O. Bond Program of $439 million, the City saves approximately $38 million in interest costs over the life of bonds, when comparing the City’s “AA+” rating to bonds issued by entities with a “AA-“ rating. Lower interest rates mean more money available for capital construction.

How did the G.O. Bond Advisory Panel make recommendations about projects?

Mayor Dan Gelber created a G.O. Bond Advisory Panel, consisting of 11 City of Miami Beach residents, representing various communities of interest in Miami Beach.  The charge of the Advisory Panel was to evaluate projects from a “resident-centric” perspective, and to make advisory, non-binding recommendations regarding the prioritization of proposed G.O. Bond projects. The Advisory Panel prioritized and recommended projects based on the following key criteria:

  • Public input support for the project;
  • Long-term return on investment associated with the project;
  • Quality of life enhancements associated with the project;
  • Citywide impact associated with the project;
  • Equitable distribution of enhancements to Mid-beach, North Beach and South Beach; and
  • The resiliency and/or safety benefits associated with the project.

Public input was central to the development of the G.O. Bond Program, and to the Advisory Panel’s recommendations.  Throughout the process, hundreds of residents have shared their feedback during public charrettes organized by the City, numerous events hosted by community associations and organizations, and through online surveys. 

The Advisory Panel began with 90 proposed projects totaling $700 million, and vetted and prioritized projects utilizing the criteria noted above.  On July 17, 2018, the Advisory Panel presented its recommendations to the City Commission, with a set of recommended projects based on three different options for an overall size of the G.O. Bond Program ranging from $353 million to $444 million, as follows:

  • $444 million; 37 projects
  • $398 million; 35 projects
  • $353 million; 32 projects

On July 25, 2018, the City Commission ultimately approved a final list of projects totaling $439 million, with the final list being 95% consistent with the Advisory Panel’s recommendations. 

How much property tax-supported debt does the City currently have?

As of September 30, 2017, the City’s property tax supported debt is $41.8 million, which amounts to less than 1% of the $5.6 billion assessed property value in the City. The State of Florida limits property tax-supported debt to no more than 15% percent of the total assessed property value in the City, which means that the City cannot have more than $835 million in property tax-supported debt outstanding.  If the proposed Bond Program is approved by the voters, the City’s tax supported debt would 8.9% of the total assessed property value in the City, which is well within the 15% permitted by law.

How will I know bond projects are being completed?

Transparency is of utmost importance to the City and the City has a G.O. Bond project website at https://www.gomb2018.com. The website will provide updates as to the timeline for projects and progress.  On May 16, 2018, the City Commission adopted a resolution to establish a G.O. Bond Oversight Committee, to monitor and provide guidance to the City with its implementation of the Bond Program.  In addition, the November 6, 2018 Ballot will also ask voters whether they desire to establish an Inspector General Office, which will have additional oversight into the execution of the Bond Program.

What is the status of the previous G.O. Bond approved in 1999?

Of the 62 total projects in the $92 million bond program, all are complete or in progress, except for 5 projects.  Funding for 2 municipal facility projects was re-prioritized to other public-facing projects.  The 3 remaining projects are La Gorce Neighborhood Improvements, La Gorce Island Improvements, and North Shore Neighborhood Improvements.  These 3 projects require an additional $30 million to complete due to increases in scope and cost since the projects were originally approved.  The funding to complete these projects would come from the 2018 G.O. Bond program.

How can I get involved?

  • Visit www.GOMB2018.com to access information such as the Voter’s Guide, project descriptions, overview of the process to date, upcoming events, and much more!
  • Participate in community open houses in-person or by Twitter or Facebook by using the hashtag #GOMB2018
  • Sign up for G.O. Bond specific news, updates, and meeting notices here
  • Request a presentation at your organization’s next meeting here
  • Reach out to your Commissioners! They will be valuable assets throughout this process.

Who do I contact if I have a question or comment about the 2018 G.O. Bond?

Questions and comments are welcome! Please contact GOMB2018@miamibeachfl.gov to get in touch with us.