What is a General Obligation Bond?
A General Obligation (G.O.) Bond is a form of debt obligation that provides local government with funds for major capital improvements.
Miami Beach G.O. Bonds are backed by the full faith and credit of the City, 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.
What are G.O. Bonds used for?
G.O. Bonds are sold to investors and the proceeds are used to pay for capital projects that fulfill a public interest and need. Bond funds cannot and will not be spent on regular municipal operations. Such expenses are paid for by annual revenues (i.e. property taxes, resort taxes, etc.) that support the City’s General Fund. The Miami Beach G.O. Bond program totals $439 million, which is being allocated to:
Parks, Recreational Facilities, and Cultural Facilities - $169 million
Neighborhoods and Infrastructure - $198 million
Police, Fire, and Public Safety - $72 million
How is the City financing the approved G.O. Bond Program?
The City dedicates a portion of its property tax revenues to repay debt incurred for bond-funded capital improvements. The City will borrow the $439 million in four separate phases rather than all at once, allowing the property tax rate to increase gradually over time.
The full amount will be financed over the course of approximately 10 years. As the debt service tax rate is gradually phased in, the associated tax rate will be adjusted each year. Use our calculator tool to see the impact on your property taxes.
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 (Standard & Poor and Moody’s) that have rated the City’s G.O. Bonds. The City’s credit rating from Standard & Poor is AA+, and its Moody’s credit rating is AA2.
Both scores reflect the City’s track record of prudent fiscal management. To put the value of the City’s “AA+” and “Aa2” ratings in perspective, the City is expected to save approximately $38 million in interest costs over the life of the $438 million G.O. Bonds. Lower interest rates = more money available for capital construction.
Who is managing the implementation of the Miami Beach G.O. Bond Program?
A G.O. Bond Program org chart is available here.
The overall G.O. Bond Program implementation plan is being coordinated by a designated City staff team to deliver the associated projects on-time, in-budget and as-promised to the public. Each project has a managing City Department that plans, designs and builds the project from start to finish. A citizen-led Oversight Committee reviews each step of the project management process and the elected Mayor and Commission officiates next steps. The independent Inspector General’s Office ensures that finances are used responsibly, information is transparent, and timelines are on track.